Arbitration Clauses in Trusts

There can be no doubt that going to Court can be expensive and time-consuming. One of the reasons that many people use Revocable Living Trusts in their estate plans is to avoid the necessity of having their heirs going to Probate court. But, what happens if someone decides to challenge the Trust? Unfortunately, that can often end up in Court too.

Ordinarily, when someone decides to contest a Trust or how the Trustee is handling the Trust assets, a lawsuit is filed asking the Court to intervene. The litigation is expensive and can take awhile to work its way through the system. There might be something that you can do to minimize the cost and expense. You can usually insert a mandatory arbitration clause into the Trust document. This makes it so that anyone who wants to contest the Trust has to submit the matter to an arbitrator, which is normally less expensive and time-consuming than going to Court. However, states do differ on whether arbitration is binding and in some cases people may go to court if they do not like the results of arbitration.

You can not always prevent people who want to fight from going to Court. However, you can minimize the opportunity to do so over a Trust with an arbitration clause.

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Thanks again.

Dennis D. Duffy

Duffy Law Office, PLLC