What Does the State Do With Escheated Funds

Escheated funds are assets that have no rightful owner and are turned over to the state. They often arise when an individual dies without a will or has no known heirs. In such cases, the state holds the funds for a period of time, typically five years, to allow any potential claimants to come forward. If no valid claims are made, the state may then use the funds for public purposes, such as education, healthcare, or infrastructure. This process of escheating funds ensures that unclaimed assets are not lost or misappropriated, and instead are used to benefit the public good.

Unclaimed Property Laws

Unclaimed property laws govern what happens to assets that are left unclaimed for an extended period of time. These laws vary from state to state, but they generally follow the same basic principles.

  • Property is considered unclaimed if the owner cannot be located or has not made a claim for it within a specified period of time.
  • The state takes possession of unclaimed property and holds it for safekeeping.
  • The state makes a reasonable effort to locate the owner of the unclaimed property.
  • If the owner cannot be located, the state sells the unclaimed property and uses the proceeds to benefit the public.
StateUnclaimed Property Holding PeriodProcedure for Claiming Unclaimed Property
Alabama5 yearsFile a claim with the Alabama State Treasurer’s Office
California7 yearsFile a claim with the California State Controller’s Office
Florida5 yearsFile a claim with the Florida Department of Financial Services
New York10 yearsFile a claim with the New York State Comptroller’s Office
Texas5 yearsFile a claim with the Texas Comptroller of Public Accounts

Unclaimed property laws are designed to protect the interests of property owners and to ensure that unclaimed property is used for the public good. If you believe that you may have unclaimed property, you should contact the state treasurer’s office or comptroller’s office in the state where you last resided or where the property was located.

Dormant Bank Account Process

When a bank account has been inactive for a prolonged period, the bank may consider it dormant. The specific definition of dormancy varies by state law, but it typically ranges from 3 to 5 years. During this time, the bank will attempt to contact the account holder to verify their identity and activity. If the bank is unable to contact the account holder or if the account remains inactive, the funds may be considered escheated.

Escheatment is a legal process by which abandoned or unclaimed property is turned over to the state. The state will then attempt to locate and notify the rightful owner of the funds. If the owner cannot be found within a specified period (usually 5 to 7 years), the funds will be deposited into the state’s general fund.

The process of escheating dormant bank accounts can vary by state. However, the following steps are generally followed:

  1. The bank identifies a dormant account and attempts to contact the account holder.
  2. If the bank is unable to contact the account holder, the account is reported to the state as dormant.
  3. The state attempts to locate and notify the account holder of the dormant funds.
  4. If the account holder cannot be found, the funds are transferred to the state’s general fund.

It is important to note that not all dormant bank accounts are escheated. If the account holder can be located and provides proof of ownership, the funds will be returned to them. Additionally, some states have laws that allow banks to charge maintenance fees on dormant accounts, which can reduce the amount of funds that are ultimately escheated.

State Escheat Office Functions

State Escheat Offices are responsible for handling unclaimed property, also known as escheated funds. Escheat laws vary by state, but generally, unclaimed property is considered to be money or other assets that have been left dormant for an extended period of time without any activity or contact from the owner.

  • Receive and process reports of unclaimed property from businesses and individuals.
  • Maintain a database of unclaimed property.
  • Run public outreach campaigns to inform people about unclaimed property.
  • Return unclaimed property to its rightful owners or heirs.

If you think you may have unclaimed property, you can search state escheat office databases online or by mail. You can also contact the escheat office directly to inquire.

Escheat Process

1Property is considered abandoned or unclaimed
2Holder reports property to state escheat office
3State escheat office attempts to locate owner
4If owner is not found, property escheats to the state
5State escheat office holds property for a period of time
6If owner claims property within the holding period, property is returned
7If owner does not claim property within the holding period, property becomes property of the state

What Happens to Escheated Funds?

Escheated funds are assets that have been deemed abandoned or unclaimed by their rightful owners. States have specific laws governing the handling of these funds, which vary from state to state.

Proceeds of Escheated Funds

  • Public Funds: Escheated funds may be used to fund public programs, such as education, healthcare, and infrastructure.
  • Unclaimed Property Funds: Some states maintain unclaimed property funds where individuals can claim their abandoned assets.
  • Investment and Earnings: Escheated funds are often invested to generate earnings, which are added to the funds.

How Funds Are Used

States may use escheated funds for a variety of purposes, including:

  1. Funding state programs (e.g., education, healthcare)
  2. Creating unclaimed property funds
  3. Investing and generating earnings

Table of State Escheat Laws

The following table provides a summary of escheat laws in different states:

StateEscheat LawUnclaimed Property FundInvestment Policy
CaliforniaCalifornia Code of Civil Procedure Section 1500California State Controller’s Office, Unclaimed Property DivisionCalifornia Unclaimed Property Act, Investment Policy
New YorkNew York Abandoned Property LawNew York State Comptroller’s Office, Office of Unclaimed FundsNew York Abandoned Property Law, Investment Policy
TexasTexas Property Code Chapters 72 and 74Texas Comptroller of Public Accounts, Unclaimed Property DivisionTexas Property Code, Investment Policy