by C. Jean Stewart

When he died in December of 1799, George Washington left a will that was remarkable in many ways. Shortly after his death, the will was printed in Virginia, and was then circulated throughout the country in pamphlet form.  In concluding the dispositive part of his handwritten will, Mr. Washington inserted an arbitration clause that provided, in part:

            “ . . . I hope, and trust, that no disputes will arise . . . ; but if, contrary to expectation, the case should be otherwise . . . My Will and direction expressly is, that all disputes (if unhappily any should arise) shall be decided by three impartial and intelligent men, known for their probity and good understanding; two to be chosen by the disputants—each having the choice of one—and the third by those two.  Which three men thus chosen, shall, unfettered by Law, or legal constructions, declare their sense of the Testators intention; and such decision is, to all intents and purposes to be as binding on the Parties as if it had been given in the Supreme Court of the United States.”

            The mandatory arbitration provision in wills and trusts has not been without controversy in this country in recent times although, as Mr. Washington’s example reveals, it clearly was used previously.  It is sometimes argued that the arbitration provision would be unenforceable in modern times where state law did not specifically provide for its use in the context of a will or trust dispute because of arbitration’s inherently contractual nature.  

This makes the recent decision from the Supreme Court of Texas hopeful in that the Texas Arbitration Act (modeled on the Uniform Arbitration Act in force in 22 states and the District of Columbia) provides that an arbitration clause in an “agreement” is enforceable and the Texas Supreme Court held that the trust in question was an agreement. Hence, the Court enforced the arbitration provision against the Beneficiary/Plaintiff.

In my view, the most significant holding in the opinion in terms of Alternative Dispute Resolution, is the Court’s use of the “doctrine of direct benefits estoppel” to find that a beneficiary/plaintiff who had accepted the benefits of the trust and had filed a suit to enforce its terms had exhibited the degree of assent required to form an enforceable agreement to arbitrate under Texas state law. 

I continue to urge estate planners to include ADR language in their wills and trusts and to share with their clients the advantages of avoiding protracted and expensive litigation over estate and trust disputes.  Perhaps Colorado will soon have an appellate decision enforcing one of those arbitration provisions?