McArthur v. McArthur - Arbitration Clause in a Trust

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Author Shahram Miri

Excerpts:
Arbitration is a common non-judicial method of resolving legal disputes.

Recently settlors, the people who author trusts, have begun to insert arbitration clauses in their trust agreements. The intent behind this, presumably, is to reduce the cost of litigation and to keep the matter private.

Following Ms. McArthur's death in 2011, Pamela sued Kristi for financial elder abuse and sought, inter alia, to have the 2011 trust invalidated. Kristi moved to compel arbitration, citing the clause in the 2011 trust. Pamela objected to this and the trial court agreed, finding that because Pamela was not a signatory to the agreement, she could not be compelled to arbitrate her claims against her sister. Kristi then appealed her decision to the 1st District Court of Appeal.

The appellate court agreed with the trial court's decision, finding that because Pamela had neither expressly or implicitly sought the benefits of the 2011 trust, she was not compelled to arbitrate.

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