U.S. states are currently managing tens of billions of dollars’ worth of assets (bank accounts, stocks, life insurance policies) for which nobody has come forward.

The matter is complicated by the fact that the topics of American inheritance and probate procedures (probate process), as well as “unclaimed estates” (unclaimed property / escheat), are extremely wide-ranging, because in the United States there is no unified federal inheritance law.

What can nevertheless generally be said about U.S. probate proceedings?

In the United States, inheritance and probate proceedings — collectively referred to as probate — are fundamentally determined by whether the deceased left behind a valid will (testate) or died without a will (intestate).

Because there is no unified federal inheritance code in the USA, all 50 states proceed according to their own laws and their own specialized courts (Probate Court, in New York for example the Surrogate’s Court), but the steps forming the core of the process follow a similar logic throughout the entire country.

Here is the process of the American probate procedure, from the official legal steps all the way to the fate of unclaimed estates:

1. Initiation of the Proceeding and Appointment of the Representative

The proceeding always begins at the county court (county) according to the deceased person’s last permanent residence.
In the case of a will (Testate):
The person named in the will — the estate executor (Executor) — submits the will and the death certificate to the court.The court examines the validity of the will and then issues a document called Letters Testamentary, which authorizes the Executor to manage the estate.

In the absence of a will (Intestate):
If there is no will, a close relative or interested party requests the court to appoint an estate administrator (estate administrator).
The administrator receives authorization from the court in the form of a document called Letters of Administration.

2. Assessment of the Assets Belonging to the Estate (Inventory)

The first and most important task of the appointed representative (Executor or Administrator) is to secure, identify, and value all assets of the deceased.

The bank accounts, real estate, securities, personal property, and business interests must be collected.

In many cases, an official appraiser (appraiser) must be hired in order to determine the exact market value of real estate or artwork. This detailed inventory (Inventory and Appraisal) must be submitted to the court.

Important! What falls under the probate process?
In the United States, a significant part of assets falls outside the court probate procedure (Non-Probate Assets).

Such assets include:

• jointly owned real estate (if it was created with survivorship rights: Joint Tenancy with Right of Survivorship)
• bank accounts where beneficiaries have been designated (Payable on Death – POD)
• life insurance policies
• assets placed into trusts (Living Trust)

These pass directly to the beneficiary, bypassing the court.

3. Notification of Creditors and Settlement of Debts

American law strictly protects creditors. Heirs can receive anything only after all debts of the deceased have been paid.

Notice to creditors:
The representative is required to publish a notice in local newspapers and official publications calling upon creditors.

Deadlines:
Depending on state laws, creditors generally have 3–4 months (but in many states longer than this) to submit their claims.
If they fail to do so, their claim becomes barred.

Payments:
The following must be paid from the estate:

• funeral expenses
• probate proceeding fees
• accumulated debts (credit cards, mortgages, hospital bills)
• the deceased person’s final income tax
• and any possible inheritance taxes (estate tax)

4. Distribution of Assets and Closing of the Proceeding

After all debts and taxes have been paid, the representative submits a final financial accounting (Accounting) to the court, detailing every income and expense.
If there is a will:
After approval by the court, the remaining assets are distributed among the beneficiaries (beneficiaries) according to the instructions written in the will.
If there is no will (Intestate):
The distribution of assets takes place according to the inheritance order established by the laws of the relevant state (Intestacy Laws).
This varies from state to state, but generally follows a strict order:

• surviving spouse
• children
• grandchildren
• parents
• siblings
• and then more distant relatives (aunts, cousins)

There are states where the estate is divided between the paternal and maternal family lines, while in other states the closest relative inherits everything.

5. What Happens If There Are No Heirs?

This is the point where the procedure changes into the “unclaimed estate” phase.

The heir search phase
If there is no known relative, the court and the estate administrator cannot immediately declare that the assets belong to the state.

They are required to conduct a “good faith and thorough search” (diligent search).
In such cases, professional companies dealing with genealogy and heir research are often hired (forensic genealogists or probate research firms), who attempt to locate even third- or fourth-degree collateral relatives through family tree research — often abroad as well (for example, in Eastern Europe, if relatives of an emigrated ancestor remained there).

State takeover: Escheatment

If the search is unsuccessful, or if heirs do not come forward for the assets within the period defined by law, the legal institution of escheat comes into effect.

Transfer to the state:
The Probate Court closes the proceeding and orders that the remaining cash, bank balances, and proceeds from the sale of personal property or real estate be transferred to the state’s State Treasury or Unclaimed Property Division.

Custodial period:
Most states do not immediately spend this money. They operate as a type of custodian (custodian) of the property.
In certain states, legal heirs may still have the right to apply for the assets for years, or even without a time limit, if they appear later and can credibly prove their family relationship with the deceased.