Unclaimed property acts as a significant source of short-term cash for state governments. While seeking the property’s rightful owner, states are free to invest it and even earn interest. How states handle this interest is an issue that recently found its way to the Illinois State Supreme Court.

While some states – such as New Jersey – pay interest to property owners when the property is returned, Illinois returns just the property. Any interest earned from investing the funds remains with the state.

According to an article published by the Associated Press, a group of property owners recently challenged the state’s policy regarding interest. They believed that all interest earned on unclaimed property should be paid to the property owners.

The Illinois State Supreme Court, however, disagreed. While property owners indeed have a right to reclaim any unclaimed property held by the state, the state has no obligation to turn over any interest earned while Illinois managed the money.

In Illinois, uncashed vendor checks must be turned over to the state after five years. Also, holders are required to send out search letters to the last known address of the property owner.

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