Detailed Answer
When a property owner in Colorado dies with real property solely in their name and that property generates surplus sale proceeds—most commonly after a foreclosure or forced sale—the law directs where the extra funds must go. Under Colorado Revised Statutes (C.R.S.) § 38-38-504(2), any surplus after satisfying liens, costs, and junior encumbrances must go to the person legally entitled to the property. If the owner died before or during the sale, the estate holds title, and the personal representative must claim the funds on the estate’s behalf.
Once the personal representative collects the surplus, they distribute it under Colorado probate rules. If the decedent left a valid will, distribution follows its terms. If the decedent died without a will (intestate), the estate distributes under the intestate succession statutes:
- Surviving spouse’s share: Under C.R.S. § 15-11-101, a surviving spouse receives either the entire estate (if there are no surviving descendants or parents) or a statutory percentage when descendants exist.
- Descendants’ share: If the decedent leaves children, a portion of the residue passes to them alongside or after the spouse’s share.
Colorado law also protects a surviving spouse through allowances and exemptions before residue distribution:
- Homestead allowance: Up to $75,000 of value in Colorado (C.R.S. § 15-11-402).
- Family allowance: A reasonable sum for support during probate (C.R.S. § 15-11-403).
- Exempt personal property: Certain household items and vehicles up to statutory limits (C.R.S. § 15-11-404).
In practice, the personal representative:
- Files a motion in the district court overseeing the probate (see C.R.S. § 38-38-504(2) for foreclosure surplus claims).
- Sends notice to heirs and creditors.
- Collects and distributes funds after satisfying funeral expenses, debts, and statutory allowances.
If disputes arise—over entitlement, will interpretation, or valuation—interested parties often seek court assistance or mediation. When the process seems complex, consulting a probate attorney can help ensure you meet filing deadlines, follow statutory requirements, and protect your rights.
Helpful Hints
- Locate the personal representative’s appointment order in probate court before claiming surplus proceeds.
- Reference C.R.S. § 38-38-504(2) (foreclosure surplus) when filing your motion.
- Check for a valid will; it overrides intestacy rules but must meet formal signing and witnessing requirements (C.R.S. § 15-11-502).
- Remember that homestead and family allowances come off the top of the estate before residue distribution.
- File probate claims and objections promptly—late filings can forfeit your right to contest distributions.