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When Does The Government Inherit An Estate (the Estate Escheats)?

When does the Government Inherit an Estate (the estate escheats)?

We often hear from clients that are worried that a loved one’s estate is going to fall entirely in the government’s hands because the person hasn’t written a will yet. It should be known that it is extremely rare for an estate to be inherited by the government and that the government only inherits an estate when there is absolutely no available beneficiaries or relatives of the testator. When this does happen, the estate is said to have escheated. Further, when individual assets from an estate fall into intestacy (no valid beneficiary appointed, or no valid will exists), the government still has the lowest priority to receive the intestate assets. Any relatives of the deceased will be entitled to receive the estate before it escheats, or is inherited by the government.

Dying Without a Will or Intestate

When someone dies without leaving a valid will, their assets are typically distributed to their spouse and their children. When the testator has no spouse or children, their parents, brothers, sisters, or other relatives inherit the estate. In general, the closer the relationship of a beneficiary to the testator, the higher priority they will have to inherit the estate. While this doesn’t seem unreasonable, the testator has no say in how their estate is handled or distributed. For more information, read our blog on dying intestate and how assets are distributed.

When there are no relatives that can be identified or located, the government is the final entity that would be entitled to inherit the estate. When this is the case, the estate will escheat, or be given to the government.

When the Estate Escheats

The best way to prevent your estate from escheating is by writing a valid will as soon as possible.

The Escheat Act specifies exactly what happens when an asset escheats and who is responsible for handling the escheated assets. Basically, when the intestate succession finds that there are no lawful heirs to the estate, the assets escheat and become property of the government. For real property such as real estate, the government will seize ownership and in most cases, sell the property.

For personal belongings, they will usually be disposed of as they have minimal value and aren’t typically worth taking time to sell. As described in s.8 of the Escheat Act, the Attorney General may act in their own discretion to “make any assignment of personal property to which the government is entitled because of

  1. The person last entitled to it having died intestate and without leaving any kin or other person entitled to succeed to it,
  2. The property having become vested in the government as a thing that had no owner, or
  3. The property having become forfeited to the government, or

Make an assignment of any portion of the personal property, for the purpose of

  1. Transferring or restoring it to any person or persons having a legal or moral claim on the person to whom it had belonged,
  2. Carrying into effect any disposition of it which the person may have contemplated, or
  3. Rewarding the person making discovery of the right of the government to the property.”

Another factor to note is that the government will never seek out the estate executor, asking for the escheated assets from the estate. The only time the government becomes aware of an escheated estate is when the executor notifies them.

Relative Found After Assets Have Escheated

An estate executor must search for any relative or heir who could be legally entitled to the deceased’s estate before they can say that the estate escheats. After a diligent search and a sufficient effort to locate an heir, the executor can notify the government and escheat the estate. In some cases, a relative of the deceased surfaces and comes looking for their inheritance, after it has already escheated. At this point, it’s not the executor’s responsibility and the relative must deal with the government. The executor can not be held liable for costs of the relative, so long as they were diligent in their search for beneficiaries. The person can apply to the Attorney General to have the assets distributed to them and will usually be successful if they’re a lawful heir of the deceased. There is no limitation period in this scenario.

You don’t usually need to worry about your estate or a loved one’s estate escheating and being given to the government. The only time this will happen is if (a) the person died without leaving a valid will and (b) there are absolutely no relatives or heirs to the deceased who would be entitled to inherit the intestate estate.

If you’re worried about an estate escheating, the best way to prevent this is by writing a valid will. If you need assistance writing your estate plan, contact an experienced estate lawyer today. We will ensure your estate is handled exactly as your expecting and distributed to those that you wish.

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.

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