Escheat is defined as acquisition of the property by the state government from the estate of a diseased person. This can occur at the time, when there is no relative, no survivors of the diseased person, to whom the property will be transformed. Lack of any kind of will of the person can result in acquisition of the property by the state government. However, escheats are quite unusual as there is no evidence of the fact that a person has no will no survivor. The concept of escheat has been taken from feudalism which state the fact that the superior feudal lords are bestowed with the power to inherit a certain property which is left without any owner. Different states have implemented regulatory framework in order to govern the escheat. The very concept of escheat deals with the property, which has no legal owner.
The entire process of escheat is generally being maintained on revocable basis that state the fact that ownership of the estate will be reverted to the lawful wing. It imperative for the government to seek lawful and relevant conditions at the time of carrying out the process of escheat. Escheat is basically a common law of doctrine, which deals with lawful transformation of financial asset and property of the person, who had died without leaving any survivor. The states need effective financial institution and brokerage firms in order to report at the time, when the state government has considered a personal property as abandoned or unclaimed after a certain period of time. It is important to note here that the time period after which a property can be considered as abandoned is five years. Before a brokerage account can be considered abandoned or unclaimed, it is imperative for the firms to put consistent effort in terms of locating the owner of the account. If the firms become unable to do, the state government will consider the account as inactive. It is imperative for the firms to keep the state government informed about the fact that the where the account is held. This is the way, through which the state can claim the account.
The process, through which the state government can consider the account as their own property is defined as “escheatment,". With the assistance of this process, the church becomes the owner of the property. Being one of the major parts of the escheatment process, the state government has the power of holding the account as bookkeeping entry. Now, this activity of the state government can lead the original owner of the property to claim it. Then, the state government will become highly inclined towards selling the securities of the escheated accounts and consider the account as the state fund. At the time of making the valid requires by the original holder of the account, the state generally provides the cash in accordance with the account to the holder. Any kind of interest will not be applicable with the amount of cash, being paid by the state government to the original owner of the account.
At the time of executing the escheatment process, an account entry is being created in a legal document, with the assistance of which the owner of the property can make the claim. After the state becomes the owner of the abandoned property, the entire asset from the property goes to the state fund. It is imperative for the government to send relevant personal information in order to assess the ownership of the property. After completing the process of verifying the information, he or she should provide a claim to the owner which they should fill and submit to the state.
Escheatment process can also be carried out for the financial bank account. A bank account or other financial assets are being considered as abandoned when it is left for more than five years. It is imperative for the banks or other financial institutions to take proper care towards locating the account holder, irrespective of the time, from which it is left abandoned. The organizations such as National Association of Unclaimed Property can be accessed by the bank or other financial institutions in order to locate the original owner of property. This organization can allow the individual people to keep their property under a certain name. Escheat of Unclaimed Financial Assets can happen at the time, when a bank account is dormant and there is no money left in the account. In such situation, the state has the power to enjoy the ownership of the funds by considering them as the escheated funds. However, before transferring the money, it is imperative for the bank to follow relevant regulatory framework, which focuses on the fact that it is the prime responsibility of the bank to put all the possible effort in order to contact the owner of the account. If the account holder does not come up even after several communications, the bank can escheat the funds.
The regulatory framework of each of the state determines the amount of time, by which the entire process of escheatment is being carried out. In addition, the state law can also determine the factors such as required number of notices, the process followed by the bank to deliver the notice, which should be considered at the time of transferring the property. Payroll checks, dormant stocks, checking and savings accounts and funds from court proceedings are some of the major types unclaimed properties, which the state government can escheat and enjoy its ownership. The period of time, after which a property can be considered as abandoned varies from one state to the other. Some of the reasons for which a property can be considered as unclaimed are as follows:
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