ICI Supports Federal Bill to Stop States From Seizing Inactive Investment Accounts

The Investment Company Institute ("ICI") expressed its support for proposed federal legislation that would prevent states from seizing and liquidating securities and other investment accounts based solely on inactivity.

In a policy statement on unclaimed property laws, ICI said some states are increasingly adopting "inactivity standards" that treat ordinary buy-and-hold investing as abandonment. Under these laws, states can take custody of an account through escheatment simply because an investor has not logged in, traded, or contacted the financial institution for a set period, even if the investor is reachable and intentionally leaving the assets alone.

ICI warned that premature escheatment causes severe financial harm because states typically liquidate the seized securities. If an investor later reclaims the account, ICI said, the investor may receive only the cash value at the time of seizure, losing subsequent market gains, dividends, interest, and the benefits of long-term compounding. The association noted in a related article that "forced liquidation can also trigger unforeseen tax consequences."

To address the issue, the association urged in its policy statement that Congress pass the Safeguarding Americans' Fairly Earned Retirement Act ("SAFER Act"). The bill would bar a financial institution from turning a covered asset, the proceeds of its sale, or related payments over to a state based on inactivity alone. For an individual owner, the institution could yield custody only if it had received confirmation of the owner's death at least three years earlier and no fiduciary for the estate had expressed interest in the asset during that period. For an owner that is not a natural person, the institution could yield custody only after at least five years with no record of contact with a representative. The bill would preempt conflicting state law.

The bill's protections would extend beyond traditional securities. A "covered asset" would include any security, digital asset, or investment account, and the bill defines a digital asset as a digital representation of value recorded on a cryptographically secured distributed ledger or similar technology, with centralized digital asset exchanges included among the covered financial institutions.

At the state level, ICI cited recent legislative corrections as a model for protecting long-term investors. The association pointed to Florida, where more than $1 billion in additional assets escheated to the state after it adopted an inactivity standard in 2024, much of it prematurely, before lawmakers replaced that standard in June 2026 with a hybrid framework built around a 10-year dormancy period, successful communications, and other objective indicators of owner engagement.