What Happens to an Inheritance That Is Unclaimed?

Written by erika johansen
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What Happens to an Inheritance That Is Unclaimed?
An unclaimed inheritance will pass to other inheritors or the state. (real estate image by Andrei Merkulov from Fotolia.com)

An inheritance that remains unclaimed will pass on the next person in the line of intestate succession. If the nonclaiming individual was the last in the intestate line, the property will escheat, or revert to the state.

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Intestate Succession

An inheritance refers to a disposition of property received from an individual who died intestate (without a will). Upon the intestate decedent's death, his property will pass to the next individual in the line of succession. Each state has its own varying rules for the order of intestate succession, but most states' lines will begin with the decedent's direct issue (children) and then pass onward to various relatives of the decedent. Legal counsel is advisable for those attempting to discover where they fall in a particular state's line of intestate succession.

Unclaimed Inheritance

When small inheritances remain unclaimed, it's usually because the court administering the estate is unable to locate the inheritor. Large estates, however, are rarely left unclaimed in the modern era because of the emergence of heir-hunting firms. These investigative agencies will locate heirs in return for a reward, often a percentage of the estate at stake. However, if the heir truly cannot be located, the inheritance will pass to the next heir in the line of intestate succession.

Disclaimer of Inheritance

Disclaimer occurs when an heir refuses to accept an inheritance. A valid legal disclaimer must be in writing and signed by the disclaimant, identify the decedent, and identify and describe the interest being disclaimed. Disclaimer can also be made by a legal guardian in the case of an heir who is incompetent, an infant or deceased.

Effect of Disclaimer

If an heir disclaims his inheritance, most states will then treat the disclaimant as though he predeceased the decedent. By relating the heir's disclaimer back to the date of the decedent's death, the court can smoothly pass the inheritance on to the next heir in the line of succession as though it had remained unclaimed. This relation also keeps any creditors of the disclaiming heir from claiming a portion of the inheritance.

Escheat

If no legal heir can be found to take an inheritance (for instance, if every single heir in the line of intestate succession has predeceased the decedent), the property will forfeit to the state. Such forfeiture is known as "escheat." Some state statutes attempt to prevent escheat by allowing a long line of succession. Other state statutes mandate escheat very early in the line of succession in order to prevent "laughing heirs," distant relatives who will receive the inheritance without having had any real connection to the decedent.

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