Escheatment in feudal times
Escheatment is a legal process that refers to the transfer of unclaimed property or assets to the state when the rightful owner cannot be located or identified. This practice dates back to feudal times when the concept of land ownership was first introduced.
During feudal times, lands were granted to individuals by the monarch or the lord of the manor. If lands or personal assets had no owner, the property would revert back to the lord through a process known as escheatment. By ensuring that lands reverted back to the lord of the manor when the tenant died without an heir, the lord could prevent the land from falling into the hands of outsiders who might challenge their authority. Escheatment also allowed the lord to punish those who committed crimes against the crown by seizing their property. This helped ensure that their subjects remained loyal and obedient.
Over time, the concept of escheatment became more formalized, and various laws were enacted to regulate the process. In the United States, each state has its own laws regarding escheatment, and the process is typically overseen by the state treasurer or controller.
Today, escheatment applies to various types of property, including bank accounts, stocks, uncashed checks, and other financial assets. If the rightful owner of such property cannot be located, the assets are turned over to the state, where they are held in trust until the owner is found.
To this day, The Crown Estate in the UK owns over £15B in land.
Accounts of "other people's money" have a lifecycle of active -> inactive -> dormant -> escheated. The duration an account can be inactive / dormant depends on the account type and jurisdiction.
Holders are required to report dormant accounts to the states. Alongside this reporting, they must also complete due diligence requirements through which they try to find the owners of the assets. However, due diligence as required often fails to be effective and most accounts that enter this state will end with escheatment. After reporting, holders may liquidate assets before sending into the custody of the state depending on the asset type and state.
States vary in how they handle escheated assets. Many take a proactive approach to try to find the owner, searching through accessible data such as tax returns to find up to date contact information.
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