Escheat: Most of us did not learn this word in law school, but it is the historical concept that has evolved into modern unclaimed property law. Unfortunately, unclaimed property laws are as unfamiliar to businesses as the word “escheat” is to most lawyers. Such unfamiliarity can result in significant and unexpected financial liabilities.
State unclaimed property laws are largely concerned with intangible property such as uncashed payroll and vendor checks, unredeemed gift cards, uncashed dividend checks and accounts receivable credit balances. Unclaimed property is property, held or owed by a business to someone else, for which the actual owner has not, during a certain period specified by law, taken some action that indicates an awareness of an ownership interest in the property. When this “abandonment” occurs, it becomes the obligation of the party holding the property to report and pay over such property to the state. The rationale behind unclaimed property laws is that the state can best protect the interest of the owner. The state becomes the custodian of the property and steps into the shoes of the owner.
