Short Answer

In North Carolina, life insurance proceeds belong to the named beneficiaries and usually do not pass through probate. If the insurer mistakenly paid someone else, the named beneficiaries can demand correction and, if necessary, file a civil action in Superior Court to recover the funds through claims like unjust enrichment, conversion, or a constructive trust. Act quickly—many claims have a three-year deadline.

Understanding the Problem

In North Carolina, can the named beneficiaries recover life insurance benefits when the insurance company pays the wrong person? Here, the insurer issued proceeds to a sibling who was not a designated beneficiary.

Apply the Law

Under North Carolina law, life insurance payable to a named beneficiary is a nonprobate transfer that bypasses the estate. Disputes over mistaken payments to a non‑beneficiary are handled in civil court, not by the Clerk of Superior Court. The core path is to (a) prove you are the named beneficiary, (b) show the unintended recipient received and kept the benefit, and (c) obtain equitable relief or a money judgment. The main forum is Superior Court, and a common deadline for these claims is three years from accrual.

Key Requirements

• Show beneficiary status: Provide the policy, beneficiary designation, and claim correspondence confirming you (and your twin) are the named beneficiaries.
• Prove mistaken payment: Document that the insurer paid someone who is not a designated beneficiary.
• Unjust enrichment elements: The wrong recipient received a measurable benefit, accepted it, and it would be unfair for them to keep it.
• Conversion alternative: The wrong recipient exercised control over proceeds that belong to you, excluding your rights.
• Equitable remedy: Ask the court to impose a constructive trust over funds still traceable in the recipient’s hands.
• Forum and timing: File in Superior Court; typical limitation period for unjust enrichment/conversion is three years.

What the Statutes Say

• North Carolina Gen. Stat. § 28A-2-4 (Estate proceedings; clerk jurisdiction) – Monetary damage claims belong in Superior Court, not before the Clerk.
• North Carolina Gen. Stat. § 1-52 (Three-year limitations) – Most claims for conversion and unjust enrichment must be brought within three years.
• North Carolina R. Civ. P. 22 (Interpleader) – Allows an insurer to deposit disputed proceeds with the court when there are competing claims.
• North Carolina Gen. Stat. § 28A-19-6 (Order of claims; funeral expenses) – Confirms how funeral expenses are treated when pursuing reimbursement through the estate process.

Analysis

Apply the Rule to the Facts: You and your twin are the sole named beneficiaries, so the proceeds should have been paid to you. Another sibling received the funds, satisfying the “benefit received and accepted” element. Keeping those funds would be inequitable given the clear designation, supporting unjust enrichment and a constructive trust. Because the insurer did not honor the funeral assignment and you paid those costs, you can also seek to recoup those funeral amounts from the proceeds you recover, or, if needed, through the estate’s claim process.

Process & Timing

1. Who files: The named beneficiaries. Where: Superior Court in the North Carolina county where the defendant resides or where the dispute arose. What: A civil complaint for unjust enrichment, conversion, and constructive trust; include a motion for a temporary restraining order/preliminary injunction to freeze funds if still on deposit. Also send a written demand to the insurer and the unintended recipient with copies of the policy, beneficiary designation, and assignment. When: File as soon as practicable; many claims have a three-year limit from payment or discovery.
2. Insurer response/interpleader: The insurer may correct the payment voluntarily or file an interpleader, depositing funds with the court. If interpleader is filed, the case proceeds under the court’s schedule; beneficiaries prove entitlement and the court orders distribution.
3. Final step and outcome: Seek a judgment imposing a constructive trust on the proceeds (or their traceable replacements) and ordering turnover to the named beneficiaries. If funds are gone, request a money judgment against the wrong recipient.

Exceptions & Pitfalls

• Clerk vs. court: Do not start with the Clerk of Superior Court. Claims for money or equitable relief against a third party belong in Superior Court.
• Tracing risk: If the wrong recipient spends or transfers the money, you can still seek a money judgment, but move fast and consider an injunction to preserve funds.
• Insurer defenses: If the insurer paid in good faith under the policy and without notice of a dispute, recovery may focus on the unintended recipient; whether the insurer remains liable depends on the facts and policy terms.
• Funeral costs: If you paid funeral expenses because the assignment was not honored, include those amounts in your recovery effort. If estate reimbursement is needed, follow the estate claims process and deadlines.
• Proof package: Keep the policy, beneficiary designation, assignment to the funeral home, death certificate, claim forms, and payment records; these documents drive outcomes.

Talk to a Probate Attorney

If you’re dealing with a life insurance payout sent to the wrong person, our firm has experienced attorneys who can help you understand your options and timelines. Call us today.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.