Jan82026
Probate Q&A Series

How do I make sure my minor child actually receives life insurance and retirement benefits when they are the named beneficiary? – North Carolina

Short Answer

In North Carolina, a minor cannot usually receive and control life insurance or retirement benefits directly, even if the child is the named beneficiary. To make sure the money is actually received and protected for the child, the payor typically requires payment to a court-supervised option (like the clerk of superior court) or to a legally authorized fiduciary (like a guardian of the estate) or a properly titled custodial (UTMA) account. The right path depends mainly on the type of benefit and the amount involved.

Understanding the Problem

In North Carolina probate and beneficiary-designation situations, the key question is: when a deceased parent named a minor child as beneficiary on a life insurance policy or retirement account, what legal setup must exist so the company can pay the benefit and the funds are held for the child until adulthood? The decision point is usually whether the benefit can be paid into a clerk-administered minor’s fund or a custodial arrangement, or whether a guardian of the estate must be appointed by the clerk of superior court to receive and manage the money.

Apply the Law

Under North Carolina law, a minor generally lacks legal capacity to take possession of and manage significant funds. As a result, insurers and retirement plan administrators commonly refuse to pay large sums directly to a child and instead require a legally recognized recipient. North Carolina provides several pathways, including clerk administration for certain amounts, a court-appointed guardian of the estate, and custodial property under the North Carolina Uniform Transfers to Minors Act (UTMA). The main forum for court involvement is the clerk of superior court in the county where the minor is domiciled.

Key Requirements

  • Confirm the payor’s rules and the asset type: Life insurance and retirement accounts are usually “non-probate” transfers, but the company still needs a legally authorized person or structure to receive funds for a minor.
  • Use a legally recognized recipient for a minor: Common recipients include (1) the clerk of superior court/public guardian for qualifying amounts, (2) a court-appointed guardian of the estate, or (3) a UTMA custodian if the benefit can be transferred that way.
  • Protect and document the child’s benefit: North Carolina’s minor-fund and UTMA rules focus on using the money for the child’s exclusive benefit, keeping records, and preserving funds until the child reaches the applicable age for distribution.

What the Statutes Say

Analysis

Apply the Rule to the Facts: Here, the minor child is the named beneficiary on a deceased parent’s life insurance and retirement account, and a surviving parent/guardian wants to ensure the child receives the benefits. Because the beneficiary is a minor, the insurer/plan administrator will usually require payment to a legally authorized recipient rather than paying directly to the child. In practice, that often means using a clerk-administered minor’s fund for qualifying amounts, setting up a UTMA custodianship if the institution will recognize it, or asking the clerk of superior court to appoint a guardian of the estate to receive and manage the funds for the child.

Process & Timing

  1. Who files: Typically the surviving parent or another adult with a legitimate interest in the child’s welfare. Where: The clerk of superior court in the county where the minor is domiciled (for clerk-administered funds and for guardianship of the estate). What: The payor’s claim packet (death certificate, beneficiary claim forms, proof of the child’s identity), plus any court paperwork the payor requires (for example, letters of appointment for a guardian of the estate, or a clerk receipt/order if funds are paid to the clerk). When: As soon as the payor confirms it will not release funds directly to a minor; delays can occur if the payor is waiting on court authority.
  2. Choose the correct “receiving structure”: If the life insurance proceeds qualify for payment to the clerk under § 7A-111, the insurer may pay to the clerk/public guardian, and the clerk controls disbursements for the child’s needs. If the amount is larger or the payor refuses clerk payment, the usual next step is a guardianship of the estate so a court-appointed guardian can receive the funds and manage them under clerk supervision.
  3. Receive, safeguard, and document use of funds: Once funds are paid to the clerk, a guardian of the estate, or a UTMA custodian, the money must be kept for the child’s benefit. Disbursements typically require documentation and should track expenses that are truly for the child, not routine parental support obligations.

Exceptions & Pitfalls

  • Assuming a surviving parent can automatically receive the money: A parent is not automatically entitled to take control of a child’s beneficiary funds. Many payors require a clerk-administered deposit or a guardian of the estate appointed by the clerk of superior court.
  • Misunderstanding the “$50,000” concept: Under § 7A-111, the statutory limit applies per policy (and, for other funds, commonly per payor/source). That can affect whether the clerk-administered option is available without a formal guardianship of the estate.
  • Using the child’s funds for ordinary living expenses: North Carolina’s minor-fund framework focuses on the child’s exclusive benefit. Routine expenses that a parent is already obligated to cover can trigger problems, especially if disbursements are requested without clear justification and records.
  • UTMA titling errors: UTMA transfers require specific “as custodian for [minor] under the North Carolina Uniform Transfers to Minors Act” wording and proper account setup. If the institution will not title the account correctly, the transfer may not work as intended.
  • Retirement plan complications: Retirement accounts may have plan-specific rules and federal overlays. Even when North Carolina law provides a path (guardian/clerk/UTMA), the plan administrator may require particular documentation before releasing funds.

Conclusion

In North Carolina, when a minor child is the named beneficiary of life insurance or retirement benefits, the payor usually will not pay the money directly to the child. To ensure the child actually receives and keeps the benefit, the funds typically must be paid to the clerk of superior court under the statutory minor-funds process (when available), to a properly created UTMA custodianship, or to a guardian of the estate appointed by the clerk. The next step is to confirm the payor’s requirements and, if needed, file the appropriate request with the clerk of superior court in the child’s county of domicile.

Talk to a Probate Attorney

If a minor child is named as beneficiary on life insurance or retirement benefits and the company will not release funds without court authority, our firm has experienced attorneys who can help explain the options and timelines for getting the money properly received and protected for the child. 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: Pierce Law

Pierce Law Group is a North Carolina law firm focused on probate administration, real estate partition matters, and surplus funds claims across North Carolina. We know these situations often come with stress, family dynamics, and time-sensitive decisions—so we prioritize clear communication, steady guidance, and a practical plan from day one. Our goal is to make a complicated process feel manageable, while protecting what matters most to you.