Detailed Answer

When a decedent’s home is sold and the proceeds are used to pay the decedent’s debts, any remaining cash typically becomes part of the decedent’s probate estate in Indiana. The personal representative (sometimes called the executor) is responsible for collecting assets, paying valid claims and expenses, and then distributing any remaining funds according to the decedent’s will or, if there is no valid will, under Indiana’s intestacy rules.

How this usually works under Indiana law

Appointment of personal representative: After someone dies, a court usually appoints a personal representative to administer the estate. The representative gathers assets (including cash from the sale of real property), pays debts and expenses, and distributes what remains. See the Indiana Probate Code (Title 29) for the statutory framework: Indiana Code, Title 29 (Probate).
Sale proceeds become estate assets: If the personal representative sells the home during administration, the sale proceeds are estate property. After paying liens (for example, a mortgage) and necessary costs of sale, the remaining cash is available to pay funeral bills, taxes, creditor claims, and administration expenses.
Distribution of any leftover funds: If valid debts and expenses are paid and money remains, the remaining funds (the “residue” of the estate) are distributed according to the will. If the will contains a residuary clause, the funds pass to those named in that clause. If there is no will, the funds pass under Indiana’s intestacy rules, which govern who inherits when a person dies without a valid will. See Indiana Probate self-help information for practical guidance: Indiana Courts — Probate.

Common scenarios that change the outcome

Not every sale of a house leads to proceeds going into the probate estate under the will. Common exceptions include:

Joint ownership with right of survivorship: If the home was owned jointly (for example, as joint tenants with right of survivorship) and the surviving owner automatically became sole owner at death, the house may not be part of the probate estate and the sale proceeds (if sold by the survivor) would not be distributed under the deceased parent’s will.
Property in a living trust: If the home was titled in a revocable living trust, the trustee follows the trust terms and the property typically bypasses probate.
Beneficiary designations or transfer-on-death instruments: If a transfer-on-death deed, payable-on-death account, or beneficiary designation applies, the asset may avoid probate and pass directly to the named beneficiary.
Jointly owed mortgage or liens: A mortgage or other lien must be satisfied from sale proceeds before distribution. Secured creditors are paid from the secured asset or its sale proceeds.

Illustrative example

Hypothetical facts: Dad owned his home in his name alone. After Dad died, the personal representative sold the house for $300,000. There was a mortgage balance of $150,000 and $10,000 in sale and closing costs. Funeral and estate administration costs totaled $15,000 and valid creditor claims were $5,000.

How the money flows: From $300,000, pay the mortgage ($150,000) and closing costs ($10,000) = $140,000. Then pay funeral and administration ($15,000) and creditor claims ($5,000) = $20,000. Total deductions = $160,000. Leftover cash for the estate = $140,000. That $140,000 is part of the probate estate and will be distributed according to Dad’s will (for example, under the residuary clause) or under intestacy rules if no valid will exists.

What to do next — practical steps

Confirm ownership: Check the deed to see how title was held (sole ownership, joint tenancy, tenants in common, or trust).
Find the will and identify the personal representative named in it. If there is no will, the court will appoint an administrator.
Ask the personal representative for an inventory or accounting. They must collect assets, pay debts, and then distribute any residue. You can request an explanation of how sale proceeds were handled.
If you suspect the proceeds weren’t handled correctly, you can seek guidance about filing a complaint in probate court or asking for a formal accounting.

When a will does not control distribution

Even if there is a will, some allowances or protections can affect how much the will can reach. Indiana statutes provide procedures and protections that can affect distribution (for example, family allowances, exempt property, creditor priority). For practical probate procedures and forms, see: Indiana Courts — Probate and the Indiana Code, Title 29: https://iga.in.gov/legislative/laws/2024/ic/titles/029.

Helpful Hints

Check title and deed right away. Ownership language determines whether the probate estate includes the house.
Ask for a copy of the final accounting from the personal representative before distribution happens.
Keep copies of the will, death certificate, mortgage statement, deed, and closing documents.
If the estate owes creditors, expect the claims process to be finished before the final distribution.
If you disagree with the way proceeds are handled, you can petition the probate court for review or for a formal accounting.
When in doubt, talk to a probate attorney who handles Indiana estates. An attorney can review documents (deed, will, settlement statements) and explain your rights and options.

Disclaimer

This article is for general informational purposes only and does not provide legal advice. I am not a lawyer. For advice about a specific situation in Indiana, consult a licensed probate attorney who can review the facts and applicable law.