Escheatment
Pronunciation: es-CHEAT-ment
The legal process by which unclaimed property—such as dividends, proceeds from share sales, or dormant account balances held by a transfer agent—is remitted to the state government after a statutory dormancy period.
Full Definition
Escheatment is the transfer of abandoned or unclaimed financial assets to the state under unclaimed property laws, after the holder (in this context, the transfer agent or issuer) has been unable to locate the owner for a prescribed period (the dormancy period), typically three to seven years depending on the state. Transfer agents are required to conduct due-diligence outreach (e.g., mailings) to locate shareholders before escheating assets. Once escheated, shareholders may reclaim their property from the state. Editors should note that 'escheatment' is a noun; the verb form is 'escheat'. Neither form should be confused with 'forfeiture', which implies a penalty.
Usage
Usage note: The noun is 'escheatment'; the verb is 'escheat'. Do not use 'escheated to' and 'forfeited to' interchangeably—escheatment is a legal process with reclaim rights; forfeiture implies a permanent penalty. Capitalise state names but not 'state' in 'remitted to the state'.
In Context
- "The transfer agent is responsible for tracking dormant shareholder accounts and initiating escheatment to the applicable state after the statutory dormancy period has elapsed." — Transfer agent services agreement
- "Former shareholders whose dividends were subject to escheatment may file a claim directly with the state's unclaimed property office." — Investor relations Q&A