Short Answer

In North Carolina, a valid assignment of life insurance proceeds to a funeral home can be enforced against the insurer and/or the person who was wrongly paid. If the insurer paid a non-beneficiary despite notice of the assignment and beneficiary designations, you can demand corrective payment and, if needed, file a civil action for declaratory relief and breach of the policy. Separately, you can pursue the person who received the money by mistake for unjust enrichment and ask the court to impose a constructive trust on those funds.

Understanding the Problem

You’re in North Carolina, you and your twin are the named beneficiaries, and the policy included an assignment to the funeral home. You want to know how you can make the insurer honor that assignment so the funeral bill is covered after the insurer paid the wrong sibling instead. This turns on who has the right to the proceeds, whether the assignment was valid and communicated, and which court can order repayment.

Apply the Law

Under North Carolina law, life insurance payable to named beneficiaries is generally non-probate property; the Clerk of Superior Court does not adjudicate damages claims between beneficiaries and insurers. Enforcement typically occurs in a civil action in Superior Court, where beneficiaries (and an assignee funeral home) can seek declaratory relief and money damages. If the insurer mispaid, beneficiaries can compel correction; if a non-beneficiary received the funds, courts commonly use unjust enrichment and constructive trust to redirect those funds to the rightful payees. If the estate ultimately pays funeral costs, those costs have statutory priority, but that priority applies within the estate, not against the policy unless the estate is the beneficiary.

Key Requirements

• Valid assignment: The assignment to the funeral home must be properly executed and provided to the insurer before payment.
• Rightful beneficiary status: You (and your twin) are the policy’s named beneficiaries under the most recent designation on file.
• Mispayment or refusal: The insurer either failed to honor the assignment or paid someone who was not a designated beneficiary, causing loss.
• Proper forum: Claims for money or equitable relief (constructive trust, unjust enrichment) are filed in Superior Court, not with the Clerk in an estate file.
• Timeliness: Act promptly; civil claim deadlines can be short (often around three years) and policy terms may set shorter contractual limits.

What the Statutes Say

• N.C. Gen. Stat. § 28A-2-4 (Clerk’s jurisdiction) – Damages claims belong in Superior Court; the Clerk lacks jurisdiction over such claims.
• N.C. Gen. Stat. § 1-254 (Declaratory judgments) – Lets a court declare parties’ rights under the policy and assignment.
• N.C. Gen. Stat. § 28A-19-6 (Priority of estate claims) – If the estate pays, reasonable funeral expenses have priority within the estate process.

Analysis

Apply the Rule to the Facts: You and your twin are the only named beneficiaries, and there was an assignment of benefits to the funeral home. The insurer paid a different sibling anyway, so a court can order the insurer to correct the payment if it had notice of the assignment/beneficiaries and also order the sibling to return funds under unjust enrichment with a constructive trust. Because you and your twin covered the funeral out of pocket after the assignment failed, you can seek to have proceeds directed to reimburse that expense or pay the funeral home and reimburse you accordingly.

Process & Timing

1. Who files: The named beneficiaries (and/or the funeral home as assignee). Where: Superior Court in the North Carolina county where the defendant resides or the insurer does business. What: A civil complaint seeking declaratory judgment (rights under the policy/assignment), breach of contract (against the insurer, if applicable), unjust enrichment/constructive trust (against the sibling who received funds), and any needed provisional relief. When: File promptly; civil deadlines can be as short as three years from payment or denial, and policy terms may impose shorter limits.
2. Serve the insurer and the sibling, exchange information (policy, assignment, claim file, payment records), and consider early mediation. If the insurer disputes competing claims, it may interplead funds into court.
3. Resolve by settlement or court order. The court can direct the insurer to honor the assignment and pay the funeral provider, and/or enter judgment against the sibling with an order imposing a constructive trust and requiring turnover of funds.

Exceptions & Pitfalls

• If the insurer made a good-faith payment based on its records, it may invoke policy or statutory safe-harbor defenses; focus claims on the person wrongly paid.
• Confirm the assignment was delivered to the insurer before payment and that it matches the policy’s requirements; incomplete or late assignments are harder to enforce.
• If the funeral home has already been paid by you, coordinate a release or reassignment so the court directs proceeds to reimburse you without creating double payment.
• Do not file this as an estate proceeding with the Clerk; the Clerk generally lacks jurisdiction over damages or equitable claims between private parties.

Talk to a Probate Attorney

If you’re dealing with a misdirected life insurance payout or an insurer that ignored a funeral assignment, our firm can help you understand your options and timelines. Call us today at .

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.