What Is an Escheat?

Escheat refers to a government's legal right to seize estate assets or unclaimed property. It occurs most frequently when a person dies without a will or heirs. Additionally, escheat rights may be granted when assets remain unclaimed for an extended period of time. These circumstances are also known as bona vacantia or simply unclaimed property.

The concept of escheat asserts that property always has a recognized owner, which is the state or government if no other claimants exist or can be readily identified. Each state has its own laws and regulations governing escheat rights as well as related matters in the United States.

• Escheat refers to a government's legal right to seize estate assets or unclaimed property.

•In the United States, each state has its own rules and regulations regarding the granting of escheat rights.

• Escheat rights are frequently determined through probate or other court proceedings.

After a specified period of time, the majority of states have standard procedures for automatically transferring dormant account assets.

Understanding  About Escheat

Escheat is the government's right to unclaimed property after a certain period of time. Escheat rights may be granted by a court of law or according to a predetermined time frame. In the event of death without a will or heirs, a state may be granted escheat rights through a probate decision.

Each state in the United States has its own regulations governing escheat rights. Often, escheated property can be reclaimed at a later date. Some states may include a statute of limitations, which establishes an expiration date beyond which property cannot be reclaimed.

The process of transferring assets to the state is known as escheatment. Typically, escheat rights are maintained on a revocable basis, which can be extended indefinitely if there is no statute of limitations. This means that if a legitimate heir or owner appears, the estate or property assets could revert to their rightful owner.

Without a will, estate assets are considered intestate upon death. Typically, a court of probate determines the final disposition of all deaths and last wishes. Intestate deaths are also subject to probate, which involves researching potential heirs to whom property assets may be distributed. Inherited assets may be inherited by spouses, siblings, aunts, uncles, nieces, nephews, cousins, and potentially other distant relatives. A judge would grant escheat rights to the state if a probate court discovers no heirs for unclaimed assets upon death. Escheat may also occur if a will or trust is deemed invalid and it is difficult to identify the legal heirs to an estate. In the majority of cases, the identification of heirs eliminates the need for escheatment. Nonetheless, escheat can also occur if a person's legal heirs are deemed incapable of managing the inheritance and no other rightful heirs can be identified.

If a legitimate heir comes forward after escheat rights have been granted, the property can be distributed in accordance with applicable laws. State laws vary widely and may include a statute of limitations that renders property rights irrevocable.

States in the United States also have processes and procedures for granting escheat rights to unclaimed property after an extended period of time. The processes and procedures vary by asset type and by state.

Escheat of Unclaimed Property

The government can be granted escheat rights for various types of assets. Real estate, bank deposits, and unclaimed securities in accounts that have been inactive for an extended period of time may constitute assets.

After a predetermined period of time, financial institutions and brokerages label inactive accounts as dormant. Financial institutions maintain a record of inactive accounts. Typically, these accounts must be turned over to the government after a predetermined time period, which is typically determined by each state. Before transferring these assets to the state through escheatment, financial institutions with inactive accounts are typically required by law to make efforts to locate the account holders, such as sending reminders and notices.

Escheat rights vary widely by type of asset and by state. Each state can determine the timeline and procedure for granting escheat rights to the government. After a specified period of time, escheatment typically occurs automatically for financial accounts.

Monitoring Unclaimed Property

Some states maintain online databases of unclaimed property and inactive accounts. This allows rightful owners to reclaim property even after the state has been granted escheat rights. However, these efforts are ultimately subject to state law, and states may impose a statute of limitations that restricts claims after a certain time period. Generally speaking, statutes of limitation serve to protect states that sell assets or spend funds for their own purposes by making these assets less recoverable over time.