Explaining the 5 Basic Steps to the Escheatment Process

When assets such as unused bank accounts, uncashed checks, or inactive securities remain unclaimed past a certain threshold date, they get transferred to the State under “escheatment laws.”

These laws can protect consumers by safeguarding their assets until they are claimed (within a specific statute of limitations).

For businesses, however, the escheatment process can be complex and time-consuming. At Eisen, we make this process seamless, automating key steps to ensure compliance with state-specific requirements.

So, what exactly is the escheatment process? Let’s break it down. 

5 Basic Steps to the Escheatment Process

The escheatment process's core steps are all about ensuring that property owners have every opportunity to reclaim what is theirs. Because of that, you’re going to find that you have a lot of monitoring, reporting, and due diligence to undertake. 

1. Identify Dormant Property

The first step involves identifying assets that have exceeded a “dormancy period,” or timeframe in which the asset hasn’t been accessed or used. This period varies by State and asset type, typically ranging from three to five years.

This isn’t a passive requirement. You must have tools and technologies in place to track assets as they move into dormancy periods because, for example, an account hasn’t been used in a while, a check hasn’t been cashed, or a deposit box remains unopened for months or years.

2. Conduct Due Diligence

In this context, “due diligence” is your responsibility to identify the owner, reach out to the owner, and document your attempts for compliance. You’ll start by attempting to reach out to their last-known address and expand your search from there (within reason… no government expects you to conduct a manhunt for the owner of unclaimed assets). 

3. Prepare State Reports

Once due diligence has been completed, businesses must prepare reports detailing all unclaimed property. These reports must include detailed information about each dormant account, such as the owner’s name, last known address, account balance, and the type of property.

This is a necessary part of your regulatory obligations, and one you can’t cut corners on without risking extensive penalties, including fines and potential impact on your ability to do business in a jurisdiction.

4. File Reports with the State

After preparing the necessary documentation, the next step is to file the escheatment report with the appropriate State. Most states have strict deadlines for submitting these reports, typically once a year. Filing late or incomplete reports can result in fines, so businesses need to stay on top of state-specific reporting schedules. 

5. Transfer Property to the State

Once the report has been filed, the unclaimed property is transferred to the State. Once transferred, the State takes custody of the assets until the rightful owner comes forward to claim them. This step finalizes the escheatment process and ensures compliance with state regulations. 

Common Mistakes Made in the Escheatment Process

While the steps of this process are straightforward, there are common mistakes that businesses often make, leading to penalties and compliance issues. 

Here are a few key mistakes to avoid: 

Failing to Conduct Due Diligence

One of the most common mistakes is failing to conduct proper due diligence before transferring property to the State. Notifying the property owner promptly and compliantly can lead to penalties and may result in negative customer experiences. Make sure your institution has a clear process for reaching out to account holders before their assets are escheated. 

Missing State Reporting Deadlines

Each State has specific deadlines, which can result in hefty fines. Businesses must stay organized and ensure that all reports are submitted on time. Eisen’s Escheatment Laws by State Guide can help you stay on top of these deadlines.

Incorrect or Incomplete Reporting

Submitting inaccurate or incomplete reports is another common pitfall. Mistakes such as missing owner information, incorrect account details, or failing to list all dormant accounts can lead to compliance issues. It’s essential to double-check all reports before submission to ensure accuracy. 

The Bottom Line

The escheatment process may seem complicated, but with the right steps and tools in place, it can be managed efficiently. By understanding the process, avoiding common mistakes, and staying organized, businesses can protect themselves from penalties while ensuring they comply with state escheatment laws.

Streamline State-by-State Escheatment Compliance with Eisen

At Eisen, we’re committed to making the escheatment process easier for financial institutions and businesses of all sizes. Our Escheatment Hub automates every step, helping you easily track, report, and transfer unclaimed property.

Forecast Your Escheatment Liability Due to Each State

With Eisen, you can forecast your escheatment liabilities based on each State’s specific requirements. Our platform automatically calculates which accounts are nearing dormancy and how much property will need to be reported, helping you prepare for each State’s escheatment deadlines.

Track the Status of Every Active, Inactive, and Dormant Account

Eisen’s Escheatment Hub provides real-time visibility into every account, allowing you to easily track which are active, inactive, or dormant. This transparency helps you take action before accounts become escheatable, ensuring no accounts slip through the cracks.

Never Miss a Deadline Again

With automated reminders and state-specific tracking, Eisen ensures you stay ahead of all escheatment deadlines. Our platform informs you about reporting schedules and due diligence requirements, so you can file reports on time and avoid penalties.