DEFINITION
Escheatment is when money in an account appears to be abandoned after a certain time period. The financial institution holding the dormant deposit must then turn the money over to the government. Original owners can still claim the money, as long as they have a valid claim.
The Key Takeaways
- Escheatment refers to the process of transferring unclaimed money from accounts at a bank or another financial institution to the government.
- The time period before funds are considered to be abandoned depends on the type of property, the state in which it is located and its condition. However, it usually ranges from one to five years.
- You will need to complete the appropriate forms and follow the procedures established by your state in order to reclaim the funds.
Definition and example of Escheatment
If money appears to have been abandoned or is lying dormant on a deposit account, the bank that deposited it or any other organization with whom the money was deposited may not be allowed to keep the money for themselves. They’re required to return it to the state after a certain period. It’s called “escheatment.” The owner can still claim the money after it has been handed over to the government for safekeeping.
Not only will money from deposit accounts be escheated. Money can be escheated if you forget to cash your check. If you fail to claim your salary, the money can be escheated.
How Escheatment Works
The state may legally take possession of personal property that has not been claimed by the owner and is held by a bank or other firm. The state must document the escheatment in a certain way and give the owner a chance to claim the property.
These are the types of property which can be left unclaimed, and will eventually be escheated.
- Checking your account
- Savings Accounts
- Payroll and commission checks
- Vendor credits
- Utility Deposits
- Stocks, bonds and mutual funds, as well as brokerage accounts
- CDs
- IRAs
- Proceeds from Life Insurance
- Annuity Contracts
- Mineral royalties on oil and gas
- State tax refunds
- Pension benefits2
Note:
The state will not receive federal tax refunds. You only have three years in which to claim your federal tax refund. 3
When are the funds transferred to the state?
The state determines the amount of time before the account is turned over. Each state has its own requirements and time periods for escheatment. It also depends on what type of money is being escheated. Different periods may apply to bank accounts, wages, and checks.
Note that laws can change and that each state is the authority on escheatment. The chart below, for example, shows the state, and the time period after which the money will be turned over to the government by the bank or other payor.
| State | Account | Checks/Drafts | Wages/Salaries |
| Alabama | 3 years* | Three years old | One year |
| Alaska | 5 Years | 5 Years | One year |
| Arizona | Three years old | Three years old | One year |
| Arkansas | Three years old | Three years old | One year |
| California | Three years old | Three years old | One year |
| Colorado | 5 Years | 5 years* | One year |
| Connecticut | Three years old | 3 years* | One year |
| Delaware | 5 Years | 5 Years | 5 Years |
| D.C. | 3 years* | Three years old | One year |
| Florida | 5 Years | 5 Years | One year |
| Georgia | 5 Years | 5 Years | One year |
| Hawaii | 5 Years | 5 Years | One year |
| Idaho | 5 Years | 5 Years | One year |
| Illinois | Three years old | Three years old | One year |
| Indiana | Three years old | Three years old | One year |
| Iowa | Three years old | Three years old | One year |
| Kansas | 5 Years | 5 Years | One year |
| Kentucky | Three years old | Three years old | One year |
| Louisiana | 5 Years | 5 Years | One year |
| Maine | Three years old | Three years old | One year |
| Maryland | Three years old | Three years old | Three years old |
| Massachusetts | Three years old | Three years old | Three years old |
| Michigan | Three years old | Three years old | One year |
| Minnesota | Three years old | Three years old | One year |
| Mississippi | 5 Years | 5 Years | 5 Years |
| Missouri | 5 Years | 5 Years | Three years old |
| Montana | 5 Years | 5 Years | One year |
| Nebraska | 5 Years | 5 Years | One year |
| Nevada | Three years old | Three years old | One year |
| New Hampshire | 5 Years | 5 Years | One year |
| New Jersey | Three years old | Three years old | One year |
| New Mexico | 5 Years | 5 Years | One year |
| New York | Three years old | Three years old | One year |
| North Carolina | 5 Years | 5 or 7 Years* | One year |
| North Dakota | 5 Years | Two years old | Two years old |
| Ohio | 5 Years | 5 Years | One year |
| Oklahoma | 5 Years | 5 Years | One year |
| Oregon | Three years old | Three years old | Three years old |
| Pennsylvania | Three years old | Three years old | Two years old |
| Rhode Island | Three years old | Three years old | One year |
| South Carolina | 5 Years | 5 Years | One year |
| South Dakota | Three years old | Three years old | One year |
| Tennessee | Three years old | Three years old | One year |
| Texas | Three years old | Three years old | One year |
| Utah | Three years old | Three years old | One year |
| Vermont | Three years old | Three years old | One year |
| Virginia | 5 Years | 5 Years | One year |
| Washington | Three years old | Three years old | One year |
| West Virginia | 5 or 7 Years* | 5 Years | One year |
| Wisconsin | 5 Years | 5 Years | One year |
| Wyoming | 5 Years | 5 Years | One year |
Consult your state laws to determine if there are any additional requirements.
The Fees that may be Charged
Before they hand over the money to the state, banks charge fees. Some banks charge monthly service charges, as you are probably used to with your checking account. However, many charge a lower fee if they find that the account has been dormant, inactive or the balance is low.
Note:
Some banks charge an escheat or restitution fee before money is sent to the government.
Conditions for Reclaiming Escheated Funds
Search a public database such as MissingMoney.com or Unclaimed.org . You can use these sites to link to unclaimed funds sites in each state. From there, you can search to see if you are eligible to claim any money. You can also search “unclaimed property [your state]”.
You will need to complete a claim process if your property has been turned over to state. This will verify that you are entitled to receive the money. Some claim forms are required, others allow you to submit your claim online and still others require documents or identification.
