Short Answer

Yes. In North Carolina, life insurance payable to named beneficiaries is a non-probate asset and is paid directly by the insurer to those beneficiaries, not into the estate. Key exceptions apply if the estate is the named beneficiary, if a beneficiary has died with no contingent beneficiary, or if the “slayer” rule applies. You still must meet probate filing duties, but you do not list such policies on the 90‑day Inventory unless payable to the estate.

Understanding the Problem

In North Carolina probate, can a personal representative treat a life insurance policy that names individual beneficiaries as outside the estate? Here, the policy lists specific people as beneficiaries. The answer determines whether the insurer pays the estate or the individuals, whether the policy appears on the probate Inventory, and what the personal representative must file with the Clerk of Superior Court and when.

Apply the Law

Under North Carolina law, life insurance that designates living beneficiaries is generally a non‑probate transfer. The insurer pays those beneficiaries directly. The policy only becomes a probate asset if the estate is the beneficiary or if no designated beneficiary survives and the policy’s default terms send the proceeds to the estate. A beneficiary who unlawfully kills the insured cannot receive proceeds under the “slayer” statute; the proceeds instead pass as if that beneficiary predeceased. While creditors of the decedent’s estate typically cannot reach insurance payable to an individual beneficiary, federal estate tax apportionment rules can require beneficiaries to bear a share of estate tax if one is due. For probate administration, the personal representative files a 90‑day Inventory with the Clerk of Superior Court; non‑probate insurance payable to individuals is not listed there.

Key Requirements

• Non‑probate by default: If the policy names living beneficiaries, the insurer pays them directly; the proceeds do not go into the probate estate.
• Probate if no beneficiary/estate named: If the estate is named, or all beneficiaries predecease and the policy defaults to the estate, the proceeds are a probate asset and must be inventoried and accounted for.
• Slayer bar: A beneficiary who unlawfully kills the insured is treated as having died first; they cannot take any insurance proceeds.
• Inventory duty/timing: The personal representative must file the 90‑day Inventory with the Clerk of Superior Court within three months of qualification; list insurance only if payable to the estate.
• Tax apportionment: Even when proceeds bypass probate, beneficiaries may owe a share of any federal estate tax attributable to those proceeds if an estate tax applies.

What the Statutes Say

• N.C. Gen. Stat. § 28A-20-1 (Inventory due in 3 months) – Personal representative must file the inventory within three months of qualification.
• N.C. Gen. Stat. § 28A-20-2 (Compelling inventory) – Clerk may order filing and enforce compliance if the inventory is late.
• N.C. Gen. Stat. § 31A-11 (Slayer statute—life insurance) – A slayer cannot receive insurance proceeds; benefits pass as if the slayer predeceased.

Analysis

Apply the Rule to the Facts: Because the policy names individual beneficiaries, it is a non‑probate asset and should be claimed directly from the insurer by those beneficiaries. As personal representative, you still must file the 90‑day Inventory within three months of qualification, but you would not list this policy unless the estate is the beneficiary or no beneficiary survives and the policy defaults to the estate. If any federal estate tax is due, the beneficiaries may owe a share under tax apportionment rules.

Process & Timing

1. Who files: The named beneficiaries (or the personal representative if the estate is the beneficiary). Where: With the insurance company’s claims department; probate filings go to the Clerk of Superior Court in the county of qualification. What: Insurer usually requires a certified death certificate and a claimant’s form; if payable to the estate, also provide Letters Testamentary/Administration. When: Beneficiaries may claim promptly; the personal representative must file the 90‑day Inventory within three months of qualification.
2. The insurer reviews the claim and pays the named beneficiaries (or the estate, if applicable). Timeframes vary by company.
3. If proceeds are payable to the estate, the personal representative lists them on the Inventory and later reports receipt and disbursement on the estate accounting.

Exceptions & Pitfalls

• No living beneficiary: If all beneficiaries have died and no contingent is named, the policy’s default may send proceeds to the estate (or, by policy terms, to heirs).
• Estate is the beneficiary: Proceeds become a probate asset—list on the Inventory and administer through the estate.
• Slayer statute: A beneficiary who unlawfully kills the insured cannot take; proceeds pass as if that person died first.
• Elective share impact: Even though insurance bypasses probate, it can count in calculating a surviving spouse’s elective share; plan accordingly.
• Tax apportionment: If a federal estate tax applies, beneficiaries may owe a proportionate share attributable to insurance proceeds.
• Inventory mistakes: Do not list insurance payable to individuals on the 90‑day Inventory; do list it if payable to the estate.

Talk to a Probate Attorney

If you’re handling an estate and want to be sure which assets are probate versus non‑probate and what must go on the Inventory, 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.