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Trust Litigation & Disputes: Mediation and Arbitration

Because probate, trust and estate litigation is often quite complex and expensive (e.g, breach of trust, trustee removal, trust contests),  many estate planning and drafting attorneys have included provisions to try to avoid or expedite these problems if a dispute arises down the road. An increasingly common way they combat this is by including mandatory arbitration and mediation provisions requiring that certain disputes be submitted to these forums. There is a Missouri statute stating that these types of provisions are enforceable: 

456.2-205.  Enforceability of mediation or arbitration provisions. — 1.  Subject to the exception in subsection 2 of this section, a provision in a trust instrument requiring the mediation or arbitration of disputes between or among the beneficiaries, a fiduciary, a person granted nonfiduciary powers under the trust instrument, or any combination of such persons is enforceable.

2.  A provision in a trust instrument requiring the mediation or arbitration of disputes relating to the validity of a trust is not enforceable unless all interested persons with regard to the dispute consent to the mediation or arbitration of the dispute.

To date, there does not appear to be any Missouri cases interpreting/finding whether this statute is enforceable because it in effect deprives individuals of their right to file a lawsuit in court if they are not a signer to the trust. In other situations, arbitration agreements typically need to be signed and agreed upon to be enforceable against that party; accordingly, the validity and legality of this statute would seem to be dubious. Subject to a court decision finding this to be the case, though, this statute is the law in Missouri. And, as such, it is important to speak with legal counsel to determine whether an arbitration or mediation provision in a trust exists and whether it would be helpful or detrimental to invoke it. 

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