An escheat is a situation in which property or other financial holdings revert to the ownership of a government. This reversion of monies or property normally occurs when the owner dies without having a last will and testament in place to provide for the orderly transfer of his or her assets to heirs. When there are no blood relatives that can be awarded ownership of those assets under the terms of local laws, the government becomes the permanent owner of the property and is free to make use of those assets as it sees fit.
There are a number of examples throughout history of how an escheat works. In feudal societies, the holdings of a tenant who passed away and left no heirs behind would revert to the control of the landowner, usually a feudal lord. The lord was then able to make use of the property by reassigning it to another tenant. This same approach could also be utilized if a tenant was found guilty of some grievous offense in a court of law; the lord could claim the assets of the tenant and effectively rid the estate of someone who was now considered undesirable.
In some countries, the concept of the escheat still allows landlords to lay claim to the a tenant’s belongings if that tenant dies and does not leave his or her possessions to one or more heirs. After allowing for a period of time, known as an escheat period, the local courts award the landlord ownership of the belongings, who is then free to sell those items on the open market, or use them in any other way desired.
Today, there are usually some sort of provisions that make it possible for those with a valid claim on the property of the deceased to come forward and plead their case. For example, while an individual may die without leaving a will, and without having a spouse or children to claim the estate, there may be a distant blood relative that would be entitled to the property. For this reason, many governments assume control of assets that are left behind when someone dies intestate, or without a will, and then hold on to the assets for a period of time. If someone can come forward and successfully prove a valid claim to the properties, the government will often relinquish control, after assessing fees for the maintenance and upkeep of the properties in the interim period.
It is important to note that not every country has provisions for some type of escheat period, or cutoff date for claims on the estate to be presented. There are situations where the lack of a last will and testament means automatic reversal of the estate to the appropriate government entity, with no potential for claims to be filed. In any event, the preparation of a will, even when the individual does not have much in the way of material possessions, is extremely important if there is a desire to ensure that specific assets are awarded to specific loved ones.
