What happens to leftover sale proceeds when someone dies without a will in New Jersey

Short answer: If a person dies without a will (intestate) in New Jersey, any sale proceeds that belong to the decedent become part of the decedent’s estate. The proceeds are used first to pay funeral costs, taxes, creditors, and administration expenses. After those obligations are paid, the remaining money is distributed to heirs according to New Jersey’s intestacy rules through the Surrogate’s Court process.

Detailed answer — how leftover sale proceeds are handled under New Jersey law

Begin with ownership. Whether sale proceeds become part of the decedent’s estate depends on who owned the asset at the time of death and how it was owned:

• Sole ownership: If the decedent owned the property alone, any money from a sale of that property (or payments owed for a sale completed before death but not yet paid) is an asset of the decedent’s estate.
• Joint ownership with right of survivorship: If the property was owned jointly with rights of survivorship (for example, joint tenants with right of survivorship), the surviving co-owner generally takes the interest automatically. In that case, sale proceeds typically pass to the survivor, not to the estate.
• Tenancy in common: If the property was owned as tenants in common, the decedent’s share passes through probate or intestacy to the decedent’s heirs, and the decedent’s portion of sale proceeds belongs to the estate.
• Transfer-on-death or payable-on-death designations: If the asset was titled to transfer on death (or had POD designation), the named beneficiary receives the proceeds outside probate.

When sale proceeds are estate assets, the Surrogate’s Court supervises estate administration in the county where the decedent lived. The personal representative (administrator) is appointed to collect assets (including sale proceeds), pay debts and taxes, and distribute what remains to heirs according to New Jersey’s intestacy rules (Title 3B of New Jersey statutes).

Typical steps the administrator or surrogate follows:

1. Identify and gather all estate assets, including any unpaid sale proceeds or escrow funds.
2. Pay funeral expenses, administration costs (court fees, attorney fees if approved), and valid debts and taxes.
3. Prepare an inventory and accounting for the court and heirs.
4. Distribute the remaining funds to heirs under New Jersey intestacy law.

New Jersey’s intestacy law sets the order and shares of heirs (surviving spouse, descendants, parents, siblings, etc.). For the statutory framework, see Title 3B (Administration of Estates) of the New Jersey statutes: New Jersey Legislature – Laws & Statutes. For practical information about probate and Surrogate’s Court procedures, see the New Jersey Courts self-help pages for wills and probate: New Jersey Courts.

Common examples (hypothetical)

Example 1 — Sole owner: Alice owned a house in her name alone. She sold it and the sale closed after her death but the escrow company still holds $150,000. That $150,000 is an asset of Alice’s estate. The administrator will collect the funds, pay estate debts and costs, and distribute the remainder to Alice’s heirs under New Jersey intestacy rules.

Example 2 — Joint owner with survivorship: Bob and Carol owned a bank account as joint tenants with right of survivorship. Bob dies. When the account is closed or sold, Carol is the surviving co-owner and receives the funds outside of probate.

Example 3 — Tenants in common: Dan and Eva owned a rental building as tenants in common (50/50). Dan dies. The buyer closed after Dan’s death and the buyer’s check for Dan’s 50% share goes into Dan’s estate. That 50% sale proceeds pass through probate to Dan’s heirs.

Practical steps for someone who finds sale proceeds that may belong to a decedent

1. Do not spend the money. Hold funds in a separate account labeled as estate funds or escrow. Misuse can create liability.
2. Check how the asset was titled and whether a beneficiary designation or survivorship right exists.
3. Locate the decedent’s death certificate and check for a will. If there is no will, contact the county Surrogate’s Court where the decedent lived.
4. If you are named as the executor or wish to be the estate administrator, file for letters of administration with the Surrogate’s Court. The court supervises collection and distribution of estate assets.
5. Prepare an inventory and notify known creditors and heirs. Pay valid debts and taxes before distributing funds to heirs.
6. If ownership or entitlement is disputed, consider consulting an attorney to protect your rights and to ensure proper court procedures are followed.

Helpful hints

• Confirm title and beneficiary designations: They often determine whether proceeds go through probate.
• Keep good records: copies of the closing statement, escrow instructions, bank statements, and correspondence help the Surrogate and heirs.
• Act promptly: Estates have timelines for notice to creditors and filing required tax returns.
• Talk to the Surrogate’s Court: County Surrogate’s offices can explain local filing steps and necessary forms. See the New Jersey Courts site for self-help resources: https://www.njcourts.gov/.
• Consider an attorney if funds are large, ownership is unclear, or heirs dispute the distribution.

Where to look in the law: New Jersey’s rules on estate administration and intestate succession are in Title 3B of the New Jersey statutes. For the statutory text and code sections, start at the New Jersey Legislature website: https://www.njleg.state.nj.us/. The Surrogate’s Court and New Jersey Courts websites offer practical guides and local filing information: https://www.njcourts.gov/.

Disclaimer: This article explains general principles of New Jersey law and common procedures. It is for informational purposes only and does not constitute legal advice. You should consult a licensed New Jersey attorney about your specific situation before taking action.