When someone dies without a will, the court appoints an administrator to guide the estate through the probate process. If assets remain after the administrator pays all the decedent’s debts and the estate's costs of operation, the administrator must then distribute them to the decedent's heirs. In most states, the order of succession is as follows: his surviving spouse, followed by his children, his grandchildren, his parents, his siblings, then his siblings' offspring. These relatives are usually easily identifiable. However, when all these individuals predecease the decedent, the executor may resort to hiring an “heir finder” to look for more distant kin. Most state laws include guidelines that must be met in the search for such relatives, and most require the administrator to submit a written report to the court explaining the efforts she made, either on her own or with the help of an heir finder.
The term “laughing heir” is a euphemism for those relatives so far removed from the decedent, they won’t experience grief over his death. Some states allow these relatives to inherit anyway, when no one more closely related to the decedent remains alive or can be located. Other states draw the line at a specific level of kinship, such as grandchildren -- by law, no one more distantly related can inherit.
Cutting off intestate succession at a specific degree of kinship can be lucrative for the decedent’s state government. When the administrator of an estate cannot locate any eligible kin, the decedent’s estate “escheats.” It goes to the state for lack of anyone else to claim it. For example, if the administrator successfully locates a cousin who could inherit, and if state law limits intestate succession at grandchildren, the decedent’s estate goes to his government, not his relative. However, this doesn’t usually occur automatically. The administrator and the state must follow legal procedure, which usually includes a court hearing. At the hearing, the burden of proof often falls to the state to prove that no heirs exist. If the state is successful, the court orders the administrator to liquidate the estate by selling assets such as real estate. The administrator then usually sends the money to the state’s treasury.
Claiming Escheat Property
In most jurisdictions, even after a decedent’s estate escheats to the state, a period of time exists during which eligible heirs can still come forward to claim it. For example, in Oregon and Kansas, heirs have 10 years to realize that they have inheritance rights and to make a claim for the money. This usually involves a court hearing as well, and the burden of proof shifts to the heir to prove his relationship.