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Escheat is a legal term that refers to the transfer of assets or property to the state when an individual dies without a will or known heirs, or when a property is unclaimed after a certain period. It also applies when a financial institution is unable to contact the owner of an account or assets after a specified period of time. This process helps to ensure that assets do not remain unclaimed indefinitely.


The phonetics of the keyword “Escheat” is: /ɪsˈtʃiːt/

Key Takeaways

  1. Definition: Escheat is a common law doctrine that transfers the property of a person who dies without heirs to the state. It serves to ensure that property is not left in “limbo” without recognized ownership.
  2. Application: Escheat also applies to unclaimed, abandoned, or uncollected property after a period of time specified by escheat laws. These laws vary by state and country, and are generally implemented to prevent fraud and illegal activities.
  3. Escheatment Process: The process involves government agencies finding eligible properties, sending notifications to the property owners about potential escheat, and finally, transferring the unclaimed property to the state after a certain period of time if no legitimate claim is made. The original owner or their rightful heirs can usually reclaim the property by providing proof of ownership.


Escheat is an important term in business/finance as it refers to the process where unclaimed or abandoned property reverts to the state after a dormancy period. This includes uncashed payroll checks, inactive savings accounts, customer overpayments, or left behind safe deposit box contents. Escheat laws protect the rights of owners of abandoned property and provide a legal framework for businesses to follow. This process helps to ensure businesses are not unjustly enriched by the retention of unclaimed property and also ensures the public interest is upheld by assigning the state as the ultimate ownership custodian. Understanding escheat laws is important as they vary by jurisdiction and often require businesses to report, remit, and comply, thus reducing liability and ensuring funds reach their rightful owner.


The core purpose of escheat is a legal process through which assets that have remained dormant or abandoned are transferred to the government. This helps avoid the property or assets from remaining unclaimed. The escheat process ensures assets are responsibly managed until their rightful owners can be located, or indefinitely if the owners can’t be found. For instance, if an individual passes away without a will and without any heirs, or if a property has been abandoned, those items typically escheat to the state.Escheat is also frequently used in many business operations to help manage unclaimed property. Take, for instance, a retail store with unredeemed gift cards. After a certain period, the value of these unused cards is considered unclaimed property and may need to be escheated to the state. Likewise, in financial institutions, dormant bank accounts, uncashed checks, stocks, dividends, or even insurance payouts that remain unclaimed also can be escheated to the state. Essentially, escheatment acts as a safeguard for assets, preventing them from languishing unclaimed.


1. Unclaimed Bank Accounts: After a certain period determined by state law, if a bank account remains inactive or the owner does not contact the bank, the balance in the account is treated as unclaimed property and is subject to escheat, meaning the funds will be handed over to the state’s unclaimed property division.2. Stock and Dividend Payments: In the finance world, a common example of escheat is with regards to stock shares and dividend payments. If the owner of these assets cannot be located for a certain period, these assets would also escheat to the state. 3. Death Without a Will or Heirs: If a person dies without a legal will or identifiable heirs, their property, including real estate, personal property, and financial assets, might escheat to the state. This essentially means that the state becomes the owner of these assets.

Frequently Asked Questions(FAQ)

What does Escheat mean?

Escheat is a legal term describing the situation where property, assets, or money is transferred to the state when an individual dies without legal heirs or when a business becomes inactive without a known rightful owner.

Who can claim escheated property?

Generally, relatives or creditors of the deceased or inactive company can claim the escheated property. The process involves filing a claim and providing sufficient evidence to prove the right to the property.

What types of assets can escheat to the state?

Almost any type of tangible or intangible asset can escheat, including money, real estate, stocks, bonds, and other possessions, as long as there are no rightful claimants.

How long after the death or inactivity does the escheat process begin?

The duration varies by region and jurisdictions, but typically, the escheat process begins after three to five years of inactivity or unclaimed status.

Can escheated property be reclaimed?

Yes, escheated property can usually be reclaimed by rightful heirs or creditors. The reclamation process differs by jurisdiction, but it typically involves documentation proving the claimant’s right to the property.

Does escheat apply only to individuals?

No, escheat also applies to businesses. If a business becomes inactive or is officially dissolved without a clear right of ownership to its assets, those assets may escheat to the state.

Is there a process to avoid escheat?

Yes, typically by ensuring assets are claimed or that clear ownership details are defined in legal documentation. Estate planning can help to avoid assets being escheated upon death.

Do all jurisdictions have escheat laws?

Yes, most jurisdictions have some form of escheat laws. However, the specifics of these laws and how they are applied can vary.

Related Finance Terms

  • Unclaimed Property
  • Probate
  • State Treasury
  • Estate Law
  • Abandoned Assets

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