Escheat

Escheat: Meaning, Process, and Reclaiming Assets

Escheat is the legal process by which government authority takes ownership of property or financial accounts that remain unclaimed and have no identifiable heirs or beneficiaries. It typically applies after a prolonged period of inactivity or when someone dies intestate (without a valid will) and no lawful heirs can be located.

Key takeaways

• Escheat lets the state claim ownership of unclaimed property when no owner or heir is found.
• Rules and dormancy periods vary by state; each state sets its own timelines and procedures.
• Commonly escheated assets include bank accounts, brokerage and retirement accounts, uncashed checks, and real estate.
• Many states maintain searchable registries of unclaimed property; national coordination exists through a central association.
• Escheated property can often be reclaimed by rightful owners or heirs, but state statutes of limitation or prior sale of assets may limit recovery.

How escheatment works

1. Institutions mark accounts as dormant after a period of inactivity specified by state law.
2. Before turning assets over, institutions are generally required to attempt contact—mail notices, email, or other reasonable steps.
3. If attempts fail and the dormancy period expires, the institution remits the property to the state (escheatment).
4. The state holds the property and typically lists it in an unclaimed-property registry.

Timing, notice requirements, and the types of property subject to escheatment differ across states. Some states allow reclamation indefinitely; others impose time limits once the state sells or spends the funds.

Common assets subject to escheat

• Checking and savings accounts
• Uncashed payroll or vendor checks
• Brokerage and investment accounts, including unclaimed securities
• Retirement, pension, and annuity accounts (when beneficiaries are not designated or cannot be located)
• Insurance proceeds
• Real estate and other tangible property

Escheat in intestate estates

When a person dies without a valid will (intestate), probate courts identify lawful heirs based on state intestacy laws (spouse, children, parents, siblings, extended relatives). If no heirs can be found or if a will/trust is invalid and no heirs are identifiable, a probate court may grant escheat rights, and the estate can pass to the state.

If an heir is later located, most states provide a legal process to reclaim the property, though recovery can be affected if the state has already disposed of the assets or a statute of limitations applies.

Reclaiming escheated assets

• Search state unclaimed-property databases; many states participate in a national searchable directory administered by the National Association of Unclaimed Property Administrators (NAUPA).
• File a claim with the state that currently holds the property, providing proof of identity and proof of ownership or heirship (wills, death certificates, account statements, probate documents).
• Be aware of state-specific procedures and deadlines—some limit claims once funds are sold or spent.

States vary on how long claimants have to recover property and what documentation is required. If a state has sold or used the funds, recovery may be restricted or limited to a specific period.

How to avoid escheatment

• Keep beneficiary designations current on retirement accounts, insurance policies, and financial accounts.
• Maintain up-to-date contact information with banks, brokers, and plan administrators.
• Cash checks and regularly monitor accounts for activity.
• Periodically search state and national unclaimed-property registries for assets you or family members might have.

FAQs

What does it mean when an account is escheated?
* It means the account was turned over to the state because no owner or heir could be located after the legally required dormancy period.

What does escheat mean in law?
* Legally, escheat is the right of the state to take ownership of unclaimed property when there are no lawful claimants.

Can escheated property be recovered?
* Often, yes. Most states allow rightful owners or heirs to file claims and reclaim property, subject to state procedures and any applicable time limits.

Conclusion

Escheatment is a state mechanism to handle unclaimed property and intestate estates when no owner or heir is found. Because rules and deadlines differ by state, staying informed, maintaining account records, and updating beneficiary information are the best ways to prevent loss of assets and to preserve the ability to recover property if it becomes escheated.