Detailed answer — how net sale proceeds are treated under Iowa law
If your parent’s house is sold and the sale pays off all debts, whether any leftover money is distributed under your father’s will depends on who owned the property and how title or beneficiary arrangements were set up.
Key rule: if the house (or the net cash from its sale) is part of your father’s probate estate, the remaining funds are estate assets and will be distributed according to the will after administration expenses and legal priorities are paid. Iowa handles probate administration under the Iowa Code (probate statutes), which governs how assets are marshaled, debts and expenses are paid, and the remainder is distributed to beneficiaries. See Iowa Code, Chapter 633 for the probate administration rules: Iowa Code Chapter 633 (Probate).
Common ownership scenarios:
- Owned solely in your father’s name: The house is typically a probate asset. If an executor or administrator sells the house, the net proceeds (sale price minus mortgage payoff, liens, sale costs, taxes, and administration expenses) become part of the probate estate. After the court-authorized payment of debts and costs, remaining funds are distributed under the will.
- Owned jointly with right of survivorship (e.g., joint tenancy or tenancy by the entirety): The house usually passes automatically to the surviving joint owner by operation of law and does not become part of probate. In that case the property (or proceeds if sold by the surviving joint owner) generally bypasses distribution under your father’s will.
- Held in a living trust: If the house was in a revocable trust your father funded during life, the trustee follows trust terms. Trust property usually avoids probate and does not pass under the will.
- Transfer-on-death or beneficiary deed: Some states allow deeds that name a beneficiary who takes title at the owner’s death. If such a deed exists and is valid in Iowa, the property passes to the named beneficiary outside probate.
Priority of payments during probate: before beneficiaries receive anything under a will, the estate must pay valid debts, funeral expenses, administration costs (executor fees, attorney fees), taxes, and certain statutory allowances. Those claims reduce the net amount available to beneficiaries.
What to watch for in Iowa specifically:
- Confirm how title was held (deed search at county recorder).
- Confirm whether your father created a trust or used a beneficiary deed.
- Ask whether the estate opened probate and whether an executor was appointed.
- Ask for an accounting or inventory from the executor — Iowa probate practice requires estate inventories and reports during administration under Iowa Code Chapter 633.
Short hypotheticals to illustrate
Hypothetical A — sole ownership: Dad owned the house in his name, owed $30,000 on the mortgage, and the house sold for $200,000. After paying the mortgage, liens, closing costs, taxes, funeral and administration expenses, the remaining net proceeds become part of the probate estate and the executor distributes them according to the will.
Hypothetical B — joint survivorship: Dad and mom held title as joint tenants with right of survivorship. When dad died, mom became sole owner by survivorship. If mom later sold the house and paid debts, the proceeds belonged to mom and not to distributions under dad’s will.
Practical steps to take now
- Check the deed: order a title or deed search from the county recorder to confirm how the house was titled.
- Ask the executor/administrator for written accounting and a copy of the will and any probate filings.
- Confirm whether a trust or beneficiary deed exists (ask family members and check probate court records).
- If you think the estate is being handled incorrectly, request a formal accounting in probate court or consult a probate attorney about your rights as an interested party.
Helpful hints
- Start by verifying title: ownership determines whether property goes through probate.
- Get copies of the will and any trust documents early — they control distribution of probate and trust assets.
- Ask the executor for an inventory. Probate law requires inventories and accountings; these show sale proceeds and disbursements.
- Remember creditor and administrative priority: funeral costs, taxes, and creditor claims reduce the amount left for beneficiaries.
- If you believe the executor is not following the will or Iowa probate rules, you can file a motion in probate court to compel an accounting or to remove an executor if there is cause.
- Nonprobate transfers (joint title, trust, beneficiary deed) generally avoid probate — that’s often why the will does not control those assets.
- Tax points: proceeds may have tax consequences; consult a tax professional about estate taxes, estate filing requirements, or capital gains on the sale.
When to consult an attorney
If title is unclear, the executor refuses to provide an accounting, you suspect debts or claims were not properly handled, or you want to challenge the distribution under the will, talk with a local probate attorney. A lawyer can explain your legal rights as a beneficiary or interested person and help you protect estate assets.