Dec162025
Probate Q&A Series

What happens if I decline or disclaim a beneficiary payout—does it pass to the estate or contingent beneficiaries, and how could that affect Medicaid eligibility? – North Carolina

Short Answer

In North Carolina, a valid written renunciation (also called a disclaimer) generally makes it as if the beneficiary had predeceased for purposes of who takes next. For life insurance and annuities, the payout typically goes to the contingent beneficiary named in the contract, and if none exists (or the contract directs it), it may go to the estate and then through probate. A disclaimer must be done carefully and quickly, because accepting benefits first can undermine the ability to disclaim, and a disclaimer made for Medicaid-planning reasons can create eligibility problems under Medicaid’s transfer rules.

Understanding the Problem

When a named beneficiary of a parent’s life insurance policy or annuity in North Carolina decides to refuse the payout, the key question becomes: does the refusal cause the money to go to the estate for probate administration, or does it go to a contingent beneficiary under the policy or annuity contract? A related concern is how declining the payout may change financial eligibility for Medicaid, especially when the refusal changes what assets are considered available or treated as transferred away. The decision often overlaps with who has authority in the estate file pending before the Clerk of Superior Court and whether someone is falsely claiming to act as executor.

Apply the Law

North Carolina allows a person to renounce (disclaim) a property interest received at death, including interests received through nonprobate transfers like beneficiary designations on life insurance and annuities. A renunciation is made by a signed and acknowledged written instrument and is generally effective when properly filed with the Clerk of Superior Court or delivered to the correct recipient, depending on the type of property interest. If valid, the renounced interest usually passes as though the person renouncing had died before the transfer would have been complete, which commonly pushes the benefit to the next beneficiary in line (often a contingent beneficiary) rather than back to the person who renounced.

Key Requirements

  • A written renunciation that meets statutory form basics: The document must identify the person creating the interest (such as the policy owner/insured), describe what is being renounced, clearly state the extent of the renunciation, and be signed and acknowledged (typically notarized).
  • Proper filing and/or delivery to the right place: Interests passing under a will or intestacy are commonly filed with the Clerk of Superior Court where the estate proceeding is (or could be) opened. Interests created by a beneficiary designation (like an annuity or insurance policy) generally require delivery to the company or person obligated to pay the benefit.
  • Timing and “no prior acceptance” concerns: For tax-qualified disclaimer purposes, North Carolina ties timing to federal deadlines, commonly a nine-month window in many estate situations. Separately, taking ownership-type actions or receiving benefits can create problems, and a Medicaid-related disclaimer can be treated differently than a tax-qualified disclaimer.

What the Statutes Say

Analysis

Apply the Rule to the Facts: The scenario involves a named beneficiary of a parent’s annuity and life insurance policy, which are typically nonprobate transfers controlled first by the contract’s beneficiary designation, not by the will. Under North Carolina renunciation law, the beneficiary generally may disclaim those death benefits, but the disclaimer must be in a proper written form and delivered to the company obligated to pay (and in some situations also filed as an estate matter with the Clerk). If the disclaimer is valid, the benefit usually passes as if the beneficiary had died first—so it most often goes to the contingent beneficiary named on the annuity/policy, and only goes to the estate if the contract provides for that outcome (for example, no surviving beneficiaries and the estate is next in line).

Process & Timing

  1. Who files: The beneficiary who is disclaiming (or a legally authorized fiduciary/representative in limited cases). Where: For estate-related filings, the Clerk of Superior Court in the county where the estate file is pending (or could be opened). For beneficiary-designation assets, deliver the disclaimer to the insurance company/annuity company (the party obligated to pay). What: A written “Renunciation/Disclaimer” signed and acknowledged, describing the specific policy/annuity interest being refused. When: For tax-qualified timing, commonly within nine months of death (or the tax-law completion date of transfer), and before any acceptance of benefits.
  2. Confirm who takes next under the contract: Request the insurer/annuity administrator’s written beneficiary confirmation showing the primary and any contingent beneficiaries and the default payout order if a beneficiary disclaims.
  3. Document delivery and preserve the paper trail: Keep proof of delivery (certified mail, carrier tracking, or written acknowledgment) and keep a file-stamped copy if the disclaimer is filed with the Clerk as an estate matter.

Exceptions & Pitfalls

  • The contract controls where nonprobate benefits go: Even with a valid disclaimer, life insurance and annuity proceeds generally follow the beneficiary designation’s order (including contingent beneficiaries). The estate receives the money only if the contract routes it there (for example, “estate” listed as beneficiary or no eligible beneficiaries remain and the default is the estate).
  • Acceptance can limit options: Depositing a check, directing where the money should go, signing claim paperwork that elects a payout option, or otherwise benefiting from the asset can make a later disclaimer harder and can also affect whether the disclaimer qualifies for certain purposes.
  • Medicaid eligibility risk: Medicaid rules treat some disclaimers as a transfer for less than fair market value, which can cause a penalty period or other eligibility consequences even if the beneficiary never touched the funds. Medicaid treatment depends on timing, the program (community vs. long-term care), and the applicant’s overall situation, so coordination with a Medicaid/elder law attorney is important before signing.
  • Wrong person acting as “executor”: Only the court-appointed personal representative has authority over probate estate assets, but that authority usually does not extend to assets payable directly to a beneficiary unless the estate is the payee. If someone falsely claims to be executor, it can still create practical problems (misdirecting information, collecting documents, pressuring a beneficiary), so it helps to verify the current appointment in the estate file with the Clerk.
  • Related property disputes are separate issues: A vehicle titled in the beneficiary’s name and personal property being withheld are not automatically solved by a disclaimer of insurance/annuity benefits. Those issues often require separate steps (title confirmation, demand for return, or a court process) in the correct forum.

Conclusion

In North Carolina, a beneficiary can disclaim a life insurance or annuity payout using a signed and acknowledged written renunciation that is properly filed and/or delivered under Chapter 31B. If done correctly, the law generally treats the disclaimed interest as passing as though the disclaiming beneficiary had died first, which usually sends the benefit to any contingent beneficiary listed in the contract rather than into the probate estate. The next step is to prepare and deliver the renunciation to the company obligated to pay and, if needed, file it with the Clerk of Superior Court within the applicable nine-month timeframe.

Talk to a Probate Attorney

If a family is dealing with a disputed beneficiary payout, confusion about who the executor is, or questions about whether a disclaimer will push funds to contingent beneficiaries or into probate, a probate attorney can help clarify the contract language, the filing steps, and the timeline. 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.

Category: Probate Q&A Series

Author: jpierce

Attorney Jared Pierce is the founder of Pierce Law Group in Raleigh, North Carolina, a firm he established with a dedicated focus on probate administration and estate planning across North Carolina. Born and raised in the Republic of South Africa, Jared moved to Durham with his family in 2001, bringing with him a rich cultural background and a distinctive accent that often serves as a conversation starter.