When a loved one passes away, the process of distributing their assets can be a difficult and emotional time. It is rare for someone to leave detailed and up-to-date lists of what assets they own.
In addition to everything else they have to do, the surviving family members often have to scramble to identify what property their loved one owns and how to best secure and manage the property.
Family members are often not able to identify all of the decedent’s property. Years can go by, the probate can be closed, and still, some of the decedent’s property may not be identified by the family members.
This is referred to as “unclaimed property” in Texas. Texas has a process for third parties to pay over the property to the state when this happens. It is then up to those who inherited the property to file a claim to recoup the property.
What is Considered Unclaimed Property in Texas?
Unclaimed property refers to any assets that have been left untouched or forgotten by their rightful owner. In the state of Texas, examples of unclaimed property include bank accounts, stocks, insurance policies, and other types of assets.
The comptroller’s office provides other examples of unclaimed property:
- dividend, payroll or cashier’s checks
- stocks, bonds or mutual fund accounts
- utility deposits and other refunds
- bank accounts and safe deposit box contents
- insurance proceeds
- mineral interest or royalty payments
- court deposits, trust funds or escrow accounts
- overpayments on insurance, utilities and other bills
It is important to note that unclaimed property does not include real estate or vehicles. These assets transfer by a legal title document, so they cannot be paid over to the comptroller. One has to use an administrative or legal process to obtain title to these assets, which involves re-titling these assets.
The Comptroller’s Office – Escheat
Under Texas law, holders of unclaimed property are required to remit it to the state’s comptroller’s office. The state comptroller is the state-level equivalent of the IRS.
The process of paying over assets to the comptroller is referred to as “escheat.” This word is used as like this: “the property escheated to the state.”
This process is intended to help provide the rightful owner with a way of finding and recovering the unclaimed property.
It also provides finality. If the property remains unclaimed for a certain period of time, it may be considered abandoned and subject to sale by the state.
When is Property Considered Abandoned
The specific time period for when unclaimed property is considered “abandoned” if claims are not filed for the property, varies by the type of property.
The Texas Property Code includes a detailed list of properties and dates that each is considered abandoned. This starts in Section 71 of the property code.
The comptroller provides this quick reference chart:
|Type of Property||Property Code||Abandonment Period|
|Wages, Payroll or Salary||MS01||1 year|
|Utility Deposits||UT01||1 year|
|Current Production of Mineral Interest||MI10||0 years|
|Demutualization Cash||SC85||1 year|
|Demutualization Shares||SC86||1 year|
|Stored Value Cards/Gift Certificates||MS12||1 to 3 years|
|Safe Deposit Box Contents||SD01||5 years|
|Other Deposit Accounts||AC09||5 years|
|Traveler’s Checks||CK08||15 years|
You can view the other charts here.
The Legal Process of Claiming Unclaimed Property
The process of claiming unclaimed property can be complex and time-consuming.
Fortunately, this process is relatively straightforward when there is no legal dispute over the property and the property has been paid over to the comptroller.
Here are the steps to file a claim with the comptroller:
- Identify the specific assets that are part of the inheritance.
- Determine if any assets were reported to the state as unclaimed property.
- Search the state’s unclaimed property database, which is typically available on the state’s comptroller’s website.
One also has to check with individual banks, financial institutions, and other entities your loved one may have used to identify any additional unclaimed property that is not listed in the database.
How to File a Claim
Once the unclaimed property has been identified, the next step is to file a claim with the state comptroller’s office.
The claim process requires the person to provide proof of their identity and relationship to the deceased. Additionally, they may also need a copy of the death certificate, a will, or other legal documents.
After the claim has been filed, the state will determine whether the person is entitled to the unclaimed property. If the claim is approved, the person will then be required to follow the state’s procedures to claim the property. This may include filing a petition to a probate court or a small estate affidavit if the property includes assets that are subject to probate.
The claims process for unclaimed property can take several months. You may need to hire an attorney with experience in Texas probate law to ensure that the process goes smoothly.
Other Consideration: Excess Proceeds
You should also be aware that the unclaimed property process described in this article differs from “excess proceeds.”
The term excess proceeds refers to money held by the county court after the property is foreclosed upon. If there is money left over after the property is foreclosed, the county holds the funds and waits for a claim to be filed–which is different than, but somewhat similar to the unclaimed property described above.
These so-called excess proceeds are often created when a property is sold at a tax sale or foreclosure sale.
Under Texas law, the proceeds are held by the county clerk and the excess proceeds must be distributed in a specific manner. The first priority is to pay any outstanding property taxes, followed by any other liens or debts associated with the property. If any funds remain after all debts are satisfied, the excess proceeds are distributed to the former property owner or other parties with a legal interest in the property.
The former property owner–or the inheritor–may need to file a claim with the county clerk’s office within a certain timeframe to receive any excess proceeds.
The process of distributing a loved one’s assets can be challenging. In some cases, assets may go unclaimed, leaving the next of kin wondering what to do. If you find yourself in this situation, it is important to understand the legal process of claiming unclaimed property and to take the necessary steps to claim your inheritance. You should consult with a lawyer with experience in Texas probate law to ensure that the process goes smoothly.
Our Houston Probate Attorneys provide a full range of probate services to our clients. Affordable rates, fixed fees, and payment plans are available. We provide step-by-step instructions, guidance, checklists, and more for completing the probate process. We have years of combined experience we can use to support and guide you with probate and estate matters. Call us today for a FREE attorney consultation.
The content of this website is for informational purposes only and should not be construed as legal advice. The information presented may not apply to your situation and should not be acted upon without consulting a qualified probate attorney. We encourage you to seek the advice of a competent attorney with any legal questions you may have.