A last will and testament allows you to specify the persons (or other entities, like charities) who will inherit your property after your death. If you fail to leave a valid will, California law provides for automatic inheritance by your heirs. But what happens if you do not have any heirs, or such heirs cannot be found after your death? In such situations, the State of California may claim—or escheat— your property for itself.
California Holds Billions in Unclaimed Assets
This is not just an issue that affects the estates of deceased individuals. All states have “unclaimed property” laws that allow government officials to seize private property if the rightful owner cannot be located for a certain period of time. In California that period is three years. So if you opened a checking account 10 years ago and have made no deposits or withdrawals since then, and had no contact with the bank, the state may seize the account as unclaimed property.
Unclaimed property is not a small matter. The California State Controller’s Office says it “is currently in possession of more than $8 billion in Unclaimed Property belonging to approximately 32.5 million individuals and organizations.” Like many states, California maintains a searchable online database of unclaimed property for individuals—or their estates, if the person is deceased—to identify and claim property that may belong to them. And while the state is supposed to make reasonable efforts to locate and contact unclaimed property owners, there have been questions about the adequacy of such efforts.
Indeed, U.S. Supreme Court Justice Samuel A. Alito recently raised concerns about the adequacy of California’s unclaimed property law. The Court had declined to accept an appeal challenging the constitutionality of California’s law. Justice Alito, while agreeing with that decision, nevertheless wrote the Court may take up the issue in a future case. The justice noted that a number of states “have shortened the periods during which property must lie dormant before being labeled abandoned and subject to seizure.” In many cases, states “rely on decidedly old-fashioned methods” for locating unclaimed property owners, such as publishing lists in newspapers.
Do Not Let the State Escheat Your Estate
In the case of an estate, California does not need to even wait three years before acting. If the deceased failed to leave a will and there are no immediately identifiable next-of-kin, then the estate “escheats at the time of the decedent’s death.” Should an eligible heir later appear, he or she may attempt to file a claim and reverse the escheat within five years of the initial seizure.
This is why you should always make a will. A will not only identifies your chosen heirs, it also allows you to appoint an executor to assume the responsibility for locating such beneficiaries. For that matter, an executor can also ensure any unclaimed property in the state’s possession at the time of your death is reclaimed on behalf of your heirs. An experienced San Diego estate planning attorney can advise you on this and other matters. Contact the Law Office of Scott C. Soady today if you would like to speak with someone right away.