Escheat
What happens when property nobody has claimed is handed to the state. In most cases the state holds it as custodian for the owner rather than taking ownership of it.
What it means
A bank, an insurer or an employer that has held money for long enough without hearing from the owner must report it and hand it over to the state. Most people meet this as unclaimed property.
In most states the state holds it rather than keeps it: the owner, or their heirs, can still claim it, usually with no deadline. The property has changed custodian, not owner.
Escheat in the strict sense is the older and rarer thing the word originally meant: title actually passing to the state, which is why the two are worth telling apart when a statute uses the term.
Why it matters
A great deal of money reaches state custody from exactly the situations Sahvelo covers — an old life policy, a final paycheck, a dormant account, a utility deposit.
Searching the state list is free. Anyone who offers to find it for a share of it is offering to do something you can do yourself in ten minutes, and what they may charge is capped by statute in most states.
When you are likely to meet it
- When a letter arrives from somebody offering to recover money you did not know about.
- When an institution says money was 'turned over to the state'.
- When an estate is being closed and old accounts have gone quiet.
How this varies by state
How long a holder waits before reporting, and what a recovery firm may charge, differ sharply — the fee cap runs from five per cent in Washington to thirty-five in New Jersey's earliest tier, and Michigan sets none at all.
Related terms
Official sources
The authority this page describes, at the agency that publishes it. Sahvelo does not restate a rule from a secondary source.