Reference

Glossary

Plain-English definitions of the words that come up in interpleader cases and beneficiary disputes. Each entry links to the guide that explains it in context.

60 terms

#Accidental death benefit

Insurance that pays only if the death results from an accident as the policy defines it. Disputes can involve both who the beneficiary is and whether the death qualifies.

Read more:Life insuranceRelated:Life insurance proceeds

#Adverse claim

A claim to money or property that conflicts with the claim of the person on record, such as a relative disputing the named beneficiary. Notice of an adverse claim is what usually makes an insurer, bank, or plan stop payment.

#Annuity

A contract, usually with an insurance company, that pays income over time and may pay a death benefit to a named beneficiary. Death benefits under annuities are interpleaded much like life insurance.

Read more:AnnuitiesRelated:Beneficiary designation

#Answer

The written response a defendant files after being served with a complaint. In an interpleader case, a claimant uses the answer (or a separate claim) to state why the money belongs to them. Deadlines are short and differ between federal and state courts.

#Beneficiary designation

The form or electronic record naming who receives an asset, such as life insurance, a retirement account, or an annuity, when the owner dies. It generally controls over a will.

#Bona fide claim

A claim made in good faith with a plausible legal basis. Texas, for example, uses the phrase when describing the adverse claims that let a life insurer hold payment or interplead.

Read more:LouisianaRelated:Interpleader

#Consolidated ERISA post-distribution interpleader (this site’s term)

This site’s own label, not a term courts use or a recognized doctrine. It describes an interpleader in which the court, before releasing the deposited money, decides both who an ERISA plan’s documents say must be paid and whether another claimant’s state-law claim, such as a divorce waiver, means that payee cannot keep the money.

#Constructive trust

A court-imposed remedy that treats a person holding money as holding it for someone else who is more rightfully entitled to it. It can be sought against a person after a plan or insurer has already paid.

Read more:Divorce · ERISA post-distribution claimsRelated:Preemption

#Contingent beneficiary

A backup beneficiary who takes only if the primary beneficiary cannot, for example because the primary beneficiary died first or was disqualified.

#Counterclaim

A claim a defendant brings against the plaintiff in the same case. In interpleader, a claimant may counterclaim against the stakeholder, for example for delay or mishandling, and that claim is decided on its own merits.

#Court registry

The account in which a court holds money deposited in a case until it orders the money paid out.

#CRIS (Court Registry Investment System)

The system federal courts use to hold and invest money deposited in their registries. The judiciary charges a small annual fee based on the assets on deposit.

#Crossclaim

A claim one defendant brings against another defendant. In interpleader, claimants often crossclaim against each other to establish who is entitled to the fund.

Read more:Named in an interpleaderRelated:Counterclaim, Claimant

#Default judgment

A judgment entered against a party who does not respond in time. In interpleader, a claimant who never answers can lose any claim to the fund.

#Deposit (tender)

Paying the disputed money into court, or posting a bond, so the court controls it while the claimants litigate. Deposit is usually what allows the stakeholder to be discharged.

#Discharge

A court order releasing the stakeholder from further liability for the fund once it has deposited the money. The case then continues among the claimants.

#Disinterested stakeholder

A stakeholder that claims no part of the fund for itself and only wants to pay the right person. Courts treat this kind of stakeholder differently from one that disputes it owes anything.

#Disputed ownership fund

A federal tax category for money held, such as in a court registry, while ownership is disputed. It can affect who reports income earned on the fund.

#Diversity jurisdiction

Federal court power over cases between citizens of different states. Statutory interpleader needs only minimal diversity; Rule 22 interpleader generally uses the ordinary diversity rules.

#ERISA

The Employee Retirement Income Security Act, the federal law governing most private-employer benefit plans, including many group life and retirement plans. It generally requires plans to follow plan documents and overrides many state laws.

#Escrow

Money or property held by a neutral party until conditions are met, such as at a real estate closing. When parties dispute who gets escrowed money, the holder may interplead it.

Read more:Escrow and sale proceedsRelated:Stakeholder

#Estate

Everything a person leaves at death, managed by a personal representative through probate. Proceeds often go to the estate when no named beneficiary can take.

#FEGLI

Federal Employees’ Group Life Insurance. A federal statute sets who is paid, and the Supreme Court has held that conflicting state laws are preempted.

Read more:Federal programsRelated:Order of precedence, Preemption

#Guardian ad litem

A person appointed by a court to represent the interests of a minor or an incapacitated person in a particular case, such as a dispute over a death benefit.

Read more:Named in an interpleaderRelated:Minor claimant

#Injunction (in interpleader)

A court order stopping claimants from suing the stakeholder elsewhere over the same fund. In statutory interpleader, 28 U.S.C. § 2361 authorizes it.

#Interest on proceeds

Money added to a death benefit for the time between death (or proof of death) and payment or deposit. Whether it is owed, from when, and at what rate depends on the policy and state law.

