Escheat is how escheat works in plain terms: when a financial asset sits untouched long enough that its holder concludes the owner has abandoned it, the holder turns the asset over to the state, which takes custody until someone claims it. Every state runs an unclaimed property program, and together they hold tens of billions of dollars in forgotten bank balances, uncashed checks, insurance payouts, and other assets. The critical point is that escheat transfers custody, not ownership. Your rights to the property survive the transfer, and in most states there is no statute of limitations on filing a claim, so you or your heirs can recover the money years or decades later.
What Kinds of Property Get Escheated
The most common escheated assets are dormant checking and savings accounts. The process also reaches uncashed payroll checks, stock dividends, insurance proceeds, utility deposits, unredeemed gift certificates, and credit balances left on closed accounts. If a company owes you money and cannot find you, that money eventually moves to the state.
Tangible property gets swept in too, most notably the contents of abandoned safe deposit boxes. States typically auction those items at public sale and credit the cash proceeds to the owner’s account in the unclaimed property fund. When you later claim, you receive the proceeds rather than the original items.
The Dormancy Clock and What Resets It
Before any property can be escheated, it has to sit untouched for a set dormancy period. For standard bank accounts, that period is generally three to five years, depending on the state.1HelpWithMyBank.gov. When Is a Deposit Account Considered Abandoned or Unclaimed Payroll checks and utility refunds often carry shorter dormancy periods of one to three years because they are tied to specific, time-sensitive transactions. Traveler’s checks and money orders can have windows as long as 15 years under the Revised Uniform Unclaimed Property Act, a model law that most states use as their starting template.
The clock resets whenever you show you are still aware of the account. Making a deposit, withdrawing funds, logging into an online portal, or contacting the institution by phone or letter all count as owner-initiated activity.1HelpWithMyBank.gov. When Is a Deposit Account Considered Abandoned or Unclaimed The bank posting interest or mailing you a statement does not count. If you have accounts you rarely touch, logging in once a year or making a small transaction is enough to keep them off the dormancy radar.
Retirement Accounts Follow Different Rules
IRAs pose a problem for escheat laws because they are designed to sit untouched for decades. A 30-year-old who opens a traditional IRA and does not withdraw anything for 40 years is not abandoning the account. States recognize this, so the dormancy clock for IRAs typically does not start running until the owner reaches the required minimum distribution age, which is currently 73.2Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs) From that point, the account holder is expected to be taking annual withdrawals, and a failure to do so, or any lost contact with the custodian, can start the countdown. Dormancy periods for IRAs typically range from two to seven years after the trigger event. Some states also start the clock upon the owner’s death or upon signs of lost contact, like returned mail.
The tax consequences here are harsh. Under IRS Revenue Ruling 2018-17, the transfer of IRA funds to a state unclaimed property program is treated as a taxable distribution. The financial institution must report it on Form 1099-R, and federal income tax withholding applies. The state cannot waive withholding on the owner’s behalf.3Internal Revenue Service. Extension of Transition Relief Under Rev. Rul. 2018-17 You could owe income tax on an IRA balance you never actually received, and if you are under 59½, an early withdrawal penalty may apply on top of it. Keeping your address current with your IRA custodian and responding to any correspondence is the simplest way to prevent this.
Which State Ends Up With Your Property
When a company holds unclaimed property, the question of which state gets to take custody is not always obvious. The U.S. Supreme Court settled the priority rules in Texas v. New Jersey (1965). The first right belongs to the state where the owner’s last known address is located, as shown on the holder’s books. If the holder has no address on file, or if that state’s laws do not provide for escheat of that type of property, the state where the holding company is incorporated gets custody instead.4Justia Law. Texas v. New Jersey, 379 U.S. 674 (1965)
This matters because it tells you where to look. If you moved from Ohio to Florida ten years ago but your old brokerage still had your Ohio address on file, the property likely went to Ohio, not Florida. When searching, check every state where you have lived or done business.
