An 'irrevocable' preneed funeral contract can only be revoked by 'a court of competent jurisdiction' under § 90-210.65(e). Which court is that, how do you start the case, and what happens when the contract purchaser has been declared incompetent?

Plain-English summary

North Carolina lets people prepay for their own funerals through a "preneed funeral contract" with a licensed funeral home. The buyer's money goes into a regulated trust, and the funeral home commits to deliver the funeral services later. The buyer can choose a revocable or irrevocable form of contract.

A revocable contract can be canceled by the buyer at any time with a refund (handled by §§ 90-210.65(a)-(d)). An irrevocable contract cannot be undone, even by the buyer, except "by order of a court of competent jurisdiction." That language, in § 90-210.65(e), raised three real-world questions:

1. Which court counts as "a court of competent jurisdiction"?
2. How do you start a case to get such an order? Civil action or special proceeding?
3. If the buyer or beneficiary has been declared incompetent, can the clerk of superior court (the regular forum for guardianship) issue the revocation order?

The AG worked through the statutory jurisdiction framework and answered all three.

Which court. The General Court of Justice is North Carolina's unified court system (§ 7A-3), composed of an appellate division and two trial divisions (superior court and district court) (§ 7A-4). Original civil jurisdiction is held concurrently in both trial divisions (§ 7A-240). Allocation between superior and district is procedural, not jurisdictional; a judgment is not void just because the case was filed in the "wrong" division (§ 7A-242). So either trial-division court of the General Court of Justice qualifies as a court of competent jurisdiction under § 90-210.65(e). Practically, most preneed-revocation cases would land in district court, since the dollar amounts are usually below the superior court threshold.

How to start the case. North Carolina's procedure system divides remedies into civil actions and special proceedings (§§ 1-1, 1-2, 1-3). A special proceeding requires statutory designation or initiation by petition; without those markers, a remedy is a civil action under § 1A-1, Rule 2's "one form of action" rule. Section 90-210.65(e) does not designate the revocation procedure as a special proceeding or use petition language, and revoking an irrevocable contract is an action to enforce private rights. The AG concluded the revocation must be sought through a civil action, started by filing a complaint per § 1A-1, Rule 3. The necessary parties are the buyer (purchaser), the funeral home licensee, and the beneficiary if different from the buyer. The trust depositary or insurance company funding the contract may need to be joined depending on the relief requested.

Clerk's jurisdiction over incompetent wards. When the buyer or beneficiary has been adjudicated incompetent, a separate jurisdictional pathway opens. The clerk of superior court has original jurisdiction for guardianships (§ 35A-1203) and for special proceedings involving administration of guardianships (§ 7A-246). The clerk is a judicial officer of the Superior Court Division (§ 7A-40), exercising judicial power. The clerk also has authority to enter consent judgments and to administer trusts. Section 35A-1251 grants a guardian power to compromise or settle contracts in the ward's best interest. Pulling these threads together, the clerk is a court of competent jurisdiction for purposes of § 90-210.65(e) when an incompetent ward is involved. The AG recommended that the clerk hold a hearing and make findings of fact establishing that revocation is in the best interest of the ward, before entering the revocation order. This protects the ward's property rights and creates a record reviewable on appeal.

Currency note

This opinion was issued in 1995. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The preneed funeral contracts statutes (now Article 13D of Chapter 90 and adjacent provisions) have been amended multiple times since 1995. The civil procedure rules have evolved. Current preneed-revocation work should be checked against current law.

Background and statutory framework

Preneed funeral contracts emerged in the mid-twentieth century as a consumer product letting families lock in funeral prices and arrangements before death. Without regulation, the product invited abuse: funeral homes could collect prepayments and then go out of business or raise prices, leaving families with worthless contracts or unaffordable add-ons. State regulation of preneed contracts followed, including trust requirements, disclosures, and revocation rules.

The revocable/irrevocable distinction reflects two purchaser goals. Most buyers want a revocable contract so they retain flexibility. But irrevocable contracts have an important Medicaid-eligibility function: under federal Medicaid asset rules, an irrevocable preneed funeral arrangement is an "excluded asset" that does not count toward Medicaid eligibility limits. So an older adult planning for nursing-home care often signs an irrevocable preneed contract specifically to remove that money from countable assets.

That Medicaid backdrop explains why § 90-210.65(e) requires a court order to revoke. If a buyer could simply walk into a funeral home and unwind an irrevocable contract, the Medicaid-asset shielding would collapse: every "irrevocable" contract would in practice be revocable by mutual agreement. The court-order requirement creates real friction. To revoke, someone has to file a lawsuit, give notice to interested parties, and persuade a court that revocation is warranted. The friction protects the Medicaid-asset rule's integrity while still leaving a safety valve for genuine hardship cases or changed circumstances.

The "court of competent jurisdiction" phrase is a legislative shorthand that often appears in older statutes where the legislature did not want to be too specific about which court. The AG's interpretation is generous: any trial-division court will do. That interpretation matches the practical reality that most preneed revocations involve modest dollar amounts and consumer-protection issues that district courts handle every day.

The clerk's role in incompetent-ward cases is a North Carolina particular. Many states route guardianship through a separate probate court; North Carolina lodges it with the clerk of superior court as ex officio judge of probate. The clerk's quasi-judicial role means that when an incompetent person is involved, the clerk who already supervises the guardianship is the natural court to handle the preneed revocation too. The AG's procedural recommendation (hearing plus findings) tracks the standard guardianship-court approach to any decision affecting a ward's property.

Common questions

What's the standard for a court to grant a revocation order?

Section 90-210.65(e) does not set a standard. Courts apply general equitable and contract principles: fraud, mistake, impossibility, frustration of purpose, or a clearly-established change in circumstances. In the incompetent-ward case, the AG's recommended "best interest of the ward" standard tracks the standard guardianship-decision rubric.

Who has to consent to the revocation?

The opinion identifies necessary parties (purchaser, licensee, beneficiary if separate) but does not say their consent is required. The court can presumably order revocation over a party's objection if the legal grounds are met. In practice, a contested revocation case is rare; most revocations involve all parties agreeing but needing the court order as a procedural step.

What about the trust money? Where does it go after revocation?

The opinion does not directly address the disposition of trust assets after revocation. Generally, revocation of an irrevocable contract would unwind the trust and return funds to the buyer (or the buyer's estate if deceased). The court order would direct the trust depositary or insurance company. The Medicaid implications would need separate analysis: a buyer who revokes might lose the Medicaid-asset shielding retroactively, which could affect eligibility.

Can a funeral home unilaterally revoke an irrevocable contract?

No. Section 90-210.65(e) requires a court order. The "irrevocable" label binds the funeral home as well as the buyer. The funeral home would need to file the same civil action and meet whatever legal standard applies.

Does this rule apply when the buyer has died?

The opinion does not directly address post-death scenarios. After death, the question typically becomes whether the funeral home performs as promised and whether the estate has any claim if performance fails or fees exceed pre-arranged amounts. Revocation is generally moot once the funeral has been performed; the post-death issue is whether the estate is owed any refund of unused trust funds.

Source

• Landing page: https://ncdoj.gov/opinions/jurisdiction-preneed-funeral-contracts/

Citations

• N.C. Gen. Stat. §§ 1-1, 1-2, 1-3, 1-7, 1-209, 1A-1 Rule 2, 1A-1 Rule 3
• N.C. Gen. Stat. §§ 7A-3, 7A-4, 7A-40, 7A-240, 7A-242, 7A-243, 7A-246
• N.C. Gen. Stat. §§ 35A-1203, 35A-1224, 35A-1251
• N.C. Gen. Stat. § 90-210.65(e)
• Woodley v. Gilliam, 64 N.C. 649 (1870)

Original opinion text

SUBJECT: Jurisdiction; Preneed Funeral Contracts; N.C.G.S. § 90-210.65(e).

REQUESTED BY: Mr. William R. Hoke, Attorney for the North Carolina State Board of Mortuary Science, and Mr. Richard Schumacher, Assistant Clerk of Superior Court, Buncombe County

QUESTIONS:

1. For the purpose of N.C.G.S. § 90-210.65(e), what is a "court of competent jurisdiction?"

2. In order for a court to revoke an irrevocable preneed contract, must a civil lawsuit be filed, with the parties being at least the preneed contract purchaser and the funeral home (seller)?

