There are many things that can hold up the distribution of assets after someone passes away, but one of the more frustrating problems to deal with is when a beneficiary can't be found. Here's how you have to handle this situation to avoid issues down the road.
Document Your Efforts to Locate the Heir
The state government requires you to make every effort to locate the decedent's beneficiary, and you must document your efforts because you will need to file a report with the probate court about the issue. In addition to getting information from family members and friends of the missing heir about the person's possible whereabouts, you'll need to file legal notices in the newspapers and possibly hire a private detective to help you track down any leads.
In some cases, the court will appoint a guardian ad litem — a legal stand-in for the missing heir who represents his or her interests — who will perform the search for you and file the necessary paperwork. It's best to research the laws in your state to determine if this is case, and to obtain copies of any reports submitted by the guardian to include with your paperwork.
Place the Assets in a Trust
When it comes time to actually distribute the assets (e.g. probate has ended), the missing heir's portion must be placed into a trust, and you will be required to manage that trust for a period of time (e.g. 3 years), which varies depending on the decedent's state of residence.
If the heir still doesn't come forward during that time period, the state will typically let you distribute the assets to the remaining heirs. However, you may be required to have the heir declared dead first. For instance, in California, the missing beneficiary must be declared dead before you can distribute money and property to other people who are legally allowed to inherit from the decedent and that person must have been missing for at least five years before he or she can be relegated to that status.
Other states may limit the line of succession. For example, your state may only let you distribute property to heirs only if those people are close in relation (e.g. sister, brother, child, or grandchild). If the person exceeds the limit (e.g. is a niece or cousin), he or she will be barred from receiving any property from the estate in this manner.
Assign Property to the State
As a last resort, if you're not able to locate the heir and there is no one who can inherit the assets, then you will usually be required to turn the property over to the state through a process called escheat. The state will take ownership of the assets and will usually hold them for a period of time for the missing heir before disposing of them. The heir can still claim his or her property as long as the person contacts the state before the deadline. Therefore, it's important you hold onto any paperwork he or she may need for the period of time the property will remain in escheat status.
For more information or assistance with this problem, contact a probate attorney like those represented at https://ivylawgroup.com.