Escheatment
Most States have a mechanism for acquiring unclaimed property. Before accounts can escheat, the financial institution must try to locate the original owner. Any attempts to reclaim escheated accounts must follow your state laws.
What Is Escheatment in Banking?
Most people do not use the term escheatment in their daily dealings. So, what is escheatment, and how does it work?
Escheatment is the legal term for the process of a financial institution turning over unclaimed property to the state government. The property can include bank accounts, funds, and other assets that have been unclaimed for a specified period.
The process does not make the government the owner, but rather, the holder, until the rightful owner can claim the asset.
Escheatment usually happens when someone dies with no heirs and no last will and testament. Unclaimed assets whose owners cannot be reached also go through escheatment, meaning the government holds them until the owner resurfaces.
In the United States, each state determines its regulations for escheatment. However, all the states require that the unclaimed property fulfill the required dormancy period. The financial institution should show proof of attempts to locate the owner before committing accounts to State ownership.
What Kinds of Property Can Be Escheated?
Escheated assets are often labeled as dormant, abandoned, or unclaimed. Brokerage firms, banks, and other financial institutions are responsible for reporting unclaimed property to the State.
Escheatment can include a variety of properties that are considered unclaimed or abandoned for an extended period. Here are examples of property that can be turned over to the state as part of the escheatment process.
- Savings or checking accounts
- Stocks
- Uncashed payroll checks
- Uncashed dividends or refunds
- Traveler's checks
- Unredeemed money orders
- Trust distributions
- Insurance payments
- Life insurance policies
- Annuities
- Utility security deposits
- Certificates of deposit
- Customer overpayments
- Safe deposit box contents
Some states also consider unclaimed gift cards and gift certificates as property that the state can claim under escheat rights.
The owner does not have to be deceased for property to escheat. They may have forgotten about the account or may have been out of the country for too long.
What Is the Escheatment Process?
When an individual dies without a will, their estate assets are considered intestate and must go through probate. If the probate court cannot find heirs for the unclaimed assets, it will grant escheat rights to the state.
Escheatment can also happen if the court determines that the only rightful heirs are incompetent to manage the inheritance. The escheat process typically follows a similar procedure.
Dormancy period
Every State sets a period after which an account is considered dormant enough to escheat. This period refers to a time when there is no owner-initiated contact and no activity on the property.
The definition of escheatment, however, does not depend solely on the number of years, because these vary by state.
Due diligence
It is a legal requirement for property holders to locate the rightful owner of unclaimed property. The institution must prove it obeyed the law by presenting certified mail receipts, copies of letters sent, and the details thereof.
Proof of a thorough search is mandatory before escheatment.
Reporting
The State government requires a comprehensive report of unclaimed property within its jurisdiction.
Many states accept the report in a standardized format, like the National Association of Unclaimed Property Administrators (NAUPA). The property holder then remits it to the State for safekeeping.
State custody
After sufficient due diligence and reporting, the holder transfers the property to the State’s unclaimed property division. The institution may transfer the physical property or the monetary equivalent to the State.
Reclamation
States have a system in place for rightful owners to reclaim property. You may apply for reclamation with your State by proving your identity and demonstrating that you own the property. The process may take some time.
State use
Escheatment allows a State to hold unclaimed property for safekeeping. After some time, the state can liquidate a property and use the cash to run public programs. Some beneficiaries include the education sector, transport, and infrastructure. The idea is for escheated funds to benefit the public.
Each holder must follow their State’s escheatment laws.
Escheatment Laws by State
Each state requires financial institutions and brokerage firms to show due diligence in locating the owner of an abandoned account. Beyond that, escheatment regulations and timeframes vary from state to state.
California escheatment law (Personal Property CODE OF CIVIL PROCEDURE SECTION 1510-1528), allows for an average of a three-year dormancy period.
The following table lists escheatment laws by state for bank accounts, checks or money orders, and wages or salaries.
