Escheat- When the state becomes the owner of your real estate and how to prevent it.

 

Escheat refers to the process by which property reverts back to the state or government when an individual dies without a will (intestate) and without heirs to claim the property or when certain types of property are abandoned. It's derived from common law traditions and exists to ensure that property is not left in "limbo" — it guarantees that all property will have a recognized owner.

According to Robert Scaralia Director of Education at the Real Estate Institute of Rhode Island the laws surrounding escheat vary from one state to another, but the underlying principle is the same: if property isn't claimed or passed on in a legally recognized way, it eventually goes to the state. This might include real estate, but can also encompass other assets like bank accounts, securities, and other personal property.

Importance of Preparing a Will:

1. Control Over Assets: A will is a legal document that dictates how an individual's assets should be distributed upon their death. Without a will, the state's intestacy laws will determine how assets are distributed. This might not align with the deceased individual's wishes.

2. Avoidance of Escheat: As mentioned, if someone dies without a will and without legal heirs, the property could escheat to the state. Preparing a will ensures that property goes to the intended beneficiaries rather than reverting to the government.

3. Minimize Family Disputes: A will provides clarity on the deceased person's wishes, which can help prevent potential conflicts or disputes among surviving family members.

4. Efficient Distribution: A well-prepared will can expedite the probate process, leading to a quicker distribution of assets to beneficiaries.

5. Designation of Guardians: For those with minor children, a will is vital to designate guardians in case both parents pass away.

6. Potential Tax Benefits: Depending on the jurisdiction, a properly structured will can also provide tax advantages or strategies for reducing estate tax liability.

In summary, escheat ensures that property always has a recognized owner in the absence of heirs or a will. However, to retain control over one's assets and ensure they're distributed according to personal wishes, it's essential to prepare a will. Not only does this safeguard an individual's assets from escheating to the state, but it also provides clarity, minimizes potential disputes, and can offer other benefits like tax planning.

For more information on real estate principles and practices contact the

Real Estate Institute of Rhode Island 401-943-8500 info@instituteRI.com www.InstituteRI.com