Escheat is a procedure whereby the sovereign may acquire title to abandoned property if, after a number of years, no rightful owner appears. (Texas v. New Jersey, 379 U.S. 674, 85 S. Ct. 626 (1964), opinion supplemented, 380 U.S. 518, 85 S. Ct. 1136 (1965); Travelers Ins. Co. v. Workers' Compensation Appeals Bd., 187 Cal. Rptr. 838 (Cal. Ct. App. 1982)).

In laymen's terms, every state has unclaimed property laws which declare money, property, and other assets to be abandoned after a period of inactivity typically in the three to five year range. During this abandonment period landlords, banks, utilities, hospitals, brokerage firms, mutual funds, insurance companies, and other organizations are required to try to return the valuables to their rightful owners. If they are unsuccessful, they then turn the property over to the state's abandoned-property division or unclaimed property office. This process is referred to as "escheatment".

According to the above referenced US Supreme Court decision, the unclaimed property is returned to the state of the property owner's last known address. The business holding the funds has an obligation to make a reasonable effort to identify the correct state of escheatment. Once all reasonable attempts are exhausted, if the address still cannot be identified, it is returned to the state in which the business holding the funds is incorporated.