WILLS, TRUSTS, and ARBITRATION AGREEMENTS
In previous blog posts, we have shown how wills and trusts are favored vehicles when protecting someone’s assets. Perhaps one of the purposes of a well-drafted will or trust is to avoid hearing the judge’s gavel when knowing who gets what part of the inheritance. Unfortunately, contentions amongst the parties may well exist. The good news is that since 2007, parties have another alternative to resolve disputes that arise out of a will or a trust. Florida Law provides the option for parties to have a clause in their will or trust requiring arbitration. See Fla. Stat. § 731.401.
Arbitration, is a private (not state-sponsored) method of resolving disputes. Arbitration is not to be confused with mediation: While mediators help the parties in finding a solution, arbitrators decide a dispute.
There are several reasons one could favor including an arbitration requirement in a will or a trust. First, arbitration is confidential; it is not a public court proceeding, as opposed to proceedings in probate court. Second, parties can customize their proceedings. In other words, they can select the rules that are to govern their dispute based on the rules of arbitration institutions such as the American Arbitration Association (AAA) or they can also invent their own rules. Third, parties can choose the arbitrator. Usually, arbitrations that are conducted under an institution such as the AAA provide a roster to the parties so that the parties have a list of arbitrators to choose from. But parties can also select as an arbitrator someone that they know of and trust in deciding their dispute.
However, using arbitration to resolve disputes related to wills and trusts might have drawbacks. First, while probate courts have vast experience in dealing with disputes that arise out of a will or a trust, arbitration is relatively new when it comes to resolving issues related to these legal instruments. Second, court intervention is not completely left out the proceedings, as judges intervene to assist with the arbitration, which could mean a delay in time and further expense to the parties. See Fla. Stat. § 682.08. Third, Florida is notorious for being a state with foreign investors. It is not clear if an arbitration proceeding that resolves issues that arise out of a will or a trust can be enforced in a foreign jurisdiction. Some countries understand that issues concerning wills and trust are considered relevant to the state and therefore only state courts can resolve them.
In sum, arbitration is another tool available for parties to resolve disputes relating to wills and trusts. Yet, a deep legal analysis might be required in order to decide if arbitration can work for resolving these issues. If you are interested in more information on whether including an arbitration clause in your will or trust is right for you, please do not hesitate to contact the lawyers at Chepenik Trushin LLP, who are experienced, ready, and willing to help – 305-981-8889, Bart Chepenik, 305-613-3548, Brad Trushin. We are always available to help and guide you on your legal needs. Call us today.