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Sudden Wealth Blog

What is Interpleader Action?

Two people fighting over a dollar. What is interpleader action?

If you’re wondering what is interpleader action you’re in the right place. An interpleader action is a legal procedure in which one party (the “interpleader”) brings two or more other parties into the same lawsuit in order to resolve their competing claims. It is often used when there is a dispute over the ownership of certain property or assets.

What is Interpleader Action?

An interpleader action is a legal proceeding in which a third-party (known as the “interpleader”) brings two or more other parties into the same lawsuit in order to resolve competing claims. It is usually used to determine who has legal ownership of certain property or assets. In an interpleader action, the interpleader will deposit those disputed assets or funds into court and allow the dispute to be settled by a jury or judge. For example, life insurance interpleaders are used in disputes over life insurance proceeds.

Who Can Bring a Case for Interpleader?

Anyone with a possible legal claim against the same disputed asset or property can bring a case of interpleader. This could include creditors, people who believe they are entitled to a portion or all of the proceeds from an estate or trust, or insurance companies trying to sort out competing claims from policyholders. The person bringing the interpleader action is typically not involved in the dispute—they are simply seeking to protect themselves by having a court determine who has rightful ownership of the disputed asset or funds.

How is an Interpleader Action Initiated?

Interpleader actions are initiated by the defendant filing an interpleader complaint in a court of law. The filing party is generally a stakeholder or someone with some interested in the outcome of the case, such as banks, insurance companies, and other entities that may be facing potential liability for distributing funds or property that may be owed to multiple parties. After the interpleader complaint is filed, all interested parties must be notified so that their rights are protected.

What Happens During the Course of an Interpleader Proceeding?

A court will typically determine the priority of claims during the course of an interpleader proceeding. This process is known as “subrogation,” which is a principle that accounts for the rights of all claimants and gives each one the right to pursue their claim in the event that it has more merit than those of other claimants. After the court determines which claims are valid and prioritizes them, it will issue a final order that details how funds or assets are to be distributed. The order also instructs how associated costs, such as filing fees, will be assessed.

What Are Your Rights In A Life Insurance Interpleader Action?

An interpleader action enables an insurance policyholder to legally transfer the ownership and responsibility of a life insurance policy to the court system, thus absolving them of any liability during the claims process. Interpleaders are entitled to legal representation throughout the duration of the proceedings and can request that costs for filing fees, attorney’s fees, and other associated costs be assessed against any claimants. As a result, claimants in an interpleader action can be liable for up to 2x the original cost of initiating legal proceedings.

If You Have a Life Insurance Interpleader Case, Let Us Fight For Your Rights

If you are a party to an interpleader action, you should act fast. You must file responsive pleadings within a certain time frame. Another claimant will likely oppose your claim. That’s why we recommend that you contact an experienced interpleader attorney (such as us) to discuss your case.
Your interpleader case was probably filed in federal court. That means wherever you are in the U.S., we can help you. Attorney Paul Deloughery has extensive experience in the area of life insurance interpleaders. Act now to get us on your side.
Schedule a Strategy Session to discuss if we can take your case. Or just call us at 602-443-4888. We’re here to help fight for your money.



Founding attorney Paul Deloughery has been an attorney since 1998, became a Certified Family Wealth Advisor. He is also the founder of Sudden Wealth Protection Law.


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