Stephen W. Murphy, Michael H. Barker, Jodie Herrmann Lawson, and Hunter M. Glenn of McGuireWoods LLP, have made available for download their article, “Virginia Supreme Court: Arbitration Clauses in Trusts Are Not Enforceable Against Beneficiaries,” published on McGuireWoods’s website. The abstract is as follows:
In Boyle v. Anderson, No. 210382 (Va. April 14, 2022), the Supreme Court of Virginia addressed an emerging topic in trusts and estates: whether a settlor can require that trustees and beneficiaries submit any disputes to arbitration, rather than allow them to proceed through litigation. This type of clause could be referred to as a “donative arbitration clause,” because it exists in a will or trust agreement, as opposed to a more conventional contract between parties.
It might come as no surprise that many settlors and advisors seek to include such a clause in their trusts. Compared to litigation, arbitration can result in savings in time, money and relationships. Importantly, arbitration itself is often private, while litigation is a public affair. Further, arbitration procedures can be specifically tailored to the trust and estate context; for example, an arbitrator might provide that discovery is limited in certain respects or might allow the admission of evidence regarding past practices and family dynamics, which may not otherwise be admissible in open court. Despite such potential benefits, the question remains whether such a clause can be enforced against a beneficiary or a trustee, when such beneficiary or trustee wants to proceed in court.
Click here to view Stephen W. Murphy, Michael H. Barker, Jodie Herrmann Lawson, and Hunter M. Glenn’s summary of “Virginia Supreme Court: Arbitration Clauses in Trusts Are Not Enforceable Against Beneficiaries”
Posted by Anthony Tran, Associate Editor, Wealth Strategies Journal