What is 'Escheat'
Escheat is the transfer of title of property or an estate to the state when an individual dies without a will and legal heirs. Escheat ensures that property always has a recognized owner, which would be the state or government if no other claimants to ownership exist. Most jurisdictions have their own laws and regulations defining escheat and the circumstances under which it can be invoked. Escheat is usually done on a revocable basis, which means that ownership of the estate or property would revert to a rightful heir should one turn up.
BREAKING DOWN 'Escheat'
In some jurisdictions, escheat also refers to the title transfer of financial assets such as bank deposits and unclaimed securities in accounts that have been dormant for a very long period of time to a state authority. Institutions with such dormant accounts are required to make efforts - such as sending reminders and issuing notices in publications - to locate the owners of these assets before transferring title to the state under escheat. Some jurisdictions maintain online registries of dormant assets such as bank deposits, which enables their rightful owners to reclaim them since escheat is revocable in most cases.