What happens to leftover sale proceeds when someone dies without a will in Texas?

Short answer: Money from a sale of a decedent’s property is part of the decedent’s estate. In Texas, the personal representative (administrator) uses estate funds, including sale proceeds, to pay valid debts and expenses first. Any remaining balance is distributed to the decedent’s heirs under Texas’s intestacy rules. If there are no qualifying heirs, the funds eventually escheat to the State of Texas.

Detailed answer — how sale proceeds are treated under Texas law

When a person dies without a will (intestate), the distribution of everything they owned at death—including cash, bank accounts, and proceeds from property sales—follows a process under the Texas Estates Code. The main steps are:

1. Identify the asset and its classification. Proceeds from the sale of real or personal property that belonged to the decedent at death are estate assets. The administrator will determine whether the asset was community property or the decedent’s separate property because distribution rules differ depending on classification.
2. Open an estate and appoint an administrator. Because there is no will naming a personal representative, a court typically appoints an administrator for the estate. The administrator will gather assets (including sale proceeds), supervise collection of debts, and handle the probate process. See Texas Estates Code, Title 2, Subtitle E on estate administration: https://statutes.capitol.texas.gov/Docs/ES/htm/ES.401.htm
3. Pay estate debts, taxes, and administration costs. Before distributions to heirs, valid funeral bills, creditor claims, taxes, and court and attorney fees must be paid from estate funds. The administrator follows the statutory priority for paying claims; only the money left after satisfying these obligations is available for distribution.
4. Distribute remaining funds under intestacy rules. Once debts and expenses are paid, the remaining sale proceeds become distributable estate assets. Texas intestacy statutes determine who inherits and in what share. Those statutes are collected in Chapter 201 of the Texas Estates Code: https://statutes.capitol.texas.gov/Docs/ES/htm/ES.201.htm
5. No heirs — escheat to the state. If no lawful heirs can be found, the remaining estate funds will ultimately be transferred to the State of Texas under Texas law.

Key legal points to know

• Sale proceeds are treated like any other estate asset and are handled through probate administration.
• Classification (community vs. separate property) matters. Community property rules can give the surviving spouse different rights than separate-property rules give other relatives.
• Creditors and estate administration costs are paid before heirs receive distributions.
• If the estate is small, simplified procedures may be available in some counties, but an administrator or representative still must follow required steps.

Example (hypothetical facts)

Imagine Maria dies in Texas owning a house she owned before marriage (separate property) that an administrator later sells for $150,000. The estate also has $10,000 in unpaid medical bills and $5,000 in funeral costs. The administrator uses sale proceeds to pay the $15,000 in debts and administrative costs first. The remaining $135,000 becomes distributable estate funds. If Maria died without a will, the administrator would distribute that $135,000 to Maria’s heirs according to Texas intestacy rules (after confirming whether any portion of that money should be classified as community property). See Texas Estates Code, Chapter 201 for rules that determine which relatives inherit: https://statutes.capitol.texas.gov/Docs/ES/htm/ES.201.htm

How to proceed if you’re involved

1. Locate important documents (death certificate, deeds, bank statements).
2. Contact the county probate court to start the administration process if necessary.
3. Ask whoever holds the sale proceeds (executor, administrator, title company, or bank) for an accounting and documentation on how funds will be handled.
4. If you are a potential heir or a creditor, file a claim or participate in the probate proceeding so your rights are protected.
5. Consider hiring a probate attorney if there are disputes about asset classification, creditor priority, or heirship.

Where to find the law

• Texas intestacy rules (who inherits and how): Texas Estates Code, Chapter 201 — https://statutes.capitol.texas.gov/Docs/ES/htm/ES.201.htm
• Probate and estate administration rules: Texas Estates Code, Title 2, Subtitle E (administration) — https://statutes.capitol.texas.gov/Docs/ES/htm/ES.401.htm

Helpful hints

• Preserve records: keep sale documents, receipts for estate expenses, creditor notices, and any communications about the proceeds.
• Act quickly on creditor claims: many claims have filing deadlines in probate.
• Confirm property classification early: whether an asset is separate or community property changes who inherits.
• Ask for written accounting from the administrator: you have a right to know how estate funds were handled.
• Use small-estate procedures only if the estate actually qualifies; otherwise, a full administration may be required.
• If you and other potential heirs disagree, mediation or court resolution may be necessary; an attorney can explain options and likely costs.

Disclaimer: This article is informational only and does not constitute legal advice. It summarizes general rules under Texas law but is not a substitute for advice from a licensed attorney who can review the specific facts of your case.