Detailed answer — what generally happens to sale proceeds

When a decedent’s real property is sold, the money produced by the sale becomes part of the decedent’s estate unless ownership passed automatically outside probate. Who ultimately receives any leftover funds depends on how title was held, whether the property passed outside probate, whether there are valid creditor claims or liens, and whether the estate goes through administration (probate).

1. Was the home part of the probate estate?

If the home was owned solely in your parent’s name (for example, only your dad), the house is typically an asset of his probate estate. If the personal representative (executor) sells the house as part of estate administration, the proceeds are deposited to the estate account, used to pay debts and administration costs, and any remainder is distributed under the will according to state law.

If the home passed outside probate, the sale proceeds may not be estate property. Common ways property passes outside probate include:

• Joint tenancy with right of survivorship: the surviving joint owner owns the entire property immediately on death.
• Property held in a living trust: the trustee follows trust terms, not the will.
• Transfer-on-death deed (if used): the designated beneficiary takes the property without probate.

If title already transferred to someone else outside probate, sale proceeds usually belong to that transferee, not to the residuary beneficiaries named in the will.

2. Paying debts, liens, and expenses first

When the house is estate property and is sold by the personal representative, law and priority rules require the estate to pay valid debts, funeral and administration expenses, taxes, and secured debts (like a mortgage or tax lien) before any distributions to beneficiaries. Secured creditors typically must be paid from the proceeds or the lien must be released at closing.

Only after satisfying creditors and the costs of administration does any leftover cash become distributable under the terms of the will (or by intestacy if there is no valid will).

3. What the will controls

If the estate still controls the proceeds after debts and expenses are paid, the personal representative distributes the remaining funds according to the will’s directions (for example, specific gifts first, then the residuary clause). If the will leaves money to named beneficiaries, those people receive the surplus. If there is no valid will, state intestacy rules determine who inherits.

4. Surviving spouse protections and allowances

North Dakota law provides certain protections for a surviving spouse and minor children (for example, allowances and exemptions that take priority over general distributions). Those rules can reduce the amount available to residuary beneficiaries. For general probate information in North Dakota, see the North Dakota Courts probate overview: https://www.ndcourts.gov/legal-resources/probate

5. Practical examples (hypotheticals)

Hypothetical A — Sole ownership and probate: Dad owned the house alone. The executor sells it for $200,000, pays off a $100,000 mortgage, $10,000 in outstanding bills, and $15,000 in estate administration costs. The remaining $75,000 is estate funds and is distributed under the will to the beneficiaries named.

Hypothetical B — Joint tenancy: Parents held title as joint tenants with right of survivorship. When one parent dies, title passes to the survivor outright. If that survivor then sells the home and pays debts, the leftover money belongs to the survivor, not to beneficiaries under the deceased parent’s will.

6. What to check right away

• Look at the deed to see how title is held (sole name, joint tenants, tenants in common, trust, etc.).
• Find the will and see if it names an executor or personal representative.
• Ask whether the property is encumbered by a mortgage, tax lien, or other recorded lien.
• Confirm whether the estate is being probated. If not, ask why (for example, because title passed outside probate).

For statutory and procedure information about administration and wills in North Dakota, you can consult North Dakota Century Code provisions on wills and estate administration available through the state legislature’s site: https://www.legis.nd.gov/cencode/t30

Helpful hints

• Obtain a copy of the deed and any trust documents. The deed shows whether the property passed by operation of law.
• Ask the personal representative for an accounting. Executors must keep estate funds separate and provide an accounting to beneficiaries in the probate process.
• Check public records for mortgages and other liens at the county recorder’s office.
• If someone sold the home without authority (for example, not the surviving owner or the executor), contact a lawyer quickly — unauthorized sales can create disputes over who owns the proceeds.
• Keep records of communications and all financial statements related to the sale and estate expenses.
• Consider speaking with a probate attorney if the estate is large, if creditors are asserting claims, if title is unclear, or if you suspect the sale bypassed the will improperly.
• Remember tax matters: estate, inheritance, or capital gains tax issues can affect net distributions. Ask an accountant or attorney about tax consequences of the sale.
• Be aware of timeframes for creditor claims and probate filings; delays can affect rights and distributions.