Short Answer

Yes. In North Carolina you can name your brothers as co-trustees in a will-based (testamentary) trust to receive and manage life insurance proceeds. The policy’s beneficiary designation controls, so you must name either your estate or your testamentary trustee as the policy beneficiary. If you want the proceeds used to pay your debts and expenses first, naming your estate as beneficiary ensures the funds pass through probate to pay claims before the balance moves to your trust or heirs.

Understanding the Problem

You want to know if you can appoint your brothers in North Carolina to manage your life insurance proceeds under your will so debts and expenses are paid first and the remaining funds go to your two adult children. This turns on who you name as the policy beneficiary and how your will sets up the trust and trustee powers.

Apply the Law

Under North Carolina law, you may create a testamentary trust in your will and name one or more trustees (including family members). Life insurance does not follow your will unless your beneficiary designation routes the proceeds to your estate or to the trustee under your will. If proceeds are payable to your estate, they become probate assets and are applied to estate expenses and creditor claims in statutory order before any remainder is distributed per your will. If proceeds are payable directly to a trustee, they generally bypass probate; creditors of your estate typically cannot compel payment from those proceeds, though you may authorize the trustee to reimburse the estate for allowed claims.

Key Requirements

• Clear testamentary trust terms: Your will should create a trust, name your brothers as co-trustees, define uses (pay debts/expenses, then children), and name successor trustees.
• Correct beneficiary designation: Update the life insurance to name either “Estate of [Your Name]” (to ensure debts are paid first through probate) or “Trustee under the Last Will of [Your Name]” (to fund the testamentary trust directly).
• Trustee administration basics: Co-trustees accept and administer prudently, keep records, and keep beneficiaries reasonably informed; bond and court accountings can be waived in the will unless a court later requires otherwise.
• Forum and claims: Probate is with the Clerk of Superior Court in your county; estate claims are paid by statutory priority before distributions.
• Coordination with taxes: Unless your will directs otherwise, life insurance can be included in tax apportionment; align directions so your trustees or personal representative know which pot pays taxes.

What the Statutes Say

• N.C. Gen. Stat. § 36C-7-702 (Trustee’s bond) – Bond is only required in limited circumstances; your will can waive it.
• N.C. Gen. Stat. § 36C-8-813 (Duty to inform and report) – Trustees must keep qualified beneficiaries reasonably informed.
• N.C. Gen. Stat. § 28A-19-6 (Order of payment of claims) – Sets the priority for paying estate expenses and creditor claims.
• N.C. Gen. Stat. § 36C-7-704 (Vacancy in trusteeship; appointment) – Process to fill trustee vacancies if a brother cannot serve.

Analysis

Apply the Rule to the Facts: Your will can create a testamentary trust naming your older and younger brother as co-trustees and your adult children as beneficiaries. To ensure debts and expenses are paid first, the simplest path is to name your estate as the life insurance beneficiary so the personal representative uses the proceeds to pay claims in the statutory order before funding your trust or making distributions. If instead you name “trustee under will” as beneficiary, add language authorizing the trustees to reimburse the estate for allowed expenses and claims; creditors generally cannot force payment from insurance not payable to the estate.

Process & Timing

1. Who files: You (during life). Where: With your insurer and your North Carolina estate planning attorney. What: Execute a new will or codicil creating the testamentary trust and naming co-trustees; submit a beneficiary change form naming either the estate or “Trustee under the Last Will of [Your Name].” When: As soon as possible to align your will and beneficiary forms.
2. After death: Who files: Personal representative. Where: Clerk of Superior Court (county of domicile in North Carolina). What: File probate papers (e.g., AOC‑E‑201, Application for Probate and Letters Testamentary) and publish/serve creditor notice; trustees accept duties under the will; the insurer processes the claim to the named beneficiary. When: Promptly after death; creditor claim periods apply before final distributions.
3. Final step: If the estate is beneficiary, the personal representative pays claims by statutory priority and then distributes the remainder to your testamentary trust or children. If the trustee is beneficiary, the trustees follow the will’s directives (including any reimbursement to the estate) and then distribute the balance to your adult children per the trust.

Exceptions & Pitfalls

• Wrong beneficiary: If you leave the insurer’s beneficiary as an individual (or outdated), your trust and debt-payment plan may be bypassed. Update the form.
• Debt-payment intent: To guarantee debts and expenses are paid from insurance, name your estate as beneficiary; if you name the trustee, include explicit authority to reimburse the estate. Creditors generally cannot force payment from insurance not payable to the estate.
• Bond and accountings: Waive trustee bond and court accountings in the will if appropriate; a court can still require a bond in limited situations.
• Co‑trustee deadlock: Include a tie‑breaker (e.g., majority decision, independent advisor, or power for one to act alone) to avoid stalemates; courts can remove trustees if lack of cooperation impairs administration.
• Tax apportionment: Unless you direct otherwise in your will, life insurance can be included when allocating estate taxes among recipients. Add clear tax-apportionment language.

Talk to a Estate Planning Attorney

If you’re dealing with how to route life insurance to a trust and ensure debts are paid first, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at .