Seized assets should sit in escrow until their owner is convicted of a crime and the assets are shown to the be the fruits of that crime. If that can't be done within, say, a year -- two, at the most -- the assets should be returned, with interest.

That, I think, is the most important change to make here. Right now people who have assets seized are effectively guilty until proven innocent, and I don't see how that's even remotely Constitutional.

Once that is changed, I agree with you: the money should go to the state's general fund or the US treasury, not the police department.