The Notice You Should Receive First
Banks, insurers, employers, and other holders cannot quietly hand your assets to the state. Before reporting property as abandoned, they must conduct due diligence to locate you. Under the model Revised Uniform Unclaimed Property Act, that means sending written notice by first-class mail to your last known address, no fewer than 60 days and no more than 180 days before filing the escheat report, for property valued at $50 or more. Many states also require electronic notice if you have previously consented to receive email from the holder.
The notice must tell you that your property is at risk of being turned over to the state and explain what you can do to prevent it, usually by contacting the institution or making a transaction. This is where many people lose property they did not need to lose. The letter goes to whatever address the holder has on file. If you moved without updating an old bank, brokerage, or former employer, someone else opens your mail. Keeping your contact information current with every institution that holds your money is the single most effective way to prevent escheatment.
How to Search for Property Already Escheated
The free starting point is MissingMoney.com, a national database managed by the National Association of Unclaimed Property Administrators. Most states participate, and a single search checks multiple state databases at once. You will need your name and any former names, along with past addresses to narrow results. Searching is always free, and no legitimate search service will charge you for it.5National Association of Unclaimed Property Administrators. National Association of Unclaimed Property Administrators
Not all states are fully integrated with the national database, so it is worth also checking the unclaimed property website for each state where you have lived, worked, or held accounts. Each state runs its own program, usually through the treasurer’s or comptroller’s office.
If the property belonged to a deceased relative, you can search under their name. Claiming on behalf of a deceased owner typically requires proof of your relationship (a birth certificate, marriage certificate, or court appointment as executor) and a copy of the death certificate.
Filing the Claim
Once you find property listed in your name, the process is straightforward for most accounts. You complete a claim form through the state’s portal or by mail, submit proof of identity such as a driver’s license or passport, and provide evidence linking you to the property, such as your Social Security number or a document showing your former address.
Processing times vary. Simple cash claims can resolve in 30 to 60 days. Claims involving estates, trusts, or high-value property may take 90 days or longer. Some states require notarization when the property exceeds a certain dollar threshold, generally from a few hundred to a thousand dollars. Upon approval, you receive the full reported value by check or electronic transfer.
States do reject claims, usually because the documentation does not sufficiently prove ownership or identity. If yours is denied, you typically have the right to an informal appeal within a set window, often 30 days, and most states also allow you to take the matter to court. In many cases, the issue is a missing document or a name mismatch rather than a fundamental problem, so contacting the office directly is usually more productive than jumping straight to a formal appeal.
Taxes on Recovered Property
Getting your money back can create a tax bill depending on what type of property it is. For ordinary bank accounts, the principal you deposited is not taxable when you get it back since it was already your money. Any interest that accrued, whether before or after escheatment, is generally taxable as ordinary income in the year you recover it.
Retirement accounts are the most painful category. Because the IRS treats the escheatment of IRA funds as a taxable distribution, the tax was owed in the year the property was escheated. If you did not report it then, you may owe back taxes and penalties.3Internal Revenue Service. Extension of Transition Relief Under Rev. Rul. 2018-17 For uncashed paychecks or other wage-related property, income tax was likely already withheld by your employer when the check was issued, so recovering the funds usually does not create additional liability. For large or complex assets, a tax professional is worth the cost.
Locator Services and Outright Scams
An industry of heir finders and asset locators exists to track down people with unclaimed property and, for a fee, help them recover it. These services are legal in most states, but they come with caveats. Many states cap the fee at around 10 percent of the property’s value, and some prohibit locators from contacting you until the property has been held by the state for a waiting period, often one to two years. Any legitimate locator agreement should be in writing, signed by you, and should disclose the nature and value of the property before you agree to pay.
The more pressing concern is outright fraud. The FTC warns that scammers commonly impersonate government agencies and contact people by phone, text, or mail claiming they have found unclaimed funds in the person’s name. Red flags include requests for upfront processing fees, pressure to act immediately, and links in unsolicited text messages. Legitimate state programs will never text you, call demanding payment, or charge a fee to search for or return your property.6Federal Trade Commission. How to Handle Unexpected Calls About Unclaimed Funds Before paying anyone, search for the property yourself on MissingMoney.com or your state’s official website. The process is designed for individuals to handle without professional help, and the vast majority of claims do not require a third party.