Safe-Deposit Loot Is Going, Going . . .

Ladies and gentlemen, check your safe-deposit boxes. And hurry.

The California controller’s office will hold its annual auction of “abandoned” property from safe-deposit boxes throughout the state May 27-28 at Hotel Sofitel in Los Angeles. Many other states will hold similar auctions in the coming months.

Some of this property--which includes hundreds of thousands of dollars’ worth of antique jewelry and sports memorabilia, along with military medals and dog tags and other items of sentimental value--could belong to you or someone you know. But it is considered abandoned because no one claimed it for at least three years after the safe-deposit box rental agreement expired. The state is overwhelmed with items, and it’s up to the rightful owners or their heirs to step forward.

Often the safe-deposit agreements are neglected because of divorce, illness or death.

“An awful lot of [the rightful owners] are older people who feel unsafe having valuable items in their homes, so they put them in a safe-deposit box,” says Peter De Vries, administrator of Florida’s unclaimed property division, which is holding a similar auction May 27-29. “Then, maybe they develop Alzheimer’s or die before they have a chance to tell anybody about the box.”

States are obligated to hold abandoned assets for their rightful owners. However, they are not obligated to hold the assets in kind. They are simply charged with passing the value of abandoned property on to the original owner or the owner’s heirs.

With most of the billions of dollars in assets that states hold, passing on the value--rather than the item itself--is perfectly acceptable because the items don’t have sentimental meaning. Those items, such as stocks, bonds and cash, are easily valued, stored and replicated.

But the contents of safe-deposit boxes are another matter. Many states, including California, have small mountains of personal items delivered to their treasuries each year by banks that are compelled by state law to drill the boxes and turn over the contents to the state after a set period, usually three to five years. Because storing these items is costly, laws in many states also compel their sale or auction within one to three years of receipt.

“There is nothing unethical or inherently wrong with holding an auction,” says Valerie Jundt, executive director of the National Assn. of Unclaimed Property Administrators and the former unclaimed property administrator for North Dakota. “But it killed me to sell some of the stuff that we sold. In some of the boxes, there were things of such sentimental value--old love letters and photographs--that would mean a great deal to a family member.”

Generally before safe-deposit box auctions are held, unclaimed property administrators attempt to find the owners or heirs, Jundt says. Typically, the efforts include running full-page advertisements in local newspapers that list names of all the property owners.

Many states do more. In Maryland, for example, the administrator matches Social Security numbers of safe-deposit box owners with federal and state tax records in an effort to find new addresses for people who may have moved. The office then sends out postcards, runs advertisements, writes editorials for local newspapers, participates in TV newscasts and hosts booths at county fairs to get the word out.

In Florida, De Vries runs a credit check on each beneficiary for whom the division has a Social Security number. That step has helped administrators find 45% to 50% of the owners and heirs--much better results than they got from newspaper advertisements alone, he says.

“We don’t have a Macy’s budget, but we do what we can,” he says.

But in California, which holds $2.4 billion in abandoned assets and where the upcoming safe-deposit box auction is expected to fetch more than $600,000, the effort to find owners is more cursory.

“Our hands are tied in terms of outreach,” says Byron Tucker, a spokesman for the state controller’s office. Although officials try to match Social Security numbers with state tax records, the controller’s office is barred by law from spending more than $15,000 a year in its effort to contact property owners, he says.

As a result, the state relies on banks to make an effort to contact owners before the property is sent to the state treasury.

“It is up to the financial institution, not the state, to try to locate these owners,” Tucker says. “Once they turn property over to us, we wait at least a year before we auction it off.”

There’s no law detailing what a financial institution must do to find missing depositors and safe-deposit box owners. Typically, they’ll send out a letter or a postcard to notify the customer that his or her safe-deposit fee is in arrears. In California, institutions are required to turn over money and contents of safe-deposit boxes to the state if the owners are not found for three years.

The controller’s office runs generic print advertisements alerting people they may be owed money by the state, and it operates a Web site (https://www.sco.ca.gov) that lets individuals search for abandoned property by name.

However, using California’s database can be tricky. Unlike other states’ sites, which allow users to call up any name that starts with a particular letter--or even search by address--you must have a complete name to search the California archive. If you type in just a last name, for example, or if the name in the state’s database includes a middle initial and you don’t include it or vice versa, the site will indicate that no matches were found.

Much more is done to advertise the state’s auction to potential bidders than to find rightful owners before their property is sold. Lone Star Auctioneers Inc., a Fort Worth-based company that handles safe-deposit box auctions for California, sends postcards and runs advertisements nationwide in an effort to find buyers. The company’s Web site at https://www.lonestarauctioneers.com also includes photographs of many items and descriptions of each lot’s contents.

California sets minimum bids at 70% of the appraised value of each lot to ensure that the owners--if found--get a fair price for their goods. However, many lots contain items whose value is more sentimental than monetary.

Consider Lot 1324 in next week’s auction. It’s packed with tokens, including late 19th century dog tags from the Army’s 14th Infantry and a souvenir commemorating the opening of the Panama Canal.

Lot 358, meanwhile, consists of 10 military medals, including an engraved Purple Heart.

Selling items of sentimental value is not unique to California. If administrators can’t find the rightful owners, Florida’s auction will include Chapin Warner’s autograph of Franklin D. Roosevelt and Bruce Green’s World War II Nazi dagger.

Anyone know Betsy Zimmerman, who once lived in Holly Hill, Fla.? Unless she or her heirs step forward, the contents of her safe-deposit box, which include a Revolutionary War diary and military discharge documents from 1887, will go on the block, De Vries says.

Generally, rightful owners or heirs who can show proof of their interest can step forward on any business day before the state auction is held and retrieve the property. But once the property is sold, all the heirs can get are the proceeds. Thus, property administrators urge individuals to check records in every state where they or deceased relatives have lived.

“We know that a lot of these items have more sentimental value than monetary value,” Jundt says. “You can’t replace an item with sentimental value. Once it’s gone, it’s gone.”

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Meet and hear from Times staff writer Kathy M. Kristof at The Times’ 1999 Investment Strategies Conference this weekend at the Los Angeles Convention Center. For registration information, call (800) 350-3211.

Kristof welcomes your comments and suggestions for columns. Write to Personal Finance, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053, or e-mail [email protected].