Escheatment is when an asset is unclaimed for a certain length of time, and must be turned over to state government. This doesn’t only happen to employee pay—dormant bank accounts, forgotten shares or uncashed dividend payments are all at risk. Escheatment also happens when someone dies with no identifiable heirs.
Once an asset has been escheated, the rightful owner or intended recipient must make a claim to the state to reclaim what is rightfully theirs. Each state has their own rules on how long it takes for unclaimed funds to become escheated, which vary depending on what sort of assets they are.
States are always looking for more revenue and may audit businesses to identify any unclaimed property. Beware: the state law that applies depends on someone’s last known address.