Detailed Answer
When a property held solely in the name of a deceased spouse generates surplus proceeds after a foreclosure or judicial sale in Indiana, state law directs how the funds pass to heirs. Two sets of statutes apply: the foreclosure distribution rules and the probate succession laws.
Surplus Proceeds After Foreclosure in Indiana
Under Indiana Code § 32-29-10-8, courts distribute any surplus funds remaining after paying foreclosure costs and satisfying all liens. The clerk releases the excess to the property owner or, if the owner is deceased, to the owner’s estate. See Indiana Code § 32-29-10-8.
How Indiana Probate Distributes Surplus Proceeds
If the sole owner dies before receiving the surplus, the funds become part of the decedent’s estate. The probate court allocates assets under a valid will or, if there is no will, under intestate succession rules in Indiana Code § 29-1-2-1. See Indiana Code § 29-1-2-1.
- If the decedent left a will:
- The surplus proceeds pass to the beneficiaries named in the will.
- If the decedent died intestate (without a will):
- The surviving spouse receives the first $100,000 of the estate plus one-half of any remainder if all children are also children of that spouse.
- If the decedent had children from another relationship, the spouse inherits one-half and those children share the other half.
- If there are no surviving descendants or parents, the spouse inherits the entire estate.
Helpful Hints
- File a court motion to claim surplus funds within one year of the sale date.
- Provide a certified death certificate and probate filings to prove the decedent’s death.
- Check local rules or consult the probate court clerk for filing deadlines.
- If a will exists, submit it promptly to open probate and appoint a personal representative.
- Inventory all estate assets, including surplus proceeds, when no will exists.
- Consider attorney assistance for complex estates or multi-party claims.