Detailed Answer
When a person dies without a will (intestate) in New York, any money that represents the decedent’s interest in a sale — for example, proceeds from the sale of real estate or personal property — is generally treated as part of the decedent’s estate unless the funds passed outside probate before or at the time of death. The estate’s personal representative (administrator) handles estate assets, pays valid debts and expenses, and then distributes the remainder to heirs under New York’s intestacy rules.
How sale proceeds become estate property
Key situations where sale proceeds will be estate property:
- Sale completed after the decedent’s death by the administrator or executor appointed by the Surrogate’s Court. The net proceeds are estate assets and must be administered through probate or administration.
- Sale completed before death but the proceeds remained solely in the decedent’s name at death (for example, a check or bank account titled only to the decedent). Those funds become part of the probate estate.
When sale proceeds do NOT pass through the estate
Proceeds will bypass probate and go directly to a non-probate recipient if the asset or account was structured to transfer automatically on death:
- Joint tenancy with right of survivorship: a co-owner usually receives the whole interest automatically at death.
- Tenancy by the entirety (spouses): the surviving spouse typically takes the property outside probate.
- Payable-on-death (POD) or transfer-on-death (TOD) designations for bank/brokerage accounts.
- Life insurance or retirement benefits with named beneficiaries — proceeds go to the beneficiary, not the estate.
Order of handling funds in probate administration
If proceeds are estate assets, the typical steps under New York law are:
- The Surrogate’s Court appoints an administrator (if there is no will) who obtains letters of administration.
- The administrator collects estate assets, including sale proceeds held by the estate.
- The administrator pays valid creditors, taxes, funeral expenses, and administration costs. New York law and Surrogate’s Court procedures govern presentation and allowance of claims (see Surrogate’s Court rules and SCPA).
- After liabilities are settled, the administrator distributes the remaining assets to heirs following the state’s intestacy rules. New York’s intestacy distribution scheme is set out in the Estates, Powers & Trusts Law (EPT).
For the statutory intestacy rules, see New York EPT §4-1.1: https://www.nysenate.gov/legislation/laws/EPT/4-1.1. For Surrogate’s Court and estate administration procedure, see the Surrogate’s Court provisions and Surrogate’s Court Procedure Act (SCPA): https://www.nysenate.gov/legislation/laws/SCPA.
Common practical issues and examples
Example A — Property sold after death by administrator: The administrator sells a decedent’s rental property and receives net proceeds of $150,000. Those proceeds are estate assets. The administrator must pay debts, taxes, and expenses before distributing what remains to heirs under EPT intestacy rules.
Example B — Proceeds in joint name: The decedent and sibling held property as joint tenants. After one co-owner dies, the surviving joint tenant automatically owns the interest; proceeds from a subsequent sale by the survivor do not pass through the decedent’s probate estate.
How heirs or potential claimants can recover proceeds
If you believe you are entitled to part of leftover sale proceeds, typical steps are:
- Determine whether the funds are estate assets or passed outside probate (look at title, account registration, beneficiary designations).
- If the funds are estate assets, check whether an administration is open in Surrogate’s Court and who the appointed administrator is (county Surrogate’s Court records).
- Request an accounting from the administrator. If you are an heir, you have a right to information about the estate’s administration.
- If there is no administration and a significant amount is involved, you can petition the Surrogate’s Court to open administration and seek letters of administration so the court can direct distribution.
Practical pitfalls to watch for
- Don’t assume sale proceeds always go to family — joint ownership, beneficiary designations, and survivorship rights override intestate distribution.
- Creditors have priority; outstanding debts can exhaust sale proceeds before heirs receive anything.
- Title companies, banks, or brokers may hold funds until they receive proof of proper authority (letters of administration or an order from the Surrogate’s Court).
Helpful Hints
- Act quickly: locate the death certificate, review account titles and beneficiary forms, and check Surrogate’s Court records for any open administration.
- Gather documents: sale closing statements, deeds, account statements, beneficiary designations, and any correspondence from banks or title companies.
- Contact the title company or closing attorney if a sale recently closed. They can say whether proceeds were paid to the decedent, to the estate, or to a co-owner.
- If funds are being held because no one has presented proof of authority, file for letters of administration in the county Surrogate’s Court where the decedent lived.
- Talk to a New York probate attorney when substantial sums are at stake, when ownership is disputed, or when creditors or taxes may consume the proceeds.
- Use official resources: New York’s EPT intestacy rules EPT §4-1.1 and Surrogate’s Court procedures (SCPA) are starting points.
Disclaimer: This article provides general information about New York law and is not legal advice. It does not create an attorney-client relationship. For advice specific to your situation, contact a licensed New York attorney or the local Surrogate’s Court.