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The basics of arbitration and trust disputes in New Jersey

On Behalf of | Jun 7, 2022 | Estate planning

Trust disputes often occur when one party to the trust believes that the trustee is not acting in their best interests. These disputes can be complex and emotionally charged, making them difficult to resolve. Arbitration may be a good option for resolving trust disputes.

What is arbitration?

Arbitration is a process in which two parties agree to submit their dispute to an impartial third party, who will then render a decision. This decision is binding on both parties, and can often be enforceable in court. This is different from mediation, in which the parties agree to work with a mediator to try to reach an agreement, but the mediator does not make a binding decision. Arbitration can be used to resolve all types of disputes, including trust disputes.

Arbitration and trust disputes

Trust disputes often arise when one party to the trust believes that the trustee is not acting in their best interests. The trustee may get accused of mismanaging the trust, breaching their fiduciary duties, or engaging in self-dealing. Trustees may also be accused of failing to properly communicate with beneficiaries about the trust and its assets.

The process of arbitration

The first step in the arbitration process is to select an arbitrator (or panel of arbitrators) who will hear the case and make a decision. The parties may choose to have the arbitrator selected by a neutral third party, such as a professional organization or the court. Once the arbitrator gets selected, the parties will meet with them to discuss the dispute and try to reach a resolution. If the parties are unable to reach an agreement, the arbitrator will hear arguments from both sides and render a decision.

Arbitration can be a faster and less expensive way to resolve trust disputes than going to court. It can also be less emotionally charged than mediation, as it does not require the parties to reach an agreement. Additionally, arbitration is confidential, which means that the details of the dispute will not be made public. If you’re involved in a trust dispute, you should consider whether arbitration may be right for you.