When does escheatment happen?
Escheatment is a legal process where assets, such as shares or cash funds, that appear to be ‘unclaimed’ (i.e. held in an inactive account) may be identified as needing to be transferred over to US state ownership. This is because all assets, such as property, money, shares, and bonds, need to have a legal owner. When no legal owner can be identified (such as you, the account holder), a US state government or government can claim the rights to those assets.
Your assets are held with our US partner DriveWealth. When there has been no activity in your account for five years, DriveWealth and the Hatch team may identify it as being ‘inactive’, which may trigger an escheatment process.
Inactive in this case means, we can’t see any share market or account activity to show that your account’s still in use. This happens when:
You may have forgotten you have an account
Your contact details may be out of date and we can’t contact you despite our best efforts
The account holder may have passed away and their assets have not been claimed by your heir/s as part of the account holder’s estate (everything owned at the time of death)
Read more:
Why does escheatment happen?
In the US, financial entities like our brokerage DriveWealth, are responsible for your assets (such as your US shares in your Hatch account). DriveWealth is incorporated in the state of Delaware, and they’re required by Delaware state law to periodically review all their account holders (which includes Hatch customers) to find out whether they’re still active.
DriveWealth identifies any Hatch accounts that have shown no activity in five years and asks us to confirm whether those accounts are active or not (only we can see whether you’ve logged in during that time; DriveWealth cannot see your account).
🚨 Important: When we’ve identified that a Hatch account is inactive, legal ownership of the assets must be transferred to the state of Delaware in an escheatment process.
Escheatment can be reversed and assets returned
Escheatment is not necessarily a permanent asset transfer. It's important to know that:
If you’ve simply been inactive for five years, or you forgot about your Hatch account, and your assets have been handed over to the state of Delaware, once you make contact with us, they’ll be transferred back to you.
If the account holder has passed away, the executor of the will or legal heir can make contact with us, show us proof of legal ownership of the account holder’s assets, and can get the assets transferred to them
🚨 Important: Proving that you’re the legal owner of assets after an escheatment has taken place may be an expensive and time consuming process.
How can you avoid being reviewed for escheatment?
At Hatch, we love that many of our investors have a long term investing strategy. But we also encourage you to log into your account at least once a year so you’re not identified by our team as having an inactive account. Our team will make every effort to contact you before any action is taken, so always make sure your contact details are up-to-date, and pop in to your account from time to time.