Escheat

How Does Escheat Work?

If an individual dies without a will and without any identifiable heirs, their assets cannot be passed on through inheritance. In such cases, the state assumes ownership of the unclaimed property. This may include real estate, bank accounts, insurance policies, investments, and other moveable or immoveable assets.

In India, escheat is governed by Article 296 of the Constitution and the Hindu Succession Act, 1956. The law outlines the order of succession, and when no eligible heir can be found, the property is transferred to the state.

Example

Consider a case where a person in India dies intestate, leaving behind a bank account with ₹1,00,000 and no known relatives. If no one claims the account and no heirs are identified, the state may legally take over the funds through the process of escheat.

Key Components of Escheat

• Intestate Death: Applies when a person dies without a valid will and has no legal heirs.

• Unclaimed Property: Includes assets that remain untouched or unclaimed for a legally defined period.

• Government Ownership: Once all options are exhausted, the state takes legal possession of the property.

Benefits of Escheat

• Prevents Dormant Assets: Ensures property does not remain idle or misused.

• Public Welfare: Enables the government to use the assets for development or welfare schemes.

• Legal Finality: Brings closure in cases where there are no rightful claimants.

Challenges of Escheat

• Verification Process: Establishing that no heirs exist requires thorough legal investigation and documentation.

• Reclamation Limitations: If an heir surfaces later, recovering the property may be subject to time limits and procedural hurdles.

• Delays and Bureaucracy: The process can be slow due to administrative complexities or a lack of clear records.

Conclusion

Escheat serves as a safeguard when no heirs are available to inherit property, ensuring that such assets do not go to waste. While it is a necessary mechanism in estate law, it is a last resort. As of 2025, with more individuals owning diverse and digital assets, creating a will and keeping it updated is the best way to prevent complications and avoid the escheat process altogether.