#Interpleader

A lawsuit in which someone holding money or property that several people claim deposits it with a court and asks the court to decide who gets it. The holder avoids paying twice; the claimants litigate against each other.

#Life insurance proceeds

The death benefit an insurer pays when the insured person dies. Life insurance is the most common subject of interpleader.

#Minimal diversity

The relaxed citizenship requirement for statutory interpleader: at least two adverse claimants must be citizens of different states. Combined with a $500 amount-in-controversy floor, it makes federal court available in many family disputes.

#Minor claimant

A claimant who is under the age of majority. A minor generally acts through a representative, and in federal court the judge must appoint a guardian ad litem or issue another appropriate order to protect an unrepresented minor.

#Order of precedence

A statutory list that decides who receives federal benefits, such as FEGLI or SGLI, when there is no valid beneficiary designation.

Read more:Federal programsRelated:FEGLI, SGLI and VGLI

#Personal representative

The executor or administrator who manages a deceased person’s estate and can make claims on the estate’s behalf.

Read more:Why beneficiary disputes happenRelated:Estate, Probate

#Plan documents rule

The ERISA principle that a plan administrator pays according to the plan’s documents and the beneficiary designation on file, even if a divorce decree or state law points elsewhere.

#Preemption

The principle that federal law overrides conflicting state law. It explains why state divorce-revocation or community-property rules often do not control ERISA, FEGLI, or SGLI benefits.

Read more:Federal programs · Key decisionsRelated:ERISA, FEGLI, SGLI and VGLI

#Primary beneficiary

The first person in line to receive an asset under a beneficiary designation.

#Probate

The court process for administering a deceased person’s estate. Assets with a valid beneficiary designation usually pass outside probate.

#Prompt-payment statute

A state law setting deadlines for insurers to pay claims and adding interest or penalties for late payment. Some, like Texas’s, also set a deadline to file an interpleader when there is an adverse claim.

Read more:State comparisonRelated:Interest on proceeds

#QDRO (qualified domestic relations order)

A court order, usually made in a divorce, that an ERISA plan will honor to pay benefits to a former spouse or other alternate payee.

Read more:Retirement accountsRelated:ERISA

#Replevin

A lawsuit to recover possession of specific personal property, such as a painting or a watch, rather than its value. A holder facing replevin claims from more than one person may interplead instead.

#Res (the fund)

Latin for “the thing.” In interpleader it means the money or property in dispute.

#Revocation-on-divorce statute

A state law that automatically cancels a former spouse’s designation as beneficiary when the marriage ends, unless an exception applies. Coverage varies: some reach life insurance and some do not, and federal law can override them.

Read more:Divorce · State comparisonRelated:Preemption, Plan documents rule

#Rule 22 interpleader

Interpleader under Federal Rule of Civil Procedure 22. It relies on the court’s ordinary jurisdiction, so it generally needs complete diversity and more than $75,000, or a federal question.

#Service of process

Formal delivery of the summons and complaint to a defendant. Answer deadlines generally run from service.

Read more:Named in an interpleaderRelated:Answer, Default judgment

#SGLI and VGLI

Servicemembers’ and Veterans’ Group Life Insurance. Federal law sets who is paid, and conflicting state-law remedies have been held preempted.

Read more:Federal programsRelated:Order of precedence, Preemption

#Simultaneous death rule

A rule deciding who is treated as surviving when the insured and a beneficiary die together or close in time. Many states use a uniform act, some with a 120-hour survival requirement.

#Slayer rule

The rule that a person who unlawfully and intentionally kills someone cannot inherit from them or collect their life insurance. Most states have a statute; the standard of proof and the role of a conviction vary.

Read more:The slayer ruleRelated:Contingent beneficiary

#Stakeholder

The person or company holding the disputed money or property, such as an insurer, bank, plan, or escrow agent, that brings the interpleader.

#Statutory interpleader

Interpleader under 28 U.S.C. § 1335. It needs only $500 or more in dispute and minimal diversity, allows nationwide service, and requires the stakeholder to deposit the money or post a bond.

#Strict compliance

A rule requiring an owner to follow the policy’s or plan’s exact procedure for a change of beneficiary to be effective.

#Substantial compliance

A doctrine that can make a change of beneficiary effective if the owner clearly intended it and did everything reasonably possible to make it, even if a formality was missed. Courts differ on when it applies.

#Summary judgment

A ruling deciding a case, or part of it, without a trial because the important facts are not genuinely disputed.

Read more:Named in an interpleaderRelated:Answer

#Thrift Savings Plan (TSP)

The federal employees’ retirement savings plan. Federal law sets how its death benefits are paid.

Read more:Federal programsRelated:Preemption

#Undue influence

Pressure that overcomes a person’s free will so that a designation or gift reflects someone else’s wishes. The elements and burden of proof vary by state.

#Waiver (in a divorce agreement)

A promise, often in a divorce settlement, to give up rights to a benefit. Under ERISA it may not stop the plan from paying the named beneficiary, though some courts allow a later suit against the person paid.

Read more:DivorceRelated:Plan documents rule, Constructive trust