| State | Bank Accounts | Checks and Money Orders | Wages and Salaries |
| Alabama | 3 years | 3 years | 1 |
| Alaska | 5 years | 5 years | 1 year |
| Arizona | 3 years | 3 years | 1 year |
| Arkansas | 3 years | 3 years | 1 year |
| California | 3 years | 3 years | 1 year |
| Colorado | 5 years | 5 years | 1 year |
| Connecticut | 3 years | 3 years | 1 year |
| Delaware | 5 years | 5 years | 5 years |
| District of Columbia | 3 years | 3 years | 1 year |
| Florida | 5 years | 5 years | 1 year |
| Georgia | 5 years | 5 years | 1 year |
| Hawaii | 5 years | 5 years | 1 year |
| Idaho | 5 years | 7 years | 1 year |
| Illinois | 3 years | 5 years | 1 year |
| Indiana | 3 years | 3 years | 1 year |
| Iowa | 3 years | 3 years | 1 year |
| Kansas | 5 years | 5 years | 1 year |
| Kentucky | 3 years | 3 years | 3 years |
| Louisiana | 5 years | 5 years | 1 year |
| Maine | 3 years | 3 years | 1 year |
| Maryland | 3 years | 3 years | 3 years |
| Massachusetts | 3 years | 3 years | 3 years |
| Michigan | 3 years | 3 years | 1 year |
| Minnesota | 3 years | 3 years | 1 year |
| Mississippi | 5 years | 5 years | 5 years |
| Missouri | 5 years | 5 years | 3 years |
| Montana | 5 years | 5 years | 1 year |
| Nebraska | 5 years | 5 years | 1 year |
| Nevada | 3 years | 3 years | 1 year |
| New Hampshire | 5 years | 5 years | 1 year |
| New Jersey | 3 years | 3 years | 1 year |
| New Mexico | 5 years | 5 years | 1 year |
| New York | 3 years | 3 years | 1 year |
| North Carolina | 5 years | 7 years | 1 year |
| North Dakota | 5 years | 2 years | 1 year |
| Ohio | 5 years | 5 years | 1 year |
| Oklahoma | 5 years | 7 years | 1 year |
| Oregon | 3 years | 3 years | 3 years |
| Pennsylvania | 3 years | 3 years | 2 years |
| Rhode Island | 3 years | 3 years | 1 year |
| South Carolina | 5 years | 5 years | 1 year |
| South Dakota | 3 years | 3 years | 1 year |
| Tennessee | 3 years | 3 years
7 years for Money orders |
1 year |
| Texas | 3 years | 3 years | 1 year |
| Utah | 3 years | 3 years | 1 year |
| Vermont | 3 years | 7 years | 1 year |
| Virginia | 5 years | 5 years | 1 year |
| Washington | 3 years | 3 years | 1 year |
| West Virginia | 5 years | 3 years | 1 year |
| Wisconsin | 5 years | 5 years | 1 year |
| Wyoming | 5 years | 5 years | 1 year |
Note: Some states use complicated laws that may change the required dormancy period for an account. For example, in Tennessee, the dormancy period for checks is three years, while money orders must be dormant for seven years.
A statute of limitations typically does not apply to dormant accounts. In other words, the rightful owner or beneficiary may be able to claim them from the state at any time.
Individuals can conduct a free online search for unclaimed property through the NAUPA website.
Planning your estate ensures that your property goes to the right person.
Most States have a mechanism for acquiring unclaimed property. Before accounts can escheat, the financial institution must try to locate the original owner. Any attempts to reclaim escheated accounts must follow your state laws.
What Is Escheatment in Banking?
Most people do not use the term escheatment in their daily dealings. So, what is escheatment, and how does it work?
Escheatment is the legal term for the process of a financial institution turning over unclaimed property to the state government. The property can include bank accounts, funds, and other assets that have been unclaimed for a specified period.
The process does not make the government the owner, but rather, the holder, until the rightful owner can claim the asset.
Escheatment usually happens when someone dies with no heirs and no last will and testament. Unclaimed assets whose owners cannot be reached also go through escheatment, meaning the government holds them until the owner resurfaces.
In the United States, each state determines its regulations for escheatment. However, all the states require that the unclaimed property fulfill the required dormancy period. The financial institution should show proof of attempts to locate the owner before committing accounts to State ownership.
What Kinds of Property Can Be Escheated?
Escheated assets are often labeled as dormant, abandoned, or unclaimed. Brokerage firms, banks, and other financial institutions are responsible for reporting unclaimed property to the State.
Escheatment can include a variety of properties that are considered unclaimed or abandoned for an extended period. Here are examples of property that can be turned over to the state as part of the escheatment process.
- Savings or checking accounts
- Stocks
- Uncashed payroll checks
- Uncashed dividends or refunds
- Traveler's checks
- Unredeemed money orders
- Trust distributions
- Insurance payments
- Life insurance policies
- Annuities
- Utility security deposits
- Certificates of deposit
- Customer overpayments
- Safe deposit box contents
Some states also consider unclaimed gift cards and gift certificates as property that the state can claim under escheat rights.
The owner does not have to be deceased for property to escheat. They may have forgotten about the account or may have been out of the country for too long.
What Is the Escheatment Process?
When an individual dies without a will, their estate assets are considered intestate and must go through probate. If the probate court cannot find heirs for the unclaimed assets, it will grant escheat rights to the state.
Escheatment can also happen if the court determines that the only rightful heirs are incompetent to manage the inheritance. The escheat process typically follows a similar procedure.
Dormancy period
Every State sets a period after which an account is considered dormant enough to escheat. This period refers to a time when there is no owner-initiated contact and no activity on the property.
The definition of escheatment, however, does not depend solely on the number of years, because these vary by state.
