What Is Escheat and How Can Gentreo Help You Avoid It?

When thinking about estate planning, many people focus on ensuring their assets are distributed according to their wishes. However, a lesser-known concept that can significantly impact the fate of unclaimed or abandoned assets is escheat. If you haven’t planned adequately, your assets could end up going to the state under escheat laws, leaving your loved ones without access to your estate.

In this blog, we’ll explore what escheat is, how it works, and how estate planning with Gentreo can help you avoid losing your assets to the state.

What Is Escheat?

Escheat is a legal process that allows the government to claim ownership of assets that have been left unclaimed for a certain period. Typically, escheat applies to financial accounts, real estate, and personal property when the rightful owner has died without an estate plan or heirs to inherit the assets. Every state in the U.S. has escheat laws, and while the specifics vary from state to state, the general principle remains the same: unclaimed assets eventually revert to state ownership.

Escheat laws are in place to prevent unclaimed property from remaining in limbo indefinitely, as well as to give the state a means of managing unclaimed assets responsibly. While these laws serve a practical purpose, they can also create unintended consequences for individuals who don’t have an estate plan or fail to update their documents over time.

How Does Escheat Work?

Escheat typically applies in two primary situations:

1. When There Is No Will or Heirs: If someone passes away without a valid will (intestate) and no heirs can be found, their assets are subject to escheat. The state attempts to locate family members, but if none can be identified, the assets become state property.
2. When Property Is Unclaimed: Even if you are alive, property can be subject to escheat if it is considered abandoned or unclaimed. This can include things like dormant bank accounts, uncashed checks, or forgotten insurance policies. If an asset is left untouched for a certain period (known as a dormancy period), it may be deemed unclaimed, and the state can take possession of it.

Each state has its own regulations concerning the dormancy period and escheat process, but the general rule is that after a certain amount of time—often five to seven years—the state gains control over unclaimed property.

Common Assets That Can Be Subject to Escheat

Here are some types of assets that could be subject to escheat if left unclaimed:

• Bank accounts: Dormant accounts or safety deposit boxes are vulnerable to escheat if they are inactive for an extended period.
• Retirement accounts: Forgotten 401(k) or IRA accounts from previous employers can also be escheated.
• Uncashed checks: Payments such as payroll checks, dividends, or tax refunds that aren’t cashed could be handed over to the state.
• Life insurance benefits: If beneficiaries don’t claim life insurance benefits, these funds could be at risk.
• Real estate: If no one claims ownership of a property and the title holder passes away without heirs, the property may escheat to the state.

How to Prevent Your Assets from Being Escheated

The key to avoiding escheat is proactive estate planning. Here are steps you can take to ensure that your assets remain in the hands of your loved ones and not the state:

1. Create an Estate Plan: Establishing a will or trust is the most effective way to avoid escheat. By documenting your wishes, you ensure your assets are distributed to the people you choose rather than being left unclaimed and eventually going to the state.
2. Keep Your Records Updated: It’s essential to keep your estate planning documents, such as wills, trusts, and beneficiary designations, up to date. This is especially important when you experience major life changes, like marriage, the birth of a child, or a divorce.
3. Monitor Accounts Regularly: Ensure that financial accounts, insurance policies, and other assets remain active. Update your contact information with financial institutions and monitor the activity of accounts regularly.
4. Share Information with Loved Ones: Make sure that your heirs know where to find important documents and how to access financial accounts. Without this knowledge, your assets could remain unclaimed and be subject to escheat.

How Gentreo Can Help Protect Your Assets

With Gentreo, you can easily create a comprehensive estate plan to protect your assets from escheat. Gentreo provides a range of estate planning tools, including wills, trusts, powers of attorney, and more. Here’s how Gentreo can help you avoid escheat:

1. Digital Vault: Gentreo’s Digital Vault allows you to store and share all of your estate planning documents securely in one place. This ensures that your loved ones have easy access to the necessary paperwork and information when the time comes, reducing the risk of your assets being forgotten or unclaimed.
2. Annual Estate Planning Review: Gentreo encourages users to review their estate plans regularly, ensuring that they remain up to date and reflect your current wishes. With an annual review, you can rest assured that your documents are in order, and your heirs will know exactly how to access them.
3. Create and Update Beneficiaries: Gentreo makes it easy to update beneficiaries on key financial accounts, such as retirement plans and life insurance policies, helping you ensure that no asset goes unclaimed due to outdated information.
4. Instant Access for Emergencies: Gentreo’s Instant Access button allows your trusted contacts to access your estate planning documents during an emergency, helping to avoid confusion or the potential for assets to remain unclaimed.

Don’t Leave Your Estate to Chance

Escheat laws may seem like an obscure part of the legal system, but they can have significant consequences if your estate is not properly planned. By creating an estate plan with Gentreo, you can take control of your legacy and protect your assets from being turned over to the state. Whether it’s a will, trust, or power of attorney, Gentreo’s comprehensive tools can help you stay on top of your estate planning needs and safeguard your loved ones’ future.

To learn more about how Gentreo can help you avoid escheat and protect your assets, visit www.gentreo.com.

Ensure your hard-earned assets remain with your loved ones, not the state. Start your estate planning today with Gentreo!

Don’t wait until it’s too late; start your estate planning journey with Gentreo today. By doing so, you’ll not only protect your loved ones but also gain the peace of mind that comes with knowing your legacy is secure.  Click HERE to join now.

This article is for informational purposes only and should not be considered legal advice. Consult with a qualified attorney or estate planning professional for personalized guidance.