Unpublished Papers

Enforceable Arbitration Clauses in Wills and Trusts: A Critique

Stephen W. Murphy, St. John, Bowling, Lawrence & Quagliana, LLP

Abstract

A dispute over a trust or estate can tax family relationships and resources. Arbitration is an alternative that can save time and money, prevent conflict, and avoid public scrutiny. Donors might hope to place an arbitration clause in a will or trust, to require that their beneficiaries and fiduciaries settle their disputes there, rather than through long, costly, and public litigation. This paper will refer to such a provision as a “donative arbitration clause.”

But state arbitration statutes would not enforce a donative arbitration clause. Those statutes only enforce arbitration clauses in a contract; and the courts that have considered the matter have held that trusts and wills are not contracts. Proponents of donative arbitration clauses are thus forced to argue for extra-statutory means of enforcing those clauses under current law, on the one hand, or to push for statutory change, on the other.

This paper offers two contributions to this fledging movement to enforce donative arbitration clauses. First, the paper critiques the proposals for extra-statutory means of enforcing those clauses. Each of these proposals is either over- or under-inclusive. This paper concludes that these clauses can only be properly enforced through statutory change.

Second, this paper critiques current attempts at statutory reform in this area in Florida, Arizona, and Hawaii. Enforcing arbitration clauses in trusts and wills should involve careful consideration of various factors and the balancing of various interests, but none of these attempts have considered these factors. This paper therefore offers several distinctions that the policymaker should consider in crafting a statute for his or her jurisdiction.

Suggested Citation

Stephen W. Murphy. 2011. "Enforceable Arbitration Clauses in Wills and Trusts: A Critique" ExpressO
Available at: http://works.bepress.com/stephen_murphy/1

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