Because it often involves very personal and emotional issues, estate planning is one area of the law that can give rise to some serious family conflicts. Some of these conflicts escalate to the point where families take one another to court. Other conflicts stay out of the courtrooms, but are no less damaging because they irrevocably harm family relationships.
As a method of solving such conflicts, families with estate planning disputes might consider using arbitration and mediation. What are arbitration and mediation? Here are some commonly asked questions.
Question 1. What is arbitration?
Arbitration is a form of alternative dispute resolution, or ADR, that uses a neutral third-party judge to preside over conflict. This judge, called an arbitrator, acts much in the same way that a judge would at trial. He or she is responsible for reviewing each side’s case, listening to arguments, evaluating the evidence, and making a determination about the outcome.
Arbitration can be either binding or non-binding. In binding arbitration, both parties have to abide by the decision the arbitrator makes. In non-binding arbitration, on the other hand, each side is free to accept or reject the decision as they wish.
Question 2. What is mediation?
Mediation is a less formal type of ADR. In a mediation setting, both sides discuss their dispute with a neutral third-party mediator. The mediator is specially trained to help the parties come to an agreement on their own. The mediation allows both sides to come to a neutral place to discuss their disagreement. Unlike arbitration, the mediator does not come to a judgment or make a determination about the case or what should happen. Both sides are free to participate in the mediation process as they choose, but the mediator is not capable of issuing a decision or making any binding rulings.
Question 3. How does mediation and arbitration come into the estate planning process?
Many disputes that arise out of the estate planning process do so because of a lack of communication. With arbitration and mediation, both sides of the dispute can meet with each other in the presence of a neutral third party to better communicate and, hopefully, come to a mutually agreeable outcome.
In some situations, people creating estate planning tools can include mediation or arbitration terms. For example, a person creating a trust can direct that if any of the beneficiaries have a disagreement about how the trustee is managing the trust, they might first have to participate in arbitration or mediation. These types of clauses are very common when people want to avoid the expenses and other concerns that arise when estate planning disagreements lead to litigation.