Alternatively: the laws for declaring somebody dead if they’re missing for long enough are still in place, but the magistrates are just refusing to enforce them in this particular case.
After all, last time they declared Bilbo Baggins dead— which involved filling out all the paperwork necessary to declare somebody dead without a body— he had the rudeness to show up again, forcing them to do a lot more paperwork, and this time with an indignant Bilbo having a go at them while they did it.
As a result, the magistrates have decided that they’re not going to declare Bilbo Baggins dead a second time unless they have a body, a coroners reprt explaining the cause of death, and a three day wake to make sure that he doesn’t get up and walk away again.
Centuries later, hobbit parents tell their children that Mad Baggins is forever gone from the shire— at least until the day when somebody is stupid enough to declare him legally dead, at which point legend states that he will immediately come marching back, demanding an explanation.