WealthCounsel’s 7th Annual Industry Trends Survey looked at the business challenges faced by estate-planning professionals in 2013 and provided insight into what motivates clients to engage in planning.
According to the survey, the top two reasons families engage in estate planning revolve around privatizing the wealth-transfer process (i.e., “avoid probate”: 59%), and the threat of inheritance disputes (i.e., “minimize discord among beneficiaries”: 57%). In my opinion, the single most powerful tool we have as planners responding directly to both of these concerns is the mandatory arbitration clause. These clauses both privatize the dispute-resolution process and minimize the family discord caused by an overworked and underfunded public court system. Back in 2007 Florida was the first state in the nation to adopt legislation expressly authorizing these clauses in wills and trusts (for my write up of the statute and sample clauses, see here).
If you look at any bank, trust company or brokerage firm’s account opening agreement, you’ll find a mandatory arbitration clause in there. If arbitration clauses make sense for corporate institutions with the resources and experience needed to best evaluate the pros and cons of our public court system, why don’t they also make sense for our clients? Answer: no good reason. I’ve written before on why privately funded and administered arbitration proceedings are a better dispute-resolution process for estate litigation. Whether you agree with me or not, there’s no denying this fact: arbitrating inheritance disputes responds directly to the top concerns our clients want us to focus on.