Short Answer

In North Carolina, you can use a parent’s insurance or policy funds to pay care and guardianship costs only if the funds are legally accessible and you have authority to act. A court‑appointed guardian of the estate (or general guardian) can collect and manage assets, but cashing out life insurance or spending principal generally requires a court order and a bond. Death benefits are not available until death; only cash value or policy loans may be used if the parent owns the policy.

Understanding the Problem

In North Carolina, you want to know if you can use your parents’ life insurance or other policies to pay guardianship expenses or nursing home bills when a care home refuses to honor your power of attorney and says you must obtain guardianship. The core issue is whether, after a guardianship is established, you can reach policy funds to cover ongoing care.

Apply the Law

Under North Carolina law, a guardian of the estate (or general guardian) manages an incompetent adult’s finances. The guardian can collect assets, pay valid expenses for the ward’s maintenance and support, and must follow court‑imposed limits. Using insurance or policy funds depends on the policy type (death benefit versus cash value) and who owns it. Spending principal or surrendering/exchanging property over certain thresholds generally requires a court order. The Clerk of Superior Court oversees these matters in the county where the parents live, and the guardian must post a bond before receiving assets. For urgent, one‑time needs, the court can authorize a single protective transaction without a full guardianship.

Key Requirements

• Authority: Appointment as guardian of the estate (or general guardian) by the Clerk of Superior Court is required to control finances when third parties reject a power of attorney.
• Policy access depends on type/ownership: Death benefits are unavailable until death; cash value or policy loans may be used only if the ward owns the policy.
• Court approval to use principal: Spending principal or surrendering/exchanging personal property over set amounts (e.g., more than $5,000 per accounting period) usually requires a court order.
• Bond and safeguarding funds: The guardian must post bond before receiving assets; restricted accounts can reduce bonding.
• Clerk oversight and accounting: The guardian files an inventory (typically within three months) and annual accounts; budgets or pre‑approvals may be required in some counties.
• Single protective order option: The court may authorize a one‑time transaction if a basis for guardianship exists but a full guardianship isn’t yet in place.

What the Statutes Say

• North Carolina Gen. Stat. § 35A-1251 (Guardian of the estate powers) – outlines a guardian’s financial powers and when court approval is needed.
• North Carolina Gen. Stat. § 35A-1230 (Guardian’s bond) – requires bond before a guardian receives property.
• North Carolina Gen. Stat. § 35A-1105 (Starting an incompetency case) – begins the guardianship process.
• North Carolina Gen. Stat. § 35A-1121 (Single protective arrangement) – allows a one‑time transaction without appointing a guardian.

Analysis

Apply the Rule to the Facts: Because the facility will not accept your power of attorney, you will likely need appointment as guardian of the estate (or general guardian) to manage your parents’ finances. If your parents own life insurance with cash value, a guardian can seek a court order to take a policy loan or surrender value and use the proceeds for nursing home bills. If the policies are pure death‑benefit only, those funds are not available until death, so you would rely on other assets or income in the meantime.

Process & Timing

1. Who files: You (the adult child). Where: Clerk of Superior Court in the North Carolina county where your parents reside. What: File Petition for Adjudication of Incompetence (AOC‑SP‑200) and, after adjudication, Application for Letters of Guardianship (AOC‑E‑206). When: Hearings are commonly set within weeks; timelines vary by county.
2. After appointment, post bond (AOC‑E‑401) as set by the Clerk, take the oath (AOC‑E‑400), and obtain Letters (AOC‑E‑407/408). Consider a restricted “Receipt and Agreement” account to lower bond exposure. If you need immediate authority limited to one task, request a single protective arrangement or a temporary guardianship order (AOC‑E‑421).
3. For policy funds: identify ownership and cash value. If cashing out or spending principal, file a motion for court approval describing the need (care costs, guardianship expenses). Once authorized, pay the facility directly and keep receipts. File the inventory within three months and timely annual accounts thereafter.

Exceptions & Pitfalls

• If the parent is not the policy owner or there is no cash value, you cannot access funds before death.
• Surrendering cash value life insurance can affect Medicaid eligibility; coordinate planning before you act.
• Courts often require approval to dispose of personal property over $5,000 per accounting period or to spend principal; skipping approval risks surcharge.
• Post the bond before taking control of assets; use restricted accounts to reduce bond where appropriate.
• Keep clean records and pay vendors directly; commingling funds or poor documentation can lead to removal or liability.

Talk to a Guardianship Attorney

If you’re dealing with a facility that won’t accept your power of attorney and you need to use policy funds for care, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at [919-341-7055].

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.