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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, then 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. Parties use it to determine who has legal ownership of certain property or assets. During the interpleader action, the interpleader deposits the disputed assets or funds into court, and a jury or judge settles the dispute. For example, parties use life insurance interpleaders 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 involve creditors, individuals asserting entitlement to a portion or all of the proceeds from an estate or trust, or insurance companies attempting to resolve competing claims from policyholders. The person that brings the interpleader action typically does not get involved in the dispute. They are simply seeking to protect themselves by asking a court to determine who has rightful ownership of the disputed asset or funds.

How is an Interpleader Action Initiated?

The defendant initiates an interpleader action by filing an interpleader complaint in a court of law. The filing party is generally a stakeholder or someone with some interest in the outcome of the case. This can include banks, insurance companies, or other entities that might face potential liability for distributing funds or property owed to multiple parties. After filing an interpleader complaint, the filer must notify all interested parties 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, known as “subrogation,” involves a principle that accounts for the rights of all claimants. Granting each the right to pursue their claim if it holds more merit than the claims of others. After the court determines the validity and priority of the claims, it will issue a final order detailing 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 proceedings and can request that the 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 with the 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.

 

ABOUT THE AUTHOR

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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