Escheatment is a procedure in which property which appears to be abandoned reverts to the ownership of the government. The government enters the property into its bookkeeping, and may dispose of it as it pleases. If a claimant to the property later appears and the claim is legitimate, the government provides compensation in accordance with the amount entered at the time of the escheatment.
This process has its roots in English common law, and it started as a way to prevent property from entering a state of legal limbo. If no clear ownership could be established because someone died without a will or because no clear heir could be identified, the property could revert to the ownership of the government. Otherwise, such property would have existed in a state of abandonment, because it could not be transferred or sold. Once the government took control, it could opt to utilize the property or to sell it.
Today, escheatment most commonly occurs when someone dies without a will or when someone appears to neglect a financial account, safe deposit box, or brokerage account. In cases where people die without a will, if family members can establish themselves as heirs, ownership of the person's property reverts to these heirs. If no heirs can be identified, the government receives the property. In situations like abandonment of accounts, the administrator of the account must generally demonstrate that there has been no activity for a set period of time, such as five years, before turning it over to the government in escheatment proceedings.
There are situations in which property with a legitimate owner becomes the property of the government through the escheatment process. There is a requirement to exercise due diligence to find the rightful owner, but sometimes even a thorough search doesn't turn anyone up at the time that the ownership of the property becomes an issue. People who believe that property may have been taken from them by escheatment can file a claim, providing documentation which indicates that the property rightfully belongs to them.
Numerous governments maintain databases which include all available information about property which has reverted to their ownership. People can search the databases for records in their name to see if any records come up. Likewise, these records can be searched if someone is the heir to someone who has died and there is a concern that property belonging to the decedent ended up with the government. For example, if someone died in California but had bank accounts in another state which heirs were not aware of at the time of the death, searching escheatment records might show these accounts and provide information about how to make a claim.