Escheatment process laws fall under state jurisdiction, according to the U.S. Securities and Exchange Commission. However, financial institutions in all states must report when personal property has been unclaimed or abandoned.
Escheatment is the process of transferring unclaimed or abandoned personal property, including bank and brokerage accounts, to the state where the account is held. Brokerage firms must attempt to locate owners of inactive accounts before an account is classified as unclaimed or abandoned. Failure to locate the owner before the state-mandated time limit results in the transfer of assets to the state. States often sell escheated accounts and book the proceeds as state funds. The former owner may reclaim cash value of the property; regulations for finding and claiming escheated property vary from state to state, as noted by the U.S. Securities and Exchange Commission.