Do I have to use arbitration to resolve a dispute that arises during a trust administration? If you’re in charge of implementing an estate plan, you may find yourself at the center of a dispute involving a trust. There may be other options for resolving these disputes short of heading to court and pursuing litigation. One such example is the arbitration process. Since there are pros and cons to using arbitration, it is important for trustees to understand whether arbitration is mandatory for a particular situation.
How to Determine Whether Arbitration Is Required to Resolve a Trust Administration Dispute
How can you tell whether arbitration is mandatory for resolving your trust administration dispute? Consider the following:
- Consult with an experienced attorney. The trust language may not be perfectly clear as to how disputes should be handled. An attorney can help you understand if arbitration is mandatory and how best to proceed with regard to the resolution of the dispute.
- Carefully review the terms of the trust you are in charge of administering. Some trusts may be silent with regard to the issue of arbitration. Others may present it as an option available to trustees. And in other cases, the trust document may dictate that arbitration is mandatory and must be utilized when a dispute arise among trustees, beneficiaries, or third parties.
- Consider whether or not the mandatory arbitration process will be binding on successor trustees and beneficiaries. These parties never signed the trust document when it was created. Therefore, the arbitrator may not have jurisdiction over these parties.
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