Detailed Answer

Whether leftover money from the sale of a deceased parent’s home is distributed under your father’s will depends on how title to the home was held and on certain New Jersey probate rules. Below are the key rules and typical steps that determine who receives any remaining funds after debts and expenses are paid.

1) Who legally owned the home at the time of death?

If the home was owned solely in your father’s name at his death, the home is normally an asset of his probate estate. The person appointed as personal representative (executor) must use estate funds, including the net sale proceeds, to pay funeral costs, administration expenses, creditor claims, taxes, and any other legal obligations. After those obligations are paid, any remaining funds are distributed according to your father’s will (or by intestacy rules if there is no valid will).

If the home bypasses probate because of a different ownership arrangement, the sale proceeds usually do not become part of the probate estate and therefore are not distributed under the will:

• Tenancy by the entirety (married couples in New Jersey): Property held as tenancy by the entirety passes automatically to the surviving spouse on death and does not become probate property. Proceeds from a sale by the surviving spouse typically belong to that spouse, not to the estate.
• Joint tenancy with right of survivorship: If the deed names your father and another person as joint tenants with right of survivorship, the surviving co-owner typically owns the property outright when your father died; sale proceeds usually belong to the surviving joint owner rather than the probate estate.
• Trust ownership: If the property was owned by or placed into a living trust, the trust terms and trustee control the proceeds; they usually avoid probate and are not distributed under the will.
• Transfer-on-death deed or beneficiary deed: If used and valid in New Jersey, such mechanisms also transfer property outside of probate to the named beneficiary.

2) If the property is part of the probate estate, what gets paid first?

The personal representative must follow New Jersey probate law and the decedent’s will when administering the estate. Typical priorities:

1. Costs of administration (court and filing fees, attorney and personal representative fees if allowed).
2. Funeral expenses and last illness costs.
3. Secured creditors and liens (for example, a mortgage or tax lien must be satisfied from sale proceeds before distribution).
4. Unsecured creditor claims allowed by the Surrogate’s office during the creditor claim period.
5. Any statutory family allowance, homestead allowance, or other statutorily mandated allowances that protect a surviving spouse or minor children.
6. Taxes (estate and income taxes, if applicable).

After all valid claims and expenses are paid, the remainder (the residue) is distributed according to the will. If the will leaves the residue to specific beneficiaries, they share the net proceeds as directed. If there is no valid will, New Jersey’s intestacy rules determine who receives the remainder.

3) Surviving spouse protections and special allowances

New Jersey law provides certain protections to a surviving spouse and minor children that can affect how much of the estate is available for distribution under a will. Examples include family allowances and possible election rights that allow a surviving spouse to claim a statutory share instead of taking under the will. These protections can reduce the amount available to other beneficiaries. For general information about New Jersey probate and surrogate practice, see the New Jersey Courts Surrogate Division guidance: https://www.njcourts.gov/courts/surrogates.html

4) Example (hypothetical)

Hypothetical facts: Dad owned the house alone. The executor sells the house for $400,000. There is a $150,000 mortgage lien and $25,000 in valid creditor claims plus $10,000 in administration costs and taxes. After paying the mortgage and claims, about $215,000 remains. If there is a valid will that leaves the residue to beneficiaries, that $215,000 (minus any statutory spouse allowances or late creditor claims) is distributed under the will.

5) Practical complications to watch for

• If title to the house lists both parents as tenants by the entirety, the surviving parent likely receives the sale proceeds free of probate.
• Creditors may file late claims within the statutory claims window; the personal representative should preserve funds until the claims period closes or obtain court approval for distribution.
• Outstanding taxes, municipal liens, or judgments may attach to sale proceeds and must be resolved before final distribution.
• Real property sales must follow the terms of the will or the court’s instructions when the property is an estate asset (for example, whether the estate should sell or transfer the property to a devisee).

For the governing New Jersey statutory framework on probate and estate administration, see Title 3B of the New Jersey Statutes (Probate and Administration): https://www.njleg.state.nj.us/Statutes/Title3B/ and consult the New Jersey Surrogate Division: https://www.njcourts.gov/courts/surrogates.html

Helpful Hints

• Check the deed: Determine whether the house was titled in your father’s name alone, as tenancy by the entirety, joint tenants with right of survivorship, or in a trust. Who appears on the deed controls whether the property becomes probate property.
• Locate the will and death certificate: The personal representative named in the will must open probate with the Surrogate’s Court for the county where the decedent lived.
• Get an appraisal: If the property is an estate asset, obtain a fair market appraisal to confirm the sale price was reasonable before distribution.
• Ask the executor for an accounting: The executor should provide an accounting showing receipts, payments (mortgage, creditors, taxes), and the proposed distribution.
• Do not accept or spend funds until you understand their source: If proceeds bypass probate (for example, belong to a surviving spouse or a joint owner), they are not estate assets. Verify ownership before assuming funds will be distributed under the will.
• Contact the Surrogate’s office: For procedural questions, the county Surrogate’s office can explain local probate steps and claim deadlines. Find local Surrogates info here: https://www.njcourts.gov/courts/surrogates.html
• Consider an estate attorney: If ownership is unclear, if there are competing claims, or if a surviving spouse asserts statutory rights, consult a New Jersey probate attorney to protect your interests.