Escheatment
The legal process of turning abandoned or unclaimed property over to a state, which holds it for the owner until it is claimed.
Also called: escheat, escheat law, abandoned property law
The legal process of turning abandoned or unclaimed property over to a state, which holds it for the owner until it is claimed.
What it means
Escheatment, or escheat, is the process by which a business turns unclaimed property over to the state after the dormancy period passes. The business, called the holder, reports the property and sends it to the state, often after trying to reach the owner by mail. Under modern unclaimed property laws, the state generally holds the money as custodian, not as its owner, so you can still claim it later.
The word has an older meaning. In traditional law, escheat is the passing of land to the state when a person dies with no will and no heirs. Unclaimed property laws borrowed the term, which is why you may see it in bank and employer notices.
Which state gets the money follows rules from a 1965 Supreme Court decision, Texas v. New Jersey. In general, the state of the owner's last known address on the holder's records may take it. If there is no address, or that state has no law that applies, the holder's state of incorporation may take it. That lasts until another state proves a better claim.
What it means for you
You will most often meet escheatment as a letter saying a company will send your balance to the state if you do not respond. If you get one, contact the company and confirm your account, because owner contact generally restarts the dormancy clock. If the money already went to the state, you can claim it there, and escheat does not mean it is lost. The state holding your money is usually the one for your last known address, so search every state where you have lived. Be cautious about paying anyone who offers to recover escheated funds. Official searches and claims cost nothing.
Example
Say a hypothetical credit union holds a small savings balance that you have not touched in years. Its letters keep coming back from your old address. After the dormancy period and its required notices, the credit union reports the balance and sends it to the state where your last known address was. You later search that state's official site, find your name, and claim the funds. The state returns your money, because it held it as custodian rather than taking ownership.
FAQ
Escheat is the legal transfer of property to the state. In older law it meant land passing to the state when someone died with no will and no heirs. Today it usually refers to unclaimed property such as dormant bank accounts and uncashed checks that a business turns over to the state.
Yes. The state generally holds unclaimed property as custodian, and you or your heirs can claim it through the state's official program at no cost. Search the state that holds the money, usually the one for your last known address.
Related terms
- Texas v. New Jersey, 379 U.S. 674 (1965) (Cornell LII)
- New York State Comptroller: holder reporting and custody of unclaimed funds
- NAUPA: Claiming vs. reporting unclaimed property
- Cornell LII Wex: Escheat
Updated Oct 18, 2026. Plain-English definitions for general information — not legal or tax advice.