Does Unclaimed Property Division Have Right to Sell Stock?
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Question:
My father died intestate many years ago, leaving a number of TXI stocks to his heirs: my mother, who has since also passed away, and six children. TXI split several times before Martin Marietta bought it out in 2014. I’ve been trying to contact Martin Marietta to have shares issued to my mother’s estate for distribution but have been stonewalled at every turn. Today I was directed to the Texas state comptroller’s unclaimed property fund office. The representative there informed me that TXI turned over my father‘s shares to the Texas unclaimed property fund in 2009. The woman also informed me that the stocks were sold on March 30, 2017, and the proceeds from that sale – a bit over $11,000– is all that remains in the unclaimed property fund for my father’s heirs.
I have the physical original certificates of stock. What possible authority does the state of Texas have to dispose of my family’s stocks? Martin Marietta shares are currently valued at about $530 a share today. The Texas comptroller’s office is in charge of gathering and safeguarding such property until the rightful heirs become aware of it and can claim it. In my opinion this is an unconstitutional taking, regardless of what, if any, statutory authority the state comptroller might profess to have. What can I do?
Response:
This is an interesting question, but really one of state law regarding unclaimed property as well as what happens when the owner of shares can’t locate the certificates. Normally, I’ve seen bank accounts turned over to the state as unclaimed property. When this happens, the state acts as the custodian of the property for the true owners.
My guess is that the state is not equipped to hold stock, which is why it sold the shares and turned the holding into cash. No doubt, the state went through the process of having the certificates reissued when the originals could not be located. In such a case, the new certificates would take the place of the originals and the originals would have been canceled.
I don’t think this is an unconstitutional taking, but simply a decision by the Texas comptroller’s office as to how most economically to hold property. While your family lost out on the stock’s appreciation since 2017, we don’t know what your family would have done with the stock if it had had control of it at that time. And it’s always possible that the the value of the stock would have fallen in the intervening years. In any case, your experience is a strong argument for not waiting to probate an estate after a family member passes away.
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