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What Is An Arbitration Clause?

What exactly is an arbitration clause? You may have heard the term thrown around when it comes to certain legal documents or even on an episode of Law & Order (although maybe not accurately).

Arbitration clauses are becoming more the norm these days and a popular alternative to going to trial for many types of legal disputes.

With that said, here's a general overview of what an arbitration clause is and how it may affect you:

Arbitration Clauses in General

In most family law matters, it is typical to include arbitration clauses in many legal contracts and documents. They essentially state that if there is any legal conflict that may need to be discussed in the future, it will go into arbitration, as opposed to the trial process.

It is also common practice for standard boilerplate contracts to contain arbitration clauses. These clauses are occasionally unenforceable because parties signing the contract may be unfairly unaware that they've opted out of a trial option. However, arbitration does have many perks over a trial -- it's faster, less formal, cheaper, and depending on the type of dispute, it may be a more ideal solution. Courts at the highest level have enforced arbitration clauses in agreements, and they continue to remain a solid option for many in Arizona.

Arbitration Clauses with Wills and Trusts

Arbitration, in the past, was rarely used in estate planning documents like wills and trusts. Lately, however, arbitration clauses have been increasing in legitimacy and enforceability when it comes to wills and trusts. Arguments for enforcing arbