North Carolina: Beneficiary Disputes and Interpleader Under North Carolina Law

The online change that did not count

Crayton is a short lesson in two layers of rules. The insured, seriously ill and without a computer or internet service, had named one daughter as beneficiary in 2004. In December 2016, someone used the insurer’s internet portal to replace that daughter with her sister. The insured died weeks later.

After a bench trial, the court found the insured had not made the change. On a post-trial motion, the second daughter pointed out that the court had found the change appeared to comply with the insurer’s procedures. The court explained: “North Carolina law sets out certain requirements for making a valid change to a life insurance beneficiary.” Separately, “The fact that the beneficiary change in this case appears to have been in compliance with New York Life’s requirements does not show that it was in compliance with North Carolina’s requirements”.¹ It reiterated that “the court found that Joyce had not substantially complied with the requirements of North Carolina law as to changing life insurance beneficiaries.”² The original daughter remained the beneficiary.

The practical point: a portal confirmation is not proof that the insured acted. A party challenging an online change can win by showing who actually made it. See change-of-beneficiary disputes.

The Slayer Act

North Carolina’s Chapter 31A defines a slayer to include “a person who has entered a plea of guilty . . . as a principal . . . of the willful and unlawful killing of another person.”³ Section 31A-4 provides that “[t]he slayer shall be deemed to have died immediately prior to the death of the decedent.” For insurance, § 31A-11(a)(2) states that proceeds payable to the slayer “shall be paid to the person or persons who would have been entitled thereto as if the slayer had predeceased the decedent. If no alternate beneficiary is named, insurance and annuity proceeds shall be paid into the estate of the decedent.”⁴

In Terry, the named beneficiary, the insured’s husband, had pleaded guilty to second-degree murder. The court held that he was a slayer under § 31A-3(3)(b). The policy named no contingent beneficiary, so the proceeds went to the insured’s estate.³ See the slayer rule.

Itemize the fees

In Christian, no one objected to the insurer’s discharge. The court granted discharge and a § 2361 injunction and reimbursed $927.63 in costs. It denied the fee request without prejudice because “the materials submitted in support of Plaintiff’s request for its attorneys’ fees are not sufficiently specific or itemized for this court to determine whether the requested award is reasonable.”⁵ See attorney’s fees in interpleader.

Decisions

Divorce and beneficiary designations

North Carolina’s revocation-on-divorce statute is written for wills. Under N.C. Gen. Stat. § 31-5.4, “[u]nless a contrary intent is expressly indicated in the will,” a divorce or annulment after a will is executed means “the testator’s former spouse shall be deemed to have predeceased the testator for all purposes related to the construction, interpretation, or administration of that will.”⁶ The section does not mention life insurance beneficiary designations. South Carolina’s statute, by contrast, expressly covers them.⁷

The difference can matter when an insured divorces in one state and dies in the other. In Southern Farm Bureau Life v. Howard (D.S.C.), the insurer’s complaint described policies delivered in North Carolina, a former spouse named before a North Carolina divorce, and an insured who later moved to South Carolina. The claimants settled at mediation, and the court directed the insurer to pay them under the settlement and discharged it, so no court decided which state’s law governed.⁸ See South Carolina and divorce and life insurance.

Related guides

• State law differences
• South Carolina
• Change of beneficiary disputes
• Slayer rule
• How a claim freezes payment

Footnotes

1. New York Life Ins. Co. v. Crayton, No. 1:17-cv-593, slip op. at 12 (M.D.N.C. June 19, 2019). GovInfo. ↩

2. Crayton, slip op. at 4. ↩

3. New York Life Ins. Co. v. Terry, No. 1:18CV739, slip op. at 4 (M.D.N.C. Mar. 23, 2021) (quoting N.C. Gen. Stat. § 31A-3(3)(b)). GovInfo. Statute: § 31A-3. ↩ ↩²

4. Terry, slip op. at 5 (quoting N.C. Gen. Stat. §§ 31A-4, 31A-11(a)(2)). Statute: § 31A-11. ↩

5. Combined Ins. Co. of Am. v. Christian, No. 1:14CV647, slip op. at 8 (M.D.N.C. Aug. 24, 2015). GovInfo. ↩

6. N.C. Gen. Stat. § 31-5.4(a). North Carolina General Assembly. ↩

7. S.C. Code Ann. § 62-2-507(a)(4), (c). South Carolina Legislature. ↩

8. Southern Farm Bureau Life Ins. Co. v. Howard, No. 7:24-cv-07178-TMC (D.S.C.), order granting consent motion, directing distribution and closing case, ECF No. 30 (July 24, 2025), court order (PDF). Background facts are as alleged in the insurer’s complaint, ECF No. 1; the court’s orders do not discuss the divorce or choice of law. ↩