When you send money to a dormant account, it depends on the specific circumstances and the financial institution handling the account.
Here's a breakdown of the possible scenarios:
1. The Account is Inactive but Not Closed
- Funds May Be Held: The bank may hold the funds until the account owner reactivates the account. This is a common practice to prevent unauthorized access and protect the account holder's funds.
- Fees May Apply: Dormant accounts often have inactivity fees. These fees can accumulate over time, potentially reducing the amount of money in the account.
- Reactivation Required: The account owner might need to contact the bank to reactivate the account and access the funds.
2. The Account is Officially Closed
- Returned to Sender: If the account is closed, the funds will likely be returned to the sender. The bank may send the funds back to the original source, or they may hold the money for a period of time before returning it.
- Escheatment: In some cases, if the account owner cannot be located, the funds may be transferred to the state's unclaimed property program.
3. The Account Owner is Deceased
- Estate Administration: If the account owner has passed away, the funds will become part of their estate. An executor or administrator will be appointed to manage the estate and distribute the funds according to the deceased's will or state law.
Tips for Avoiding Dormant Accounts:
- Regular Activity: Make small transactions in your accounts periodically to keep them active.
- Update Contact Information: Ensure your bank has your current contact information so they can reach you if necessary.
- Review Accounts: Periodically check your accounts for any inactivity fees.
Example:
Imagine you send $100 to a friend's old checking account. If the account is inactive but not closed, the bank may hold the $100 until your friend reactivates the account. If the account is closed, the $100 might be returned to you.
Note: The specific procedures and timelines for handling dormant accounts can vary depending on the bank and the state's laws. It's always best to contact the financial institution directly for detailed information.
