Overview: Sale Proceeds and Intestate Estates in Colorado

If a person dies without a will in Colorado, any money that represents the proceeds of a sale that belonged to the decedent will usually become part of that person’s estate unless the money passed outside probate by operation of law. How the funds are handled depends on how the funds were owned or titled, whether a beneficiary designation applied, and whether any creditors or taxes must be paid first.

How ownership affects leftover sale proceeds

When determining who receives sale proceeds after an intestate death, Colorado law looks to the title or legal form in which the funds were held at the moment of death. Common situations:

• Funds held solely in the decedent’s name. These proceeds are estate assets and generally must go through probate (administration). The personal representative administers the estate, pays valid debts and expenses, and distributes the remainder to heirs under Colorado’s intestate succession rules (see C.R.S. Title 15, Probate & Administration).
• Funds in a joint account with right of survivorship. If the proceeds were deposited into a joint account that has a right of survivorship, the surviving joint owner typically becomes the owner of the account funds immediately upon death—those funds usually pass outside probate.
• Funds payable-on-death / transfer-on-death designation. If the account or instrument holding the proceeds named a payable-on-death (POD) or transfer-on-death (TOD) beneficiary, the money passes directly to that beneficiary and does not become part of probate estate.
• Funds held by a closing agent, escrow, or third party. If sale proceeds remain with a closing agent, title company, or escrow holder at the time of death, the closing agent will follow the contract and any instructions on file. If no valid beneficiary or surviving owner appears, the closing agent will typically require probate court authorization or a properly executed affidavit/letters appointing a personal representative before releasing funds.

Probate, estate administration, and distribution under intestacy

If the proceeds are part of the estate, a personal representative must be appointed and the estate administered. The personal representative locates assets (including sale proceeds), notifies and pays creditors, files tax returns if needed, and distributes the residue to heirs. Colorado’s intestacy rules set the order of inheritance (spouse, children, parents, siblings, etc.). For the controlling rules, see the probate statutes in C.R.S. Title 15, Article 11 (intestate succession) and related administration rules in Title 15, Article 12.

Relevant Colorado statutes (overview): C.R.S. Title 15 (Probate & Administration). See in particular the articles on intestate succession and estate administration.

Creditors, taxes, and priority claims

Estate assets (including sale proceeds) are subject to valid creditor claims and estate taxes before distribution to heirs. The personal representative must follow Colorado probate procedures for notifying creditors and resolving claims. If creditor claims exceed estate assets, heirs may receive little or nothing.

Small estate alternatives

Colorado provides simplified procedures for smaller estates (summary administration or small estate affidavits in certain circumstances). These procedures can allow transfer of funds without full probate when statutory conditions are met. Whether those procedures apply depends on the size and makeup of the estate and how the assets were titled.

Typical practical steps to recover or distribute leftover sale proceeds

1. Locate the closing statement, escrow paperwork, and bank account records for the sale.
2. Check title and account ownership (sole, joint with right of survivorship, or POD/TOD beneficiary).
3. If funds are held by a third party, contact that party, present the decedent’s death certificate, and ask what documents they require to release funds.
4. If funds are part of the estate, open probate (intestate administration) in the county where the decedent lived so a personal representative can be appointed and handle distributions under C.R.S. Title 15.
5. Allow the probate process to address creditor claims and taxes before distributing net proceeds to heirs under Colorado’s intestacy rules.

When to get professional help

Consider consulting a probate or estate attorney if: (1) ownership of the proceeds is unclear, (2) competing claims (heirs, creditors, joint owners) arise, (3) large sums are involved, or (4) you need help with probate filings. The Colorado courts’ website and the state statutes can guide you through the basics, but complex situations usually benefit from legal advice.

Helpful Hints

• Gather the decedent’s financial documents first: deed, closing statements, bank statements, account titles, beneficiary designations, and contracts.
• Look for POD or TOD language or joint-with-right-of-survivorship designations—those override intestate distribution for the specific asset.
• Contact the escrow or title company that handled the sale. They often have procedures for releasing funds when an owner dies.
• If the account or escrow holder requires probate documents, you will typically need letters testamentary or letters of administration from the probate court before they will release funds.
• Check whether a simplified or small-estate procedure applies to avoid full probate—this can save time and expense.
• Keep careful records of communications, claims, and distributions. The personal representative must document payments to creditors and heirs.
• If you are an heir and cannot agree with the personal representative or other heirs, seek legal advice promptly—disputes can affect timelines, costs, and your rights.

Quick references: Colorado Revised Statutes, Title 15 (Probate & Administration): https://leg.colorado.gov/ (Title 15 PDF). For general probate forms and court information, see the Colorado Judicial Branch: https://www.courts.state.co.us.

Disclaimer: This article provides general information about Colorado law and is not legal advice. It does not create an attorney-client relationship. For advice specific to your situation, consult a licensed Colorado attorney.