The concept of escheat maintains that property always has a recognized owner, which would be the state or government if no other claimants to ownership exist or are readily identified. All jurisdictions have their laws and regulations governing escheat and all matters relating to it.
Breaking Down Escheat
Escheat is usually done on a revocable basis, which means that ownership of the estate or property would revert to a lawful heir should one turn up. A rightful heir and conditions which this person must meet to revoke state ownership of an estate or property is outlined by laws which can vary widely from state to state.
The conditions of escheat as it relates to real property generally rest on laws in which the physical property stands.
Escheat can also kick in if an individual's legal heirs to his or her estate are legally deemed incompetent to manage the inheritance and no other rightful heirs can be identified. Escheat may also come into play in the event that a will or trust is deemed defective and legal heirs to an estate can't be readily identified.
Escheat of Unclaimed Financial Assets
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. Financial Institutions with such dormant accounts are required by law to make efforts—such as sending reminders and issuing notices—to locate the owners of these assets before transferring title to the state under escheat.
The specifics of these laws vary by jurisdiction, and state law also determines the time frame by which a financial institution must report unclaimed assets to a state authority.
Some states maintain online registries of dormant assets such as bank deposits, which enables their rightful owners to reclaim them since escheat is revocable in many of these cases. However, these efforts would ultimately be subject to state law.
Time is also critical to anyone seeking to reclaim certain escheated financial assets since some states can sell the securities to fund state matters. The intricate details of what kinds of assets can be reclaimed and how long an owner of those assets has to reclaim them vary depending on state law. For example, the time a person has to claim an uncashed check can range from as little as one year to as long as seven years.