3. If the purchaser or beneficiary of the preneed contract has been adjudicated incompetent, is the clerk of the superior court a "court of competent jurisdiction" for the purpose of the statute? If so, must a hearing be held in order for the clerk to revoke the contract?

CONCLUSIONS:

1. All trial divisions within the General Court of Justice are courts of competent jurisdiction for the purposes of N.C.G.S. § 90-210.65(e).

2. In order for a court to revoke an irrevocable preneed contract a civil action must be initiated by the filing of a complaint with the necessary parties being the purchaser, the preneed funeral home licensee and, if other than the purchaser, the preneed funeral contract beneficiary.

3. If a purchaser or beneficiary of a preneed contract has been adjudicated incompetent, the clerk of the superior court is a "court of competent jurisdiction" and, a hearing should be held in order for the clerk to make findings establishing that it is in the best interest of the ward to revoke the contract.

DISCUSSION

Subsections (a) through (d) of N.C.G.S. § 90-210.65 address the refund of amounts paid pursuant to a revocable preneed funeral contract. Subsection (e) of that statute reads as follows:

(e) This section shall not apply to irrevocable preneed funeral contracts. Irrevocable preneed funeral contracts may not be revoked nor any proceeds refunded except by order of a court of competent jurisdiction.

The other provisions of Article 13D of Chapter 90 of the General Statutes, "Funeral and Burial Trust Funds," provide no express or implied guidance with regard to the phrase "court of competent jurisdiction" and, therefore, other authority must be referred to for assistance.

The basic statutes concerning the jurisdiction of the trial divisions of the General Court of Justice are §§ 7A-3, 7A-4, 7A-40, 7A-240, and 7A-242, which establish that the General Court of Justice has exclusive judicial power; that it is a unified system with appellate, superior, and district divisions; that the clerk of superior court is a judicial officer of the Superior Court Division; that original civil jurisdiction is concurrently vested in superior and district court; and that the allocation between trial divisions is procedural rather than jurisdictional. The courts of both trial divisions of the General Court of Justice are therefore "courts of competent jurisdiction" for the purposes of N.C.G.S. § 90-210.65(e).

With regard to the second question, the procedure system distinguishes between actions and special proceedings (§§ 1-1 through 1-3). Rule 2 of the Rules of Civil Procedure states there shall be in this State but one form of action for the enforcement or protection of private rights or the redress of private wrongs, which shall be denominated a civil action. Rule 3 provides that a civil action is commenced by filing a complaint with the court.

No express statement has been located as to the criteria to be used in distinguishing between a special proceeding and a civil action. However, the case of Woodley v. Gilliam, 64 N.C. 649 (1870), supports the proposition that in the absence of a statutory designation as a special proceeding or a reference to initiation by petition or similar indirect language, a civil proceeding should be deemed a civil action. Neither Article 13D of Chapter 90 nor any other statutory provision either directly or indirectly makes a reference to a special proceeding with regard to the order described in N.C.G.S. § 90-210.65(e). The judicial revocation of an irrevocable contract would appear to be a procedure for the enforcement or protection of some private right or the redress of prevention of a private wrong. Therefore, in light of the provisions of N.C.G.S. § 1A-1, Rule 2, and the absence of any statutory language to the contrary, the procedure used to obtain a court order revoking an irrevocable preneed funeral contract should be a civil action.

With regard to the parties involved, it is clear that the purchaser and licensee as direct parties to the preneed funeral contract are necessary parties. It is the further opinion of this office that the beneficiary, if other than the purchaser, is a real party in interest because the court order revoking the contract would diminish or eliminate his or her beneficial interest in the contract. There may also be circumstances where the financial institution or the insurance company involved in the preneed funeral contract should be joined.

When there is an incompetent involved, the clerk's jurisdiction arises under the provisions of N.C.G.S. § 35A-1203 and N.C.G.S. § 7A-246. Because the property rights of an incompetent are at issue the best course of action would be to conduct a hearing before the clerk and for there to be findings of fact establishing that it is in the best interest of the ward to have the preneed contract revoked.