We have all heard the proverb “cheaters never prosper.” Well, what about escheaters?
This is a term that most people are not familiar with. The term “escheat” derives from the Latin ex-cadere or to “fall-out.” I am really not sure why the Latin definition is important but I thought it fun to include in this blog. The problem with the Latin origin to “fall-out” is that it provides no help to understand the meaning of escheat.
Escheat is a legal doctrine. It is the transfer of a person’s “lost” or “Unclaimed Property” to the state. It is now simply known as “Unclaimed Property.”
Here is how it works. Most businesses have unclaimed property resulting from normal business operations. If you forget to cash a check or a bank account lays dormant, the asset must be transferred to the Michigan Department of Treasury as “Unclaimed Property.” Any asset belonging to a third party that remains unclaimed for a specified period of time is considered “Unclaimed Property “and will escheat.
For example, un-cashed payroll checks must be turned over after one year. Most other types of property must be turned over after three years. However, a government entity must turn over all Unclaimed Property after one year.
In the probate field, there are times that a person that will inherit an estate can not be located. Michigan law provides for the distribution to the Unclaimed Property division rather than an expensive and exhaustive search for that person.
What about the unlikely scenario in which a person dies with assets, no will, and no known family? In this case, the entire estate will escheat to the State.
Michigan’s Uniform Unclaimed Property Act protects the Unclaimed Property and attempts to return it to the rightful owner. The State Treasurer takes custody but never takes ownership of the property. In the event that the owner has died, the goal is return the property to the owners’ heirs. The National Association of Unclaimed Property Administrators estimates that nationally $41.7 billion in unclaimed property is being held for people to claim.
One of the major benefits of the law is that it centralizes the search for lost property. Before the passing of the law, it was quite difficult for persons to find lost property. It is really, really easy now. Just click here and you can search for assets in Michigan. Also, you can do a national search by clicking here.
Many people become aware of the Unclaimed Property by private companies that offer to assist you in collecting it, Often, these companies charge in excess of 25% of the Unclaimed Property. If contacted by one of these companies, The Probate Pro does not recommend hiring them. Why? Once you are aware of the fact that there is Unclaimed Property, simply go get it yourself without paying the huge fees. Recently, the NY Times wrote a terrific article on this subject.
With a clear understanding on how to collect Unclaimed Property you can declare “Escheaters do prosper.”
