Sometimes, estate planning doesn’t go as smoothly as we would hope. Disputes can arise from almost any aspect of estate planning, especially when you consider that many topics in this area involve emotional issues.
When it comes to estate planning disputes, not every situation has to end up in litigation or before a judge. In many disputes parties can use alternative dispute resolution as a way to avoid further complications. What is alternative dispute resolution and how does it work? Let’s take a little closer look.
Alternative Dispute Resolution
Often referred to by the acronym ADR, alternative dispute resolution is a term that applies to a variety of methods people can use to settle legal disagreements. The two most popular forms of ADR are mediation and arbitration. Both of these forms are less costly and less time-consuming than traditional litigation. They also both involve a neutral third party, and are intended to allow both sides to a dispute to resolve their disagreements outside of a courtroom.
Of the two more popular forms of ADR, arbitration is the more formal. In an arbitration, both sides meet with a third-party arbitrator. This arbitrator acts as a sort of private judge. The arbitrator will listen to both sides, evaluate their evidence, and then make a ruling about the case. In a binding arbitration situation the arbitrator’s ruling is something both parties must comply with, while non-binding arbitration does not impose this mandatory compliance. In non-binding arbitration, both sides are free to determine if they want to accept the arbitrator’s ruling or not.
Mediation is less formal than arbitration, and doesn’t involve anyone making a decision or imposing an outcome. A mediator acts as a type of counselor, allowing both sides to come together to discuss their issues. The mediator doesn’t make decisions or rulings, but instead gives both sides the opportunity to come to an agreement on their own. Mediators serve to facilitate a more easier and open communication process that, in many situations, allows both sides of the dispute to not only understand the other side, but to agree on an resolution.
Estate Planning and ADR
Depending on the circumstances, ADR may or may not be possible in an estate planning dispute. In other circumstances, however, ADR is not only possible, it’s required.
For example, some people who create a trust include ADR terms that require the beneficiaries to use ADR if they have a dispute over how the trustee manages trust property. In other situations ADR might be an alternative to litigation even if it’s not expressly required.
Determining if and when ADRs possible and what benefits and drawbacks it has is not something most people can do on their own. For a more detailed explanation of how ADR works, speak to your estate planning attorney.