What is the Escheat of Unclaimed Property?
Like most states, California has laws that permit the state to claim – or “escheat” – unclaimed property that is deemed abandoned. This commonly occurs when a person passes away without estate planning documents, and no one claims the property as part of the estate.
There are specific rules regarding how businesses must handle unclaimed property, when the state can deem the property to be abandoned, and how rightful property owners might reclaim their seized property.
Identifying Unclaimed Property
Businesses in California, including insurance companies, banks, and other property custodians, must file annual reports to the state regarding unclaimed property. These businesses must identify when certain property has remained dormant or untouched for a specified period of time in order to classify the property as unclaimed.
Some common types of unclaimed property include:
- Saving accounts
- Checking accounts
- Other securities
- Payroll checks
- Customer overpayments
- Insurance benefits
- Utility deposits
- Safe deposit boxes
The dormancy period for most types of accounts is three years without contact from the property owner. However, this time period can be longer. For example, payroll funds have a dormancy period of one year, and non-bank money orders have a dormancy period of seven years.
Businesses must conduct due diligence and send out notices to try to locate property owners and reconnect them with their dormant property. Once the State Controller’s Office receives a report of unclaimed property, it will also send out notices to owners to reclaim their property.
Escheat of Unclaimed Property
The holders of unclaimed property must file a second report each year regarding property that remains unclaimed, and they must turn the property over to the State of California. The Controller’s Office can audit property holders to ensure they are not wrongfully retaining unclaimed property to sell it for their own benefit.
Companies can only remit unclaimed property to the state if the owner’s last known address was in California and the owner has not opened new accounts during the dormancy period. Businesses that violate the unclaimed property law can face penalties from the state.
If you receive a notice from a property holder that you have unclaimed property, you should get in touch with the business holding the property right away. The same is true if you are the executor of an estate, and some estate property has been left unclaimed.
If the property is subject to escheat and turned over to the state, you will need to go through the unclaimed property fund and file a Claim Affirmation Form. Within about six months, you should receive the property if everything checks out.
Learn More from a Santa Ana Estate Planning Attorney
The best way to avoid the escheat of unclaimed property is to have a comprehensive estate plan in place that has a proper inventory of all of your accounts, funds, insurance policies, and other property. The Law Offices of Roshni T. Desai can assist you, so please call 714.694.1200 or contact us online to discuss your options with a Santa Ana estate planning lawyer.