If somebody hasn't logged in for 30 days you could make all settlements they have unclaimed.
Maybe release one settlement per day after 30 days, instead of all at once? That way, if they are on vacation or something and do come back, they've only lost a few. Then players with more settlements (and hence more invested in the game/likely to return) would have more time before they lost them all. Also, after 30 days of inactivity, they could lose maybe 1000 MD/week until their broke, but keep all their upgrades, etc.
When the player's balance reaches 0, they get moved to "The Deserted Plains" so that people aren't attacking broke homesteads. Or, better yet, their homestead could simply be labeled "broke, abandoned homestead" so people know not to bother attacking. The broke homesteads would keep all their upgrades, though, in case the player returns.
For players that have used less than X moves (maybe 5000) and haven't paid into the game, their homestead crumbles to dust after being a broke homestead for 2 months. Their login would still work, but IF they play again, they'd start over from the beginning as if it were a new account. For players that have played over 5000 moves or paid at least a dollar into the game, their broke homestead would take 2 years to crumble to dust. For players paying at least X dollars into the game ($20?) or Y moves (100,000?), their broke homestead would never crumble to dust, but might get graffiti spray painted on their walls. The graffiti would cost 500 MD to clean up.
If a player has been playing less than 1000 moves, after 30 days inactivity, once the homestead goes broke it would crumble in a week.
You could attribute this to "looters" robbing the place, and "disgruntled settlers" casting off their absent leader.
BTW, when you cash out, are you no longer a member of any settlements, or are you just not the governor? Do you convert from governorship to membership, or are you completely out of any settlements you previously controlled? If someone takes your settlement by attacking, are you still a member?
The bottom line no matter how complicated anyone wants to make it boils down to supply and demand.
Reduce demand for cash out by keeping people interested longer.
Reduce MD by giving people things to do that don't involve creating MD.
