What is Escheatment?
Escheatment is the process through which unclaimed assets are turned over to the state. Every year, many bank accounts remain unclaimed and properties are left abandoned. After a period of time, the assets are turned over to the state.
Once the property has been taken over by the government, the owner can still access it by filing a claim. The property can be either tangible and intangible, with intangible assets being harder to reclaim. Escheatment laws can be general and vary by state. Since each person has their own rights to their property, it is up to the state to decide what and when abandoned property is turned over to the state.
History of Escheatment
The process of escheatment dates back to the Roman Empire, although research has shown that the escheat law might have been a part of the English feudal system. During that time, when someone died and there were no heirs to the property of the deceased, it would be given to the Sovereign. Today, the states and the government take the place of the Sovereign.
The Escheatment Process
Under government regulations, all financial institutions need to report any property that’s been abandoned or left unclaimed after a period of usually five years. But before they do it, the firm must make an active effort to locate the owner of the abandoned property. However, if they are unable to find the owner and the property is left unclaimed for a period of time specified by the state, it is the business’s duty to report it.
During the escheatment process, an accounting entry is created in the books, against which the owner of the property may make a claim. Once the abandoned property becomes state-owned, the property is sold and the proceeds become state funds. If the owner then reclaims the property, they are usually given a cash equivalent of what the property was worth at the time it was claimed by the state.
The state requires a person to send their personal information to verify ownership of the property. Once their information is verified, the state will provide the owner with a claim form that they need to fill out and submit to the state.
Escheatment Laws for Abandoned Bank Accounts
Owners of bank accounts and other financial assets will lose their rights to the property if it is left abandoned for five to seven years. Regardless of how long the property has remained unclaimed, the business or financial institution must exert diligent efforts in tracking down the owner of the property before starting the escheatment process.
There are many businesses that banks and businesses can use to track down the property owners, such as the National Association of Unclaimed Property, which enables individuals to look up a property under their names. Websites that deal with unclaimed property are usually affiliated with the government and abide by the escheatment laws.
Escheatment Laws for Apartments and Storage Units
When vacating an apartment, there is a good chance that some property can be left behind. The landlord of the property must try and make arrangements to return the goods to the owner. During this time, the items can be stored, and the former tenant is charged for the storage space.
If the owner fails to reclaim the property after a specific period of time, the owner will then turn over the property to the police department, which will try to locate the owner as well. If the owner of the goods remains unfound, the landlord is given full ownership of the property.
Timeframe for Implementation of Escheatment Laws
The period of time after which the escheatment process is initiated can vary by state and the type of property that is abandoned. For smaller items that are left behind in an apartment or a storage facility, the amount of time given to reclaim the items is two to three weeks and an additional period when the goods are handed over to the police who try to locate the owner. For financial assets, the amount of time provided is longer, as the escheatment process is more complex.
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