What’s the Difference Between Escheated and Unclaimed Funds?

The distinction, if any, between escheated funds and unclaimed funds is a distinction without a difference, you might say. That is, if you have anything to say about it at all. 

But a recent Florida appellate opinion held that “the distinction is the difference under the facts of this case.” Choice Plus, LLC v. Dep’t of Fin. Services, Bureau of Unclaimed Prop., 43 Fla. L. Weekly D791 (Fla. 1st DCA Apr. 17, 2018).

Do tell, Florida. 

Decedent’s Estate Escheats to Florida

Mrs. Inez Eleanor Rigley died intestate in St. Petersburg, Fla. in 2005. In 2007, the probate court ordered that with no known beneficiaries, the assets of Inez’s estate shall escheat to the State of Florida. Under Section 732.107, Florida Statutes, the probate court ordered that Inez’s real property was to be sold and the proceeds were to be paid to the Chief Financial Officer for deposit into the State School Fund.

The statute goes on. It says that within 10 years, any person claiming to be entitled to the assets may reopen the estate administration to assert entitlement to the assets. If no claim is timely asserted, however, the state’s rights to the assets is absolute. 

Beneficiaries Discovered

In 2013, an investigative agency named Choice Plus received two orders from the probate court. The first order found that 10 claimants, all of whom were in Sweden, were Inez’s rightful beneficiaries. Choice Plus had provided genealogical support for their status as beneficiaries. The second order required the State of Florida to release the funds in the claimants’ favor.    

You’d think that 10 Swedish beneficiaries is the most interesting part of the story, but the reaction of the Florida Department of Finance is what really drives the case. The DOF spent the next two years litigating with Choice Plus over its rights to the estate—which had less than $100,000 in total assets. The DOF fought Choice Plus over its right to the assets and put the matter through the DOF’s own legal system, despite the probate court’s outstanding order that the DOF release the funds.

Escheated Funds Released to Beneficiaries

Eventually, the case ended up in the appellate court, and that’s when the probate court’s order was finally upheld and the DOF’s final order was reversed. The DOF had argued that because Section 732.107 and escheated funds were discussed within the ambit of Chapter 717, the procedure for having those escheated funds released is the same as for any other funds discussed in Chapter 717. But the Florida appellate court said the DOF was wrong. “Putting oranges and apples into one large bowl does not make them all oranges.”  

Chapter 717 gives the DOF “a panoply of tools,” said the appellate court, to determine the merits of a claim of ownership to unclaimed funds that come to the DOF through various means. It doesn’t make sense, though, to apply the panoply of tools to escheated funds because if potential beneficiaries come forward, those potential beneficiaries must first go to the probate court to determine their rights. 

In other words, the DOF has to adhere to the decision of the probate court when it comes to escheated funds, and it doesn’t make any sort of independent determination of entitlement. The bottom line, said the appellate court, is that if the DOF believed that Choice Plus failed to prove that the 10 claimants were indeed Inez’s beneficiaries, then the DOF should have intervened in the probate court proceedings, which it didn’t. 

That’s good news for Florida probate lawyers. Fight your fight in probate court, not the state agency that’s tightly holding onto your client’s property.