If you’ve ever wondered what happens to a bank account, paycheck, or refund that no one touches for years, the answer is often escheatment. It sounds like a legal term (because it is), but the idea behind it is actually pretty straightforward.
Let’s break it down in plain English.
Escheatment, Explained in Everyday Terms
Escheatment is the process where money or property that hasn’t been claimed for a long time is transferred from a bank or company to the state government.
This does not mean the money is gone forever.
The state simply holds it for safekeeping until the rightful owner or their heirs come forward and claim it.
A Simple Example
Imagine you opened a savings account years ago, moved to a new address, and completely forgot about it. If there’s no activity for several years and the bank can’t reach you, the bank is required by law to send that money to the state. That transfer is called escheatment.
You still own the money you just have to claim it from the state instead of the bank.
What Kinds of Money Can Be Escheated?
Escheatment isn’t limited to old bank accounts. Many types of financial assets can end up classified as “unclaimed property,” including:
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Checking and savings accounts
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Uncashed payroll or commission checks
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Refunds or vendor credits
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Utility security deposits
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Stocks, bonds, and brokerage accounts
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Certificates of deposit (CDs)
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Retirement accounts like IRAs
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Life insurance payouts
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Pension benefits
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Royalties from oil, gas, or mineral rights
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State tax refunds
Basically, if money is owed to you and no one can find you for long enough, it may be sent to the state.
Important note: Federal tax refunds are different. They are not turned over to the states, and the IRS only gives you three years to claim them.
How the Escheatment Process Works
Banks and other financial institutions aren’t allowed to keep abandoned money for themselves. If an account shows no activity for a legally defined period and the owner can’t be contacted, the institution must:
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Attempt to notify the owner
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Document the inactivity
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Transfer the funds to the appropriate state agency
Once the state receives the funds, it becomes responsible for holding them and reuniting them with their owner.
How Long Before Money Is Sent to the State?
There’s no single nationwide rule. The time limit depends on:
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Which state you live in
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The type of property involved
In most cases, funds are considered abandoned after one to five years of inactivity.
For example:
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Unpaid wages are often escheated after just one year
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Bank accounts usually take three to five years
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Some checks or drafts may have different timelines
Each state sets its own rules, and those rules can change over time. That’s why the official unclaimed property website for your state is always the best source of information.
Can Banks Charge Fees Before Escheatment?
Yes, sometimes they can.
Before turning funds over to the state, banks may deduct:
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Monthly maintenance fees
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Dormant or inactive account fees
If the balance is small, these fees can slowly reduce the account over time. Some banks also apply a one-time escheat-related processing fee before transferring the funds.
This is one reason it’s smart to keep old accounts active or close them properly.
How to Find and Claim Escheated Money
Claiming unclaimed money is usually easier than people expect.
Step 1: Search National Databases
Start with trusted, free websites like:
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Unclaimed.org
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MissingMoney.com
These sites connect you to official state databases where you can search by name.
You can also search online for:
“unclaimed property” + your state
Step 2: File a Claim
If you find money that belongs to you, the state will ask you to prove your identity. This may involve:
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Filling out an online claim form
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Providing a copy of your ID
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Submitting documents that link you to the address or account
Some states process claims entirely online, while others may require mailed forms.
The Bottom Line
Escheatment exists to protect consumers not to take their money away.
If funds are forgotten or left untouched for years, the state steps in to hold them safely until the rightful owner claims them. Millions of Americans have unclaimed money waiting, and checking for it costs nothing but a few minutes of your time.
A quick search today could mean an unexpected check in the mail tomorrow.
