A bank account that has been escheated to a state agency or gone through the escheatment process has been declared abandoned by the bank and the funds in the account are then forwarded to the custody of the state where the account is held.  During the escheatment process, the bank will first identify accounts that are unclaimed or abandoned.  Unclaimed financial assets in a bank account are considered abandoned based on state regulations without activity or contact for a specified period of time.

Escheat is a term that refers to the process whereby unclaimed or abandoned property passes to the custody of the state where the property is located.  The process of surrendering the bank account to the appropriate state agency that takes custody of the account and its contents is called, escheating funds. 

Banking regulations require that banks comply with state laws regarding the escheatment of abandoned property.  All states have laws regarding abandoned or unclaimed bank accounts, including requirements that the financial institutions try to find the account holder prior to sending the money to the state.  With regards to bank accounts, escheated property can be the money held in a savings accounts or checking accounts, certificates of deposit, and items abandoned in safe deposit boxes.  Each state has its own set of rules regarding the seizure of dormant funds from banks and financial institutions.

An abandoned account may also be referred to as a dormant account.  However, dormant accounts are generally accounts in which the bank has not lost contact with customer but have simply not had any activity for a period of time.  The period of inactivity that transpires before an account is considered dormant is determined by the bank.  The length of time that passes before an account is deemed abandoned is set by the state where the account is held.  Once the time frame reaches a point in which the state has declared an account is abandoned, the bank has to try and notify the customer, and then the bank must turn over the account to the appropriate state agency. 

Laws regarding the escheatment process are intended to prevent banks and other businesses from keeping unclaimed property and to help consumers find and reclaim their property and money.  Most states hold unclaimed property that has been escheated in custody for the owners or their heirs.  This generally means that there is no time limit on claiming the money.  The owners of the funds may claim the money or other assets any time or any legitimate heirs may claim the funds after the original owner’s death.

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