Escheatment, Intestacy, and the Cost of Doing Nothing

The consequences of dying without estate planning, even if it’s just a will, can be catastrophic. Not only is there no guarantee that your assets will be disbursed according to your wishes, there’s no guarantee that they will be disbursed to the inheritors you wish at all. Without proper estate planning, there are considerable risks that your assets could be claimed by the government.

What is Escheatment?

Today, every US state has laws covering unclaimed or abandoned property, including assets in the estate of a deceased which are not covered by estate planning documents. Property that is abandoned, after a statutory period of time, can then be transferred to the state through a process known as escheatment. 

While most people don’t think they will abandon their property when drawing up a will or trust, they often only think of their assets being bank accounts, houses, or other real property. Intangible assets such as 401(k)s, inherited individual retirement accounts (IRAs), taxable investments, and other financial assets are often easily overlooked when drawing up estate planning documents. For many of these intangible assets, if there are no listed beneficiaries other than the deceased, the property is legally considered to be abandoned unless it is designated for disbursement in the deceased’s estate. 

This means that these assets will be at risk to become abandoned and claimed through escheatment. A 2025 survey found that just 24 percent of Americans have a will, meaning all of their property is unaccounted for. And, unfortunately, of those who have a will, many do not have a current will with a full accounting of their assets. In either scenario, this can lead to property slipping through the cracks to becoming abandoned.

The Risks of Intestacy

However, if you do not have a will or estate planning documents, there is still a process through which your estate will be disbursed. US states have laws called intestacy statutes which determine who inherits from a person who dies “intestate,” or without a will or other estate planning documents. Normally, these laws will disburse the estate to the deceased’s next of kin, meaning a living spouse, child, or sibling. While this might seem fine to you, these laws will often disburse all of your assets to your next of kin without regard for need or your relationship to the recipient.

In addition, some intestacy laws will have provisions for assets not included in your will or trust. This is called partial intestacy, which occurs when one dies with a valid will, but this document does not address all of the deceased’s property. In this scenario, that unclaimed property will be disbursed according to the statute.

The caveat to intestacy, however, is that if there is no identifiable next of kin, that property will be subject to escheatment after the statutory period. If your descendants or inheritors do not know what assets are in your possession or how to locate them, there is a risk those assets could become unclaimed for the statutory period. Therefore, if you wish for your estate to provide for a non-family member, an organization that you care about, or a charity you wish to donate to, you need some form of estate planning documents to do so.

Scenarios at Risk for Intestacy

Dying without a will or trust is, therefore a substantial risk for those who do not wish their assets to pass through the traditional intestacy laws. For instance, a person may wish to exclude their spouse they are separated from in a will, but if they die before doing so that spouse may legally be entitled to inherit the entirety of the estate.

Here are some other common scenarios that are not usually covered by intestacy statutes.

  • Stepchildren. Under most intestacy laws, stepchildren do not automatically inherit anything unless you have legally adopted them. Without a will or trust, they will not be eligible to any assets if you die intestate.
  • Unmarried partner. In most states, unmarried partners have no legal right to each other’s estate, regardless of how long they have been together.
  • Friend. Similarly to unmarried partners, friends do not have legal rights to each other’s assets upon death, unless it is specifically delineated in a legal instrument.
  • Charity. If you wish to donate all, or some, of your assets to a charity or cause, that will not be possible without a legal instrument saying so. 

Don’t Leave Your Legacy to Chance

In addition to these specific scenarios, intestacy laws do not cover how assets are disbursed. For instance, if you wish to leave a specific asset like a treasured heirloom to a child, that will not be guaranteed to happen if you die intestate. It’s also possible that the intended inheritor will not be eligible to receive any of your assets depending on the intestacy law.

Finally, one common issue that goes overlooked when it comes to intestacy is guardianship over a child. While you are able to nominate a guardian to care for your minor children via a will, if you die intestate, the court will decide. This could mean that your child is left in the care of someone whom you would not choose.

Don’t leave your legacy to chance. Contact us today to schedule a consultation with one of California’s leading estate planning attorneys.