The term “escheat” is when a person’s property reverts back to the government after a specific event (typically after a person’s death). Typically, escheat or escheatment laws allow the government to claim title to a certain piece of property where there are no other people who have a right to inherit or claim the property. 

In the United States, escheated property usually passes to the state governments. State laws may vary with regards to the exact details of this process. 

What Does the Government Do with Escheated Property?

Generally, state governments may provide that escheated property will go to some designated political subdivision of the state. Alternatively, they can be disposed of in some other manner. The exact usage or designation of the property may depend on the region and the needs at the time. 

For instance, escheat laws are a significant source of revenue for the more rural states. Such laws allow property that would otherwise be unused to be put into active use, often generating additional revenue for local counties or jurisdictions. .

What Kinds of Property are Subject to Escheat?

As the word “escheat” is currently used, all property, real and personal, and all property rights of any nature, can be subject to escheat. In most states, however, abandoned or unclaimed intangible personal property is often subject to custodial taking statutes, rather than true escheat. Any doubts regarding whether property is subject to escheat may be taken up and resolved against the state.

When Does Property Escheat to the Government?

Under escheat laws, the state is entitled to take the property of those who die without leaving anyone eligible to take their property through intestate succession. The existence of heirs does not necessarily prevent the government from taking property by escheat. 

If such heirs are legally incompetent to take property by inheritance under the laws of the state, the situation may be the same as if there were no heirs. In such cases, the property will likely escheat back to the state.

There may be various timetables and deadlines involved when it comes to property escheatment. For instance, in the state of California, any property that becomes abandoned, or for whom no legal owner is found, is classified as “unclaimed property”. If the property remains unclaimed after three years have passed, it will escheat or transfer to the California government. 

In most cases, the state may provide notice of escheat actions, which are published in county newspapers. This sometimes gives a chance for interested parties to respond formally with regard to ownership with the states’ lost property departments. 

In some states, when property escheats to the state, there may be further waiting periods involved. For instance, in California, if property has been subject to escheat to the state for five years, and is never claimed by any legal owner, it is subject to “permanent escheatment” to California. This means that the state of California can then use the property for its own purposes. It can also choose to sell the property, with the sales proceeds being deposited in the state’s general fund. 

How Can Property Become Unclaimed?

As mentioned, one of the reasons why property may be subject to escheat is if it gets classified as “unclaimed”. This can happen in several different ways. One common way is when a person dies and fails to properly address their property in a will document. If the person left no will, or the heirs or beneficiaries can’t be located or identified, then there is a chance the property might go unclaimed. In such a case, the state may take title of the property for its own purposes and usages.

Another situation is where tenants move out of their rental properties and fail to collect security deposits, or when they leave personal property at the address. In such cases, if the deposits or property are unaccounted for after a certain period of time (for instance, 3 years), the assets may escheat to the state. Thus, both real property (land or buildings) and personal property (movable items) can be escheated to the state, depending on local laws.

How Can I Ensure that Property I Own Does Not Escheat to the State?

As mentioned, one of the most common reasons that property becomes unclaimed and escheats to the state is that the property owner failed to make proper preparations in a will document. Thus, having a valid will in place can help ensure that the property is distributed to the appropriate beneficiaries. This will aid greatly in preventing escheat situations. 

Another option is to consult with a property lawyer or an estate lawyer. A lawyer can provide legal guidance according to the relevant state laws that might affect the property. This is important, as escheat laws can vary greatly from area to area. 

Should I Hire a Lawyer if I Have Legal Issues Involving Escheat Laws?

The laws governing escheatment can be complex, and as mentioned, can vary widely by state. Your best option is to hire a property lawyer to help you draft a will naming those who you wish to receive your property once you pass away. 

An attorney skilled in the drafting of wills and trusts will help you to make sure that your property goes to your heirs (or others that you wish to receive it) and not to the government. If any legal disputes arise and a lawsuit becomes necessary, your attorney can also provide representation for such cases.