Does the Trust You Are Administering Have an Arbitration Clause?

In a perfect world, every trust administration process would run smoothly and efficiently, without issue. Unfortunately, this is not always the case. Disputes can arise among the beneficiaries, the trustees, and other parties. Pursuing court involvement may be the only option for resoling these disputes if the parties cannot see eye to eye. In some cases, however, the trust document itself may contain an arbitration provision. Arbitration is a form of dispute resolution involving an independent third party who makes a private, judicial determination of the issue at hand.

3 Advantages of Arbitration During Trust Administration

If you are the trustee of a trust and a dispute arises, you may wish to consider arbitration. Some of the advantages of this process include the following:

  1. Arbitration, in some cases, can save time and money when a dispute arises during a trust’s administration. Arbitration is generally a much quicker process than formal litigation. In addition, arbitration is often a less costly option.
  2. Arbitration offers the parties a forum to air their grievances that is specifically designed to address these issues.
  3. Arbitration may bring finality to the issue at hand, depending on the terms of the trust. Arbitration is often binding and does not allow for appeals. In addition, California law and the California court system both strongly favor arbitration and the enforceability of arbitration clauses.

While arbitration can sometimes be a welcome solution to a trust administration dispute, it is not always the best answer under every circumstance. This especially true in the trust and estate litigation context. If the trust document does not impose a mandatory and binding arbitration clause, the trustee should consider carefully how best to proceed. Fortunately, we can help. We encourage you to contact us today for more information at (714) 459-5481.