Which state can claim a company's unclaimed property?
Edvin Givargis Published 5 minute read
The short answer
One state per item of property, chosen by a two-rule hierarchy the Supreme Court of the United States announced in Texas v. New Jersey (1965) and has defended ever since. First priority: the state of the owner's last known address, as shown on the holder's own books and records. Second priority: if the books show no address for the owner, or the owner's state has no law reaching the property, the state where the holder is incorporated takes custody. The rules are federal common law, adopted to prevent fifty states from claiming the same dollar, and they leave no room for equitable argument; the Court chose administrability over fairness in terms, and it has twice refused invitations to soften the result. The one significant carve-out is statutory: for money orders, traveler's checks, and similar written instruments, Congress redirected custody to the state where the instrument was purchased, a rule the Court enforced against Delaware in Delaware v. Pennsylvania (2023). The practical consequence sits in the second rule. A holder with clean address records answers mostly to the states where its payees actually lived. A holder with incomplete records answers to its state of incorporation, and for a large share of American business that state is Delaware, which is precisely why Delaware's audit and estimation practices matter to companies with no other Delaware footprint.
The two rules and why the Court chose them
Texas v. New Jersey was an original-jurisdiction contest among four states over which could escheat obligations owed by a single company. The Court needed a rule that would settle every future contest without relitigating each one, and it selected the owner's last known address on the holder's books precisely because it was mechanical: the address is written down, it does not move after the fact, and it roughly tracks the state whose citizen actually lost the property. The backup rule, the holder's state of incorporation, was chosen for the same reason. Incorporation is a matter of public record and admits no argument. The Court acknowledged the rules were arbitrary at the margins and adopted them anyway, because the alternative was endless multi-state litigation over every abandoned account.
Two later decisions completed the structure. Pennsylvania v. New York (1972) applied the address rule to money orders and refused to craft an exception even though money order issuers rarely record purchaser addresses, which as a practical matter routed enormous sums to the issuer's state of incorporation. Congress answered with the Disposition of Abandoned Money Orders and Traveler's Checks Act, directing that sums payable on a money order, traveler's check, or similar written instrument go to the state where the instrument was purchased when the issuer's records show it. Delaware v. New York (1993) then confirmed the doctrine's other load-bearing joint: the relevant holder is the debtor legally obligated on the instrument, and the relevant records are that debtor's records, which kept the second-priority rule anchored to incorporation rather than to wherever the business happens to operate.
The modern test of the carve-out
The structure was stress-tested recently. In Delaware v. Pennsylvania (2023), the question was whether MoneyGram's official checks were money orders or similar written instruments within the federal act. If they were, custody ran to the states of purchase; if not, the Texas v. New Jersey default sent them to MoneyGram's state of incorporation, Delaware. The Supreme Court held the instruments were sufficiently similar to money orders to fall within the act, sending the disputed sums to the states where the instruments were bought. The decision is a reminder that the federal act is a genuine exception with real dollars attached, and that Delaware's second-priority position, however durable, is not limitless.
Why the second rule is the one that bites
For an operating company, the priority rules translate into a simple diagnostic. Property with a good owner address on the books is owed to that owner's state, reportable under that state's dormancy schedule and exemptions, and the exposure is spread across the map roughly in proportion to where employees, vendors, and customers live. Property without an address, and property for periods where records no longer exist at all, defaults to the state of incorporation. That is the doctrinal seam that estimation practices grow out of: when an examination reaches years for which the holder cannot produce records, the examining state treats the unaddressed liability as second-priority property, and if the holder is a Delaware entity, the estimated amount lands in Delaware. A separate article in this library covers how that estimation works and what limits Delaware's statute now places on it.
The same diagnostic runs in reverse for planning. Address hygiene is the cheapest unclaimed property strategy that exists. Complete owner records keep property in first-priority states, many of which exempt business-to-business transactions or particular property types outright, and keep it out of the incorporation-state default where no such exemption applies. Record retention does the same work across time: the holder that can produce records for the full lookback confines the examination to actual property, while the holder that cannot invites an estimate.
Practice notes
Map the company's unclaimed property footprint the way the priority rules do, not the way the org chart does. Start with where owner addresses actually sit in the payables, payroll, and receivables systems, because that distribution, not the company's operating footprint, is the reporting map. Identify every entity in the structure by state of incorporation and treat each Delaware entity as carrying second-priority exposure for whatever its records cannot support. When acquiring a company, read the target's record retention and filing history through the same lens; an acquired Delaware entity with thin records carries an estimable history, and the priority rules decide who gets to do the estimating. G&G State Tax Group provides unclaimed property consulting, including priority-rule analysis and exposure scoping, alongside its state and local tax practice.
This article states the law as of September 25, 2026
Statutes, rates, thresholds, and agency practice change, and a different set of facts can change the answer. Before acting on anything discussed above, contact G&G State Tax Group, or another state and local tax adviser, to confirm what has changed since this was written and how the rules apply to a specific situation.
This publication is informational in nature and is not, and should not be considered, legal, accounting, tax, or other professional advice for any person or situation. Correct application of tax law depends heavily on the facts and circumstances in each case, and G&G State Tax Group, LLC assumes no liability in connection with the use of this information, and is not obligated to inform any reader of changes in the law or other factors that could affect the information contained herein.