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What Can Be Interpleaded?

Almost any identifiable fund or property can be the subject of an interpleader. What changes from one asset to the next is the paperwork that controls who gets paid, and the law that decides whether that paperwork wins.

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On this page
  1. The legal test is broad
  2. Assets that pass outside a will
  3. Money held during a transaction or dispute
  4. Objects, not just money
  5. Why the asset type matters
  6. Common triggers across all asset types

Interpleader is not limited to a list of asset types. The federal interpleader statute reaches anyone holding “money or property of the value of $500 or more,” anyone who has issued “a note, bond, certificate, policy of insurance, or other instrument of value or amount of $500 or more,” and anyone “under any obligation written or unwritten to the amount of $500 or more,” as long as the other requirements are met.1 Rule 22 and state interpleader procedures are similarly general.

In practice, though, a handful of asset types produce most interpleader cases, and each has its own source of conflict.

Assets that pass outside a will

Many of the most valuable things a person owns at death do not pass under a will. They pass by contract or by the terms of an account, to whoever is named on a form held by the company. These designations are often signed years before death and never revisited. When family circumstances change, the form and the family’s expectations can point in different directions, and the company holding the money ends up in the middle.

Life insurance

Ex-spouse beneficiaries, divorce decrees, missing change forms, minors, and policies governed by federal law.

Full guide

Bank accounts

Joint, payable-on-death, and agency designations; adverse-claim notices; fraudulent wires; and why banks freeze accounts.

Full guide

Retirement accounts and IRAs

Employer plans under ERISA versus IRAs, spousal consent rules, and divorce orders.

Full guide

Annuities

Contested death benefits, disputes between co-owners, and federal payout timing rules.

Full guide

Brokerage accounts

Transfer-on-death registrations, conflicting forms, divorce, firm holds, and whether securities must be sold before deposit.

Full guide

Money held during a transaction or dispute

A second group of cases involves money that a neutral party is holding while a deal closes or a dispute plays out: earnest money and closing proceeds held by an escrow agent or title company, surplus proceeds from a foreclosure sale, settlement funds, retainage on a construction project, or wages and benefits an employer owes to a worker who has died. The holder has no stake in the outcome but has received competing instructions.

Escrow and sale proceeds

Earnest money, closing funds, and surplus proceeds.

Full guide

Personal injury settlements

Medicare, Medicaid, health plan and hospital claims, lawyers’ liens, child support and tax liens, and policy limits with several claimants.

Full guide

Other disputed funds

Liability insurance limits, property insurance after a fire, deposits, and money held by a court.

Full guide

Objects, not just money

The statute’s reference to “property” means a disputed object can be interpleaded too. Auction houses, museums, dealers, repair shops and law enforcement agencies have used interpleader when two or more people claim a painting, an antiquity or a watch, often after a claim that the item was stolen or looted.

Art, jewelry and personal property

Stolen and looted art, good-faith buyers, demand-and-refusal and discovery rules, the HEAR Act, and depositing the object itself.

Full guide

Why the asset type matters

The asset type usually decides three things.

1. Which document controls. For life insurance, it is the policy and the beneficiary designation on file with the insurer. For a bank account, it is the account agreement and the form of ownership (joint, payable-on-death, or individual). For an employer retirement or life insurance plan, it is the plan documents.

2. Which law governs. Policies and accounts are usually governed by state law, but some major categories are governed by federal law:

Asset Typically governed by Why it matters
Individual life insurance State law and the policy State statutes (for example, revocation-on-divorce laws) may redirect the proceeds
Employer group life or retirement plans ERISA, 29 U.S.C. § 1001 and following Federal law requires administrators to follow plan documents and preempts state laws that “relate to” the plan2
Federal employee life insurance (FEGLI) 5 U.S.C. § 8705 A federal order of precedence controls; divorce-related court orders count only if received by the right office before death3
Servicemember life insurance (SGLI/VGLI) 38 U.S.C. § 1970 A federal order of precedence controls, and state-law remedies that conflict with it have been held displaced4
Bank and credit union accounts State law and the account agreement State multiple-party account statutes decide survivorship and protect the bank when it pays5

3. What happens if no one is validly named. Policies, plans, and statutes each have default rules (for example, paying the estate, or following an order of precedence that starts with a surviving spouse). Disputes often turn on whether a designation was valid, which in turn decides whether the default rule applies.

Common triggers across all asset types

  • Divorce without an updated beneficiary designation.
  • A change form that was signed but not received, or was received after death.
  • Competing documents, such as a will or divorce settlement that says something different from the form on file.
  • Questions about capacity or undue influence when a designation was changed late in life.
  • A beneficiary who is a minor or cannot legally give a release.
  • A beneficiary accused of causing the death, which brings in so-called slayer rules.
  • A beneficiary who cannot be located, or who died at nearly the same time as the insured.

The guides in this section explain how these play out for each asset type.

Footnotes

  1. 28 U.S.C. § 1335(a). Cornell LII. ↩

  2. 29 U.S.C. § 1104(a)(1)(D) (fiduciary must act “in accordance with the documents and instruments governing the plan”); § 1144(a) (preemption). See Egelhoff v. Egelhoff, 532 U.S. 141 (2001), and Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009), summarized in our decisions library. ↩

  3. 5 U.S.C. § 8705(a), (e). Cornell LII. See Hillman v. Maretta, 569 U.S. 483 (2013). ↩

  4. 38 U.S.C. § 1970(a). Cornell LII. See Ridgway v. Ridgway, 454 U.S. 46 (1981). ↩

  5. State statutes vary. For one example, see the Minnesota Multiparty Accounts Act, Minn. Stat. §§ 524.6-201 to 524.6-216, discussed in the bank accounts guide. ↩