The thrust of the Court's opinion is simple. Both the VUAA and the FAA require that a party agree to arbitrate disputes. Thus, to compel arbitration under the VUAA or the FAA, the arbitration provision at issue must be in a contract. But trusts differ from contracts in a few key ways. First, generally speaking, a trust is a donative instrument created by the settlor. It doesn't require consideration or mutual assent by the beneficiaries. Second, the duties owed in connection with a trust differ from those owed in connection with a contract. A trustee is a fiduciary. A counterparty to a contract is not. Third, and finally, unlike a contract, a trust gives rise to divided ownership of property, whereby the trustee has legal title and the beneficiaries have equitable title.
In sum, a trust is not a contract, and an arbitration clause in a trust does not reflect any agreement by the trust's beneficiaries to arbitrate. Therefore, trust beneficiaries cannot be compelled to arbitrate a trust dispute under either the VUAA or the FAA.
Disputes involving trusts and estates are complex.
Disputes involving trusts and estates often involve complex, nuanced issues. If you are involved in a dispute involving an estate or trust, you will want to hire an attorney with experience handling such complex disputes. Don't wait. Contact us today.
