Arizona: What Happens to Leftover Sale Proceeds After a Parent’s House Is Sold?

Short answer

Usually, yes: if a decedent’s house is sold and the sale proceeds remain after paying mortgage, funeral costs, taxes, administration expenses and valid creditor claims, the remaining money becomes part of the decedent’s estate and is distributed according to the will. However, Arizona law and the way the property was owned (sole name, joint tenancy, community property, trust, or beneficiary designation) can change that result. Certain allowances and exemptions for a surviving spouse or family may also reduce what goes to will beneficiaries.

How this works in Arizona — step by step

1) Who actually owned the house?

Ownership controls whether the house (and sale proceeds) go through probate at all:

• If the title was solely in your dad’s name at his death, the house is typically part of his probate estate. Sale proceeds then become estate assets and are administered through probate.
• If the property was titled as joint tenants with right of survivorship (JTWROS), the surviving joint owner usually takes the property automatically outside probate; there is no estate distribution of those proceeds.
• If the property was community property (Arizona is a community property state), a surviving spouse often already owns one-half of the community property and the other half is part of the decedent’s estate.
• If the house was in a living trust, it usually passes according to the trust terms and not through probate.

2) Who can sell the house?

If the house is probate property, only the personal representative (executor) appointed by the probate court or someone authorized by law can sell it. If a surviving joint owner or trustee sells property that passes outside probate, the sale and proceeds follow the rules for that form of ownership.

3) Order of payment from sale proceeds

When property that is part of the probate estate is sold, proceeds are usually used in this order:

1. Costs of sale (commissions, closing costs)
2. Secured debts tied to the property (mortgage, mechanic’s liens)
3. Administration expenses (probate costs, attorney and personal representative fees)
4. Funeral expenses and expenses of the last illness
5. Taxes due by the estate
6. Unsecured creditor claims allowed in probate
7. Family allowances, homestead allowance, and exemptions (statutorily allowed amounts for surviving spouse/children)
8. Remaining balance distributed to beneficiaries under the will (or by intestacy rules if no valid will)

These payment priorities are part of how Arizona administers decedents’ estates under its probate code. For an overview of probate law in Arizona, see the Arizona Revised Statutes, Title 14 (Probate): https://www.azleg.gov/arsDetail/?title=14. For practical probate guidance from the Arizona courts, see https://www.azcourts.gov/selfservice/Probate.

4) Will distributions — what the beneficiaries actually receive

If, after paying the items above, money remains in the estate, the personal representative distributes that balance according to the will’s terms. The will controls only the decedent’s probate property. Example outcomes:

• If the will leaves the residue of the estate to a child, that child will receive the leftover cash after debts and allowances are paid.
• If the will leaves specific sums or assets to others and the estate lacks cash, the estate may have to sell assets or follow statutory rules for how gifts are reduced (abatement).

5) Surviving spouse protections and family allowances

Arizona law provides certain protections for a surviving spouse and minor children. These may include a homestead allowance, family allowance, and exemptions that can reduce the amount available to pay will beneficiaries. Those rules can affect how much of the sale proceeds are distributable under the will. Details are in the probate code under Title 14 and related statutes; an attorney can explain how they apply to a particular situation.

6) When proceeds do NOT pass under the will

Proceeds won’t go through the will if:

• The property passed by right of survivorship or by trust.
• There was a payable-on-death or transfer-on-death beneficiary designation that controls the asset.
• The property was community property that automatically vested in the surviving spouse.

Common scenarios (hypotheticals)

1) Dad owned home in his name only, house sold during probate: After mortgage and allowed creditor claims are paid from sale proceeds, remaining funds are part of the probate estate and distributed under the will.

2) House titled JTWROS with mom: Mom owns the house by survivorship, sells it, and keeps proceeds. Those proceeds are not part of dad’s probate estate and are not distributed under his will.

3) House community property with right of survivorship or held in trust: The property passes outside probate according to title or trust terms, not by the will.

Practical next steps

• Check the deed to see how the property was titled. That determines whether probate is involved.
• Ask for a copy of the will and locate any trust documents or beneficiary designations.
• If probate is needed, consider hiring a probate attorney or contacting the county probate court clerk for local procedures. The Arizona courts’ probate resources are at https://www.azcourts.gov/selfservice/Probate.
• Obtain several death certificates; many institutions will require originals or certified copies before releasing assets.
• Keep detailed records of sale proceeds, payments made from those proceeds, and all creditor claims presented to the estate.

When to consult an attorney

Contact an Arizona probate or estate attorney if you encounter:

• Unclear or disputed title or joint ownership claims
• Creditor claims that might exceed estate assets
• Questions about spousal allowances, homestead rights or potential elective share issues
• Complex estate assets (business interests, out-of-state property, large debts)

Helpful hints

• Always confirm how the property was titled before assuming the will governs the proceeds.
• Keep all sale-related documents and receipts; executors must account for all funds in probate.
• Don’t distribute estate funds until creditor claims and statutory allowances are resolved. Distributing too early can create personal liability for the personal representative.
• Ask the title company or closing agent for a clear payoff statement showing liens and fees paid from sale proceeds.
• If the estate is small, Arizona has simplified procedures that may avoid full probate—ask an attorney or the court about small-estate options.

Disclaimer: This article explains general Arizona probate principles and is for informational purposes only. It is not legal advice and does not create an attorney-client relationship. For advice about a particular situation, consult a licensed Arizona attorney who can review the facts and applicable law.