Where Does an LLC Escheat “Owner Unknown” Intangible Property?
This article analyzes the rules for determining which state or states have the right to take custody of owner unknown unclaimed intangible property held by a limited liability company (LLC) or other unincorporated business entity. Most states have adopted rules providing that the state of principal place of business of the LLC has the right to claim this property, while a few states provide that the state of formation of the LLC has this right. This article argues that a uniform rule is necessary both to eliminate potential interstate disputes regarding this property, as well as to provide certainty to the businesses holding this property. This article further argues that the state of formation rule is preferable, as the principal place of business rule often leads to factual disputes which unnecessarily increase administrative complexity and compliance costs. Finally, this article argues that the principal place of business rule is fundamentally inconsistent with the federal common la
This article analyzes the rules for determining which state or states have the right to take custody of “owner unknown” unclaimed intangible property held by a limited liability company (LLC) or other unincorporated business entity. Most states have adopted rules providing that the state of principal place of business of the LLC has the right to claim this property, while a few states provide that the state of formation of the LLC has this right. This article argues that a uniform rule is necessary both to eliminate potential interstate disputes regarding this property, as well as to provide certainty to the businesses holding this property. This article further argues that the state of formation rule is preferable, as the principal place of business rule often leads to factual disputes which unnecessarily increase administrative complexity and compliance costs. Finally, this article argues that the principal place of business rule is fundamentally inconsistent with the federal common
