If you’re ever entered into a contract, one provision that you may have seen is one requiring that any disputes involving the contract must be resolved through arbitration. In some cases, but certainly not all, arbitration can be less protracted and less expensive than full-blown court litigation. In those cases where the contract has an arbitration clause, the requirement may be optional or it may be mandatory. In addition, the outcome may be binding or non-binding. Arbitration clauses have pros and cons but in the right situation, they can definitely be a viable option.
So, is an arbitration clause in a Will or Trust enforceable in Florida? The answer is ‘yes.” Section 731.401, Fla. Stat. entitled “Arbitration of disputes” contains the following provision:
(1) A provision in a will or trust requiring the arbitration of disputes, other than disputes of the validity of all or a part of a will or trust, between or among the beneficiaries and a fiduciary under the will or trust, or any combination of such persons or entities, is enforceable.
(2) Unless otherwise specified in the will or trust, a will or trust provision requiring arbitration shall be presumed to require binding arbitration under chapter 682, the Revised Florida Arbitration Code. If an arbitration enforceable under this section is governed under chapter 682, the arbitration provision in the will or trust shall be treated as an agreement for the purposes of applying chapter 682.
Under this statutory provision, an arbitration clause in a Will or Trust is enforceable as long as the nature of the dispute does not include the validity of part or all of the Will or Trust. So, if a dispute involves a Will contest seeking to have a Will declared invalid due to undue influence or duress, then arbitration cannot be compelled. In that case, a court would have to decide the matter.
But there are many things that can be disputed in the administration of a Will or Trust that do not include the validity of the instrument. For example, if a dispute was over whether an estate asset should be sold or distributed in kind, an arbitration provision could be enforced. Another example would be if there is a dispute over which beneficiary is to get a certain estate asset, arbitration could be enforced. Truthfully, the possible disputes could be endless.
An important aspect of the statutory provision authorizing arbitration is that it creates a presumption that arbitration is binding. When disputes are arbitrated, the outcome can either be binding or not. In binding arbitration, the ruling has the same force and effect as if a court had decided the matter. If non-binding arbitration, the decision is more of an advisory ruling letting the parties know what might be the outcome. Sometimes the ruling in non-binding arbitration leads to the parties settling their disputes.
If an arbitration clause can be included in a Will or Trust, why don’t more of them have these clauses? The reality is that many attorneys do not like arbitration. They prefer that disputes be decided in a court rather than through arbitration. As stated above, arbitration has pros and cons so in some cases this inclination may be understandable. However, a cynical observer could also speculate that the attorneys make more money when disputes are resolved through court proceedings!