November 17, 2010

Escheat - Government Inheritance

One partial misconception in estate planning is the notion that the government, in this case the State of California, will inherit your property. The legal term for this is "escheat." 

While the State of California may theoretically inherit your estate, in real-world application escheat rarely happens. The reason for this is because if a person writes a will or has legal heirs, escheat is avoided. Prob C § 6800. In terms of typing a will, the formalities for such are outlined in Prob C § 6110. As for legal heirs, the California Probate Code says that heirs means "any person, including the surviving spouse, who is entitled to take property of the decedent by intestate succession under this code." Prob C § 44. What this means in everyday language is that your heirs are the people who are related to you by blood. For instance, this would include your children, nieces, nephews, cousins, uncles, aunts, brothers and sisters.

For illustrative purposes, let us assume that a person named Emmanuel had moved to California from the Ivory Coast. When Emmanuel passed away years later, he left no will because he had never got around to writing one. However, Emmanuel was survived by a second cousin who lived in Arizona named Cornelius. Cornelius and Emannuel shared the same great-grandparent, thereby making them second cousins. Upon hearing that Emannuel had passed away and that he was next of kin, Cornelius came to California to administer Emmanuel's estate as he was entitled to inherit it through intestate succession. Prob C § 6402. 

While very basic, this example demonstrates how easy it is to avoid escheat. Even if a person fails to write a will, which is common, the fact that he or she is survived by a heir will avoid the imposition of escheat for their estate. It is very difficult to find a person who lacks any heirs. If you trace your family tree back further and further, the number of heirs you have will increase substantially. Thus, escheat will most likely be avoided because you will have an heir who can claim your estate should you not write a will.

One possibility where escheat might occur is where a person moves to a far off place, say Modoc County California, and loses contact with their family. Consequently, when they pass away, nobody will know about it in order to inherit that person's estate. While plausible, technology today is so extensive today, email, Facebook, twitter, instant messaging, etc.,  it prevents people from getting cut off from their families, unless they want to be a recluse or the black sheep of the family.