Escheat
What Is Escheat?
Escheat is the legal process by which unclaimed or abandoned property is transferred to the state after a period of inactivity and unsuccessful attempts to locate the rightful owner.
Escheat laws apply to many types of financial assets, including:
- Dormant bank accounts
- Uncashed checks
- Unclaimed insurance payouts
- Forgotten investment accounts
- Security deposits
- Property belonging to someone who died without heirs
State governments temporarily take custody of these assets until the rightful owner or heir claims them.
Why It Matters
Escheat laws exist to ensure that unclaimed financial assets do not remain lost or unmanaged indefinitely.
Instead of allowing funds to sit dormant with a financial institution, the assets are transferred to the state’s unclaimed property program, where they are held until the rightful owner comes forward.
Millions of dollars in unclaimed funds are held by state governments each year, and individuals can often reclaim forgotten assets.
How Escheat Works
Financial institutions are required to monitor accounts for inactivity.
Example: If a bank account remains inactive for several years and the institution cannot reach the owner, the funds may be reported as unclaimed property and transferred to the state treasury.
The state maintains records of these assets and allows individuals to search for and claim property through official unclaimed property databases.
Escheat vs Intestate Succession
Escheat → Property transfers to the state when no owner or heirs can be identified
Intestate Succession → Property passes to legal heirs when someone dies without a will
Escheat is typically a last resort when no rightful claimant can be found.
FAQs About Escheat
Can you reclaim property after it has escheated to the state?
Often yes. Many states allow owners or heirs to claim unclaimed property years later.
How long before property is escheated?
Dormancy periods vary by state but often range from 3 to 5 years for many accounts.
How can you check for unclaimed property?
Most states provide searchable databases through their unclaimed property offices.
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