FAQ: What happens to leftover sale proceeds when someone dies without a will in Kentucky?

Short answer: In Kentucky, money that represents proceeds from a sale owned by a person who dies intestate (without a will) becomes part of that person’s estate. The probate process (or a small‑estate procedure, if eligible) collects those proceeds, pays valid debts and expenses, and then distributes any remaining funds to heirs under Kentucky’s intestate succession rules. Some proceeds, however, can pass outside probate if they were payable‑on‑death, held in joint tenancy with rights of survivorship, or otherwise non‑probate assets.

Detailed answer

This answer assumes the decedent died owning sale proceeds (for example, they sold real estate or personal property and funds remained in an account, escrow, or unpaid distribution) and the decedent left no valid will. Here is how those proceeds are handled in Kentucky.

1. Are the proceeds “estate” property?

Yes, ordinarily sale proceeds that belonged to the decedent at the time of death are estate property. That means the proceeds must be collected by the personal representative (administrator) and handled through the estate administration process.

2. Do the proceeds ever pass outside probate?

Yes. Examples of non‑probate transfers include:

• Bank accounts with a valid payable‑on‑death (POD) or transfer‑on‑death (TOD) designation naming a beneficiary;
• Accounts or property held in joint tenancy with rights of survivorship — the surviving co‑owner typically becomes owner automatically;
• Assets held in a trust or with a named beneficiary (life insurance, retirement accounts) — these generally pass to the named beneficiary outside probate.

If the sale proceeds were paid into one of these non‑probate vehicles, they likely bypass probate and go directly to the named beneficiary or joint owner.

3. Who controls the proceeds if they are estate property?

If no will exists, the court appoints an administrator to handle the estate (sometimes a close family member). The administrator collects estate assets (including sale proceeds), notifies creditors, pays valid debts, files necessary tax returns, and distributes the remainder to heirs according to Kentucky’s intestacy rules.

4. How do Kentucky’s intestate succession rules determine who receives the leftover funds?

Kentucky law sets a priority order for heirs when there is no will. Common outcomes:

• If the decedent is survived by a spouse but no surviving descendants (children, grandchildren), the spouse usually inherits most or all of the intestate estate.
• If the decedent is survived by a spouse and descendants who are also descendants of the spouse (e.g., children of the marriage), the spouse often receives a large portion and the children share the remainder.
• If the decedent is survived by descendants but no spouse, descendants typically inherit everything, divided by representation among the children and grandchildren.
• If there are no spouse, descendants, or parents, more distant relatives (parents, siblings, nieces/nephews, grandparents, etc.) may be next in line. If no heirs can be found, the estate may ultimately escheat to the state.

For the exact statutory order, consult Kentucky’s statutes on descent and distribution and the probate code (search the Kentucky Revised Statutes for “descent and distribution” and “probate administration”). The Kentucky Legislature website and the Kentucky Court of Justice have authoritative resources and statutes.

5. What steps should an heir or potential administrator take to recover leftover proceeds?

1. Determine whether the proceeds are probate assets. Check account titles, beneficiary designations, and joint‑owner status.
2. If the proceeds are non‑probate (POD/TOD or joint), present required documentation (death certificate, ID, beneficiary forms) to the holder (bank, escrow agent) to get funds released.
3. If the proceeds are estate property, petition the appropriate Kentucky probate court to open an estate and appoint an administrator. The administrator can then collect the funds from escrow or other holders.
4. If the estate is small and qualifies for a simplified procedure, use Kentucky’s small‑estate or summary administration process (if available) to obtain the funds more quickly without full probate.

6. What about creditor claims and timelines?

The administrator must notify known creditors and follow statutory deadlines before distributing assets. Valid debts, funeral expenses, and estate administration costs are usually paid before heirs receive distributions. This means heirs may not receive leftover sale proceeds until creditor claims and taxes have been resolved.

7. Practical examples (hypothetical)

Example A: Alice sold her house shortly before she died. The sale funds sat in an escrow account in her name. No beneficiary was named. The funds are probate assets and will be collected by the estate administrator, who pays debts and then distributes what remains to Alice’s heirs under Kentucky intestacy rules.

Example B: Bob sold a car and deposited the sale money into a joint bank account titled to Bob and his daughter as joint tenants with rights of survivorship. When Bob dies, the daughter typically becomes sole owner of the account and the funds pass outside probate.

8. Where to find Kentucky statutes and official guidance

Authoritative sources:

• Kentucky Legislature (search the Kentucky Revised Statutes for provisions on descent and distribution and probate administration): https://legislature.ky.gov
• Kentucky Court of Justice – information about probate, administration, and forms: https://kycourts.gov

Helpful Hints

• Check account titles and beneficiary designations first — that determines whether funds go through probate.
• Obtain multiple certified copies of the death certificate; banks and escrow agents almost always require one to release funds.
• If you expect the estate will be small, ask the local probate clerk whether a simplified or summary process applies.
• Keep good records of any communications and paperwork you submit to banks, escrow agents, and the court.
• If creditors exist, do not distribute funds until the administrator confirms claims are resolved or the statutory waiting period passes.
• When in doubt, consult a Kentucky probate attorney — they can confirm whether the proceeds are probate property and advise on opening the estate, appointing an administrator, and handling creditor claims.

Disclaimer: This is general information, not legal advice. I am not a lawyer. Laws change, and outcomes depend on specific facts. For advice tailored to your situation in Kentucky, contact a licensed Kentucky attorney or the local probate court.