I need info on how to handle reissuing escheat checks after sending due diligence letters. When we receive a response stating that the payee is deceased, but the funds are due to them, is it correct to reissue the check to the "estate of payee name"?


A: On the question concerning check issuance to a payee who is deceased, you may simply reissue the check to the original payee, or issue it to the "estate of" the original payee. An estate executor can handle either. What you do not want to do is issue the check to another person if, for example, a person tells you they are the sole beneficiary or they are the executor and they want the check made out in their name. That opens up the possibility of fraud.

On your second question, escheatment laws hinge on a claim or interest by the owner (payee). Escheatment is about protecting the rights of the owner. In your question, because the company has indicated interest as a result of your due diligence, even though they do not know, presently, what the payment was for, you will need to reissue the check. Ironically, should they be unable to determine where to apply it, it will become escheatable from them –unapplied cash receipts are also escheatable. There is a kind of "catch-22" here: you must do your due diligence, but the due diligence elicits interest. To avoid this, it's important to have and enforce good payables policies and procedures, and then to reconcile your uncashed checks and scour your records for duplicate payments before the dormancy period runs out.

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