Internal Trust Disputes

Although third-party disputes involving trusts have long been considered amenable to arbitration, there is growing interest in arbitration of internal trust disputes, meaning disputes involving the internal operation of the trust and involving the trustee(s) and beneficiaries.

There is growing interest in arbitration of internal trust disputes

Not only have several states recently adopted legislation explicitly permitting arbitration of internal trust disputes, but a number of state courts have implicitly or explicitly overturned previous prohibitions on arbitration of these types of disputes. This is not to say that it is all smooth sailing.

In moving towards a more arbitration-friendly trust regime, the United States is joining trends.

Internal trust arbitration gives rise to a number of analytical difficulties not seen in other types of arbitration, particularly with respect to issues of arbitrability and party consent. Nevertheless, arbitration is in many ways very well-suited to disputes involving trusts, suggesting that parties and policymakers should persevere despite the various challenges.