What Is Escheatment?

You might not know that unclaimed property is governed by state laws. For example, if a bank account is inactive for an extended period of time, your state can claim the funds in your account in a process known as escheatment. What is escheatment?

Definition of escheatment

Escheatment is the process of a financial institution handing over unclaimed property to its state. That includes bank accounts, assets, or any other property unclaimed for an extended period of time. And, if a person dies without leaving a beneficiary to their property, it becomes escheated, or claimed by the state.

Escheated accounts are known as dormant, abandoned, or unclaimed. Dormant, abandoned, and unclaimed accounts are ones that have no activity for a specific period of time. States can escheat the accounts.

Financial institutions, like banks, are responsible for reporting unclaimed property to the state after a certain amount of time. Each state has a different time frame before the state escheats property.

If you had property that has been escheated, you can reclaim your property by applying to your state.

What does the state do with escheated property?

After the escheatment process, the state has the right to the escheated property. Many times, the state sells the securities and uses the money toward state funds.

States give a second chance to people whose property has been escheated. The original property owner applies, and if their claim is accepted by the state, the state sends them a cash equivalent. The cash equivalent equals the property value at the time it was escheated.

However, some states have a time limit on when you can claim property after it has been escheated. Make sure you stay current on your state’s laws.

Escheated checks

When a check expires without having been claimed, it is an escheated check. Some examples of escheated checks include payroll and traveler’s checks.

If you send a check to a vendor, employee, or customer, there’s a chance they might not receive or remember it. As a result, they do not cash the check. The check then becomes escheated and the state gets the funds.

The payee who did not cash their check before it became escheated can apply to their state to claim it.

Relax—run payroll in just 3 easy steps with Patriot!
  • Easy onboarding with our setup wizard
  • Free USA-based support
  • Free direct deposit
Patriot Software logo

Escheatment laws by state

Different states have rules for when a state can escheat an account or asset.

The table below lists escheatment laws by state for bank accounts, checks/drafts, and wages/salaries.

Time Before Escheatment: Different Accounts by State

StateBank AccountChecks/DraftsWages/Salaries
Alabama3 years*1 year1 year
Alaska5 years5 years1 year
Arizona3 years3 years1 year
Arkansas3 years3 years1 year
California3 years3 years1 year
Colorado5 years5 years*1 year
Connecticut3 years3 years*1 year
Delaware5 years5 years5 years
District of Columbia3 years*3 years1 year
Florida5 years5 years1 year
Georgia5 years5 years1 year
Hawaii5 years5 years1 year
Idaho5 years5 years1 year
Illinois5 years5 years1 year
Indiana3 years3 years1 year
Iowa3 years3 years1 year
Kansas5 years2 years1 year
Kentucky3 years3 years3 years
Louisiana5 years5 years1 year
Maine3 years3 years1 year
Maryland3 years3 years3 years
Massachusetts3 years3 years3 years
Michigan3 years3 years1 year
Minnesota3 years3 years1 year
Mississippi5 years5 yearsNot specified
Missouri5 years5 yearsNot specified
Montana5 years5 years1 year
Nebraska5 years5 years1 year
Nevada3 years3 years1 year
New Hampshire5 years5 years1 year
New Jersey3 years3 years1 year
New Mexico5 years5 years1 year
New York3 years3 years3 years*
North Carolina5 years7 years/5 years*1 year
North Dakota5 years2 years*2 years
Ohio5 years5 years3 years
Oklahoma5 years5 years1 year
Oregon3 years3 years3 years
Pennsylvania3 years3 years2 years
Rhode Island3 years*3 years1 year
South Carolina5 years5 years1 year
South Dakota3 years3 years1 year
Tennessee5 years5 years1 year
Texas5 years3 years1 year
Utah3 years3 years1 year
Vermont3 years3 years1 year
Virginia5 years5 years1 year
Washington3 years3 years1 year
West Virginia5 years*5 years1 year
Wisconsin5 years5 years1 year
Wyoming5 years5 years1 year

* Indicates that there are more in-depth rules from the state

For more terms and conditions, as well as escheatment laws for different accounts and assets, contact your state department of unclaimed property.

If your employee doesn’t cash a payroll check in time, it could become escheated. Patriot’s online payroll software stores your payroll history for you so you can keep track of each pay period. Try it for free today!

This article has been updated from its original publication date of December 16, 2016.

This is not intended as legal advice; for more information, please click here.

Stay up to date on the latest payroll tips and training

You may also be interested in:

Most popular blog categories