So, it is true – if you die without leaving a valid will, then the State of Texas might end up taking everything.
How Would the State of Texas Take Your Estate?
Here is how it would work:
- You die.
- You do not have a will.
- None of your accounts has a beneficiary named or is held jointly with right of survivorship.
- No one around you knows the identity of your heirs.
- Your assets just sit.
Then, Texas escheat law kicks in. The law requires that holders of your assets turn the funds in your accounts over to the state after certain time periods have expired.
If a court clerk is holding money in its account in your name, then it sends that money to the state immediately.
One Year After
One year after no activity in your account, your employer sends in your wages. The utility company turns over your utility deposits.
Three Years After
At three years, your bank (or holder) sends in the funds in your:
- Checking account
- Savings account
- Matured CD principal
- Official checks
- Uncashed checks
- Stored value cards
- Mineral proceeds
- Money orders
- Refunds
- Rebates
- Deposits
- Annuities
- Stock and cash dividends
- Bonds and bond interest
Your credit balances and sums payable under pension and profit-sharing plans are turned over.
The insurance company pays your individual policy benefits, claim payments, death benefits, premium refunds, and unidentified remittances to the state.
From your mineral interests, royalties, production payments, bonuses, shut-in royalties, and net revenue interests are paid to the state.
The court clerk sends in money that it has been holding from your divorce case, and uncashed checks from the County Treasurer.
Five Years Later
After five years, the contents of your safe deposit box are turned over.
Fifteen Years Later
After 15 years, your traveler’s checks will be sent to the state.
Can Heirs Claim Escheated Property?
Suppose you actually had heirs when you died, but they don’t surface until after your property has escheated to the state. Can they claim the escheated property?
Yes, but they are going to have to work for it. First, they will need to identify the assets that were part of their inheritance. Then they will file a claim with the Texas Comptroller’s office. They will need to prove their identity, their relationship to you, and that you are deceased. After all of that, the State may require that they file a petition in the correct court with probate jurisdiction and get an order that identifies your heirs and the percentage of your estate they are entitled to receive.
As for your real property, the State can claim that, too, but it will need to go through a court action to obtain the legal title.
How to Prevent the State of Texas From Taking Your Estate
As much as we love Texas, very few of us want our estate to end up in the state coffers. What can you do to prevent that from happening?
- Sign a valid will, but go through a competent attorney to get it done. I never recommend using an online drafting tool, including ChatGPT and the ilk. There is too great a risk that the document will be invalid, not provide for a proper execution, or fail to dispose of the entire estate.
- Let your executor and at least one beneficiary know that the will exists and where it may be found. They cannot probate a document that they do not know is there.
- Consider naming beneficiaries on your accounts, and let those beneficiaries know that the accounts exist.
- Keep a notebook with your up-to-date account information and passwords.
Hammerle Finley is Here to Help With Estate Planning
Let our expert team of attorneys help you prevent the State of Texas from taking everything, and ensure that it all goes to your rightful heirs. Schedule a consultation today.
Turns out you can cheat the escheat laws after all.
Virginia Hammerle is an accredited estate planner and represents clients in estate planning, probate, guardianship, and contested litigation. She may be reached at legaltalktexas@hammerle.com. This blog contains general information only and does not constitute legal advice.