Due diligence
It is a legal requirement for property holders to locate the rightful owner of unclaimed property. The institution must prove it obeyed the law by presenting certified mail receipts, copies of letters sent, and the details thereof.
Proof of a thorough search is mandatory before escheatment.
Reporting
The State government requires a comprehensive report of unclaimed property within its jurisdiction.
Many states accept the report in a standardized format, like the National Association of Unclaimed Property Administrators (NAUPA). The property holder then remits it to the State for safekeeping.
State custody
After sufficient due diligence and reporting, the holder transfers the property to the State’s unclaimed property division. The institution may transfer the physical property or the monetary equivalent to the State.
Reclamation
States have a system in place for rightful owners to reclaim property. You may apply for reclamation with your State by proving your identity and demonstrating that you own the property. The process may take some time.
State use
Escheatment allows a State to hold unclaimed property for safekeeping. After some time, the state can liquidate a property and use the cash to run public programs. Some beneficiaries include the education sector, transport, and infrastructure. The idea is for escheated funds to benefit the public.
Each holder must follow their State’s escheatment laws.
Escheatment Laws by State
Each state requires financial institutions and brokerage firms to show due diligence in locating the owner of an abandoned account. Beyond that, escheatment regulations and timeframes vary from state to state.
California escheatment law (Personal Property CODE OF CIVIL PROCEDURE SECTION 1510-1528), allows for an average of a three-year dormancy period.
The following table lists escheatment laws by state for bank accounts, checks or money orders, and wages or salaries.
| State | Bank Accounts | Checks and Money Orders | Wages and Salaries |
| Alabama | 3 years | 3 years | 1 |
| Alaska | 5 years | 5 years | 1 year |
| Arizona | 3 years | 3 years | 1 year |
| Arkansas | 3 years | 3 years | 1 year |
| California | 3 years | 3 years | 1 year |
| Colorado | 5 years | 5 years | 1 year |
| Connecticut | 3 years | 3 years | 1 year |
| Delaware | 5 years | 5 years | 5 years |
| District of Columbia | 3 years | 3 years | 1 year |
| Florida | 5 years | 5 years | 1 year |
| Georgia | 5 years | 5 years | 1 year |
| Hawaii | 5 years | 5 years | 1 year |
| Idaho | 5 years | 7 years | 1 year |
| Illinois | 3 years | 5 years | 1 year |
| Indiana | 3 years | 3 years | 1 year |
| Iowa | 3 years | 3 years | 1 year |
| Kansas | 5 years | 5 years | 1 year |
| Kentucky | 3 years | 3 years | 3 years |
| Louisiana | 5 years | 5 years | 1 year |
| Maine | 3 years | 3 years | 1 year |
| Maryland | 3 years | 3 years | 3 years |
| Massachusetts | 3 years | 3 years | 3 years |
| Michigan | 3 years | 3 years | 1 year |
| Minnesota | 3 years | 3 years | 1 year |
| Mississippi | 5 years | 5 years | 5 years |
| Missouri | 5 years | 5 years | 3 years |
| Montana | 5 years | 5 years | 1 year |
| Nebraska | 5 years | 5 years | 1 year |
| Nevada | 3 years | 3 years | 1 year |
| New Hampshire | 5 years | 5 years | 1 year |
| New Jersey | 3 years | 3 years | 1 year |
| New Mexico | 5 years | 5 years | 1 year |
| New York | 3 years | 3 years | 1 year |
| North Carolina | 5 years | 7 years | 1 year |
| North Dakota | 5 years | 2 years | 1 year |
| Ohio | 5 years | 5 years | 1 year |
| Oklahoma | 5 years | 7 years | 1 year |
| Oregon | 3 years | 3 years | 3 years |
| Pennsylvania | 3 years | 3 years | 2 years |
| Rhode Island | 3 years | 3 years | 1 year |
| South Carolina | 5 years | 5 years | 1 year |
| South Dakota | 3 years | 3 years | 1 year |
| Tennessee | 3 years | 3 years
7 years for Money orders |
1 year |
| Texas | 3 years | 3 years | 1 year |
| Utah | 3 years | 3 years | 1 year |
| Vermont | 3 years | 7 years | 1 year |
| Virginia | 5 years | 5 years | 1 year |
| Washington | 3 years | 3 years | 1 year |
| West Virginia | 5 years | 3 years | 1 year |
| Wisconsin | 5 years | 5 years | 1 year |
| Wyoming | 5 years | 5 years | 1 year |
Note: Some states use complicated laws that may change the required dormancy period for an account. For example, in Tennessee, the dormancy period for checks is three years, while money orders must be dormant for seven years.
A statute of limitations typically does not apply to dormant accounts. In other words, the rightful owner or beneficiary may be able to claim them from the state at any time.
Individuals can conduct a free online search for unclaimed property through the NAUPA website.
Planning your estate ensures that your property goes to the right person.