Detailed Answer
When a person dies without a will in California, any money left from the sale of their property typically becomes part of the decedent’s probate estate unless it passed outside probate before or at the time of sale. How those leftover sale proceeds are distributed depends on three things:
- whether the proceeds are probate assets or nonprobate transfers;
- whether the decedent left a surviving spouse or other relatives; and
- whether the estate can use a summary (small‑estate) procedure instead of a formal probate administration.
1. Are the sale proceeds part of the probate estate?
If the decedent owned the property outright and the sale closed and the buyer’s funds were deposited to an account in the decedent’s name or to the estate, then the proceeds are normally probate assets. Proceeds are NOT probate assets if they were paid directly to a nonprobate beneficiary at closing, such as under a payable‑on‑death (POD) designation, joint tenancy with right of survivorship, a living trust, or an otherwise valid transfer-on-death arrangement. Check account titles, escrow instructions, trust documents, and any beneficiary designations to see whether the funds bypass probate.
California recognizes community property rules: if the property was community property with a surviving spouse, the surviving spouse will usually have an ownership interest that affects how much of the proceeds belong to the spouse versus the decedent’s estate. See Family Code §760 for the community property rule: Family Code §760.
2. If proceeds are probate assets: who inherits under intestacy?
When the proceeds are part of the probate estate and the decedent died intestate (without a valid will), California’s intestate succession rules determine who receives the property. The general priority is:
- Surviving spouse (or registered domestic partner) — shares vary depending on whether the decedent left children, parents, or other descendants;
- Children and descendants of deceased children;
- Parents;
- Siblings, nieces and nephews, more distant relatives, and finally the state if no relatives exist.
These rules come from California’s Probate Code governing intestate succession. For the governing statutory framework, see California Probate Code (intestate succession provisions): Probate Code §6400 et seq.
Example: If a decedent owned a house solely in their name, sold it before death, and left $100,000 of proceeds in a bank account at death, and the decedent is survived by a spouse and two children, the distribution will follow the intestacy formulas (often the spouse will receive a substantial share; the exact fraction depends on whether the property was community property, quasi‑community, or the decedent’s separate property).
3. Small‑estate (summary) procedures
If the total value of the decedent’s personal property subject to probate (which may include sale proceeds) falls below the small‑estate threshold, California allows simplified procedures that avoid formal probate. One option is a small estate affidavit or a summary distribution. The current small estate threshold appears in the Probate Code small‑estate statutes; consult Probate Code §13100 and related sections for details and the precise dollar limit, which is periodically adjusted: Probate Code §13100. Using a small‑estate affidavit or a summary procedure can let heirs collect sale proceeds more quickly when eligibility requirements are met.
4. Claims by creditors and closing out the estate
Before distribution, the estate must pay funeral expenses, administrative costs, and valid creditor claims. If the estate owes creditors, sale proceeds that are part of the probate estate may be used to pay those obligations. The personal representative (executor/administrator) handles notice to creditors and payment under probate rules.
5. Practical steps to recover or claim sale proceeds
- Check who holds the funds: escrow company, bank account, or trustee. If funds were deposited into a trust or an account with POD or joint owners, they may not be part of probate.
- If funds are in a decedent‑only account and probate is required, the estate’s personal representative (if appointed) can collect and distribute funds following court approval or under small‑estate rules.
- If you are an heir and the estate is small, consider whether you qualify to use the small‑estate affidavit or other summary procedure under Probate Code §13100 et seq.
- If disputes over ownership or distribution arise (for example, between a surviving spouse and children), the probate court resolves those disputes under intestacy rules.
Key statutes and resources
- Intestate succession (Probate Code intestate provisions): Probate Code §6400 et seq.
- Small‑estate procedures and affidavit: Probate Code §13100 et seq.
- Community property definition: Family Code §760
- California Courts general information about probate and intestacy: courts.ca.gov — Probate self‑help
Bottom line: If sale proceeds are probate assets, they are distributed under California’s intestacy rules when someone dies without a will. Nonprobate transfers (joint accounts, POD, trust assets) bypass probate. If the estate qualifies as a small estate, heirs can often use a simplified process to collect the funds. Creditor claims and community property rules can affect the final distribution.
Disclaimer: This article is educational only and not legal advice. For guidance about a specific situation, contact a licensed California attorney because small facts can change the outcome significantly.
Helpful Hints
- Locate title documents, bank statements, trust documents, and escrow instructions right away to see if the proceeds bypass probate.
- Check account titles for POD or joint tenancy language; those designations usually avoid probate and transfer directly to the named payee or joint owner.
- Estimate the total value of personal property to determine if the small‑estate process applies. Verify the current dollar threshold in Probate Code §13100 before relying on it.
- If a surviving spouse is involved, determine whether the asset was community or separate property — that affects distribution under Family Code §760.
- If you are named as personal representative or plan to seek appointment, be prepared to give notice to creditors and potential heirs and follow probate timelines.
- When in doubt, consult a probate attorney in California to confirm whether probate, a small‑estate affidavit, or another path fits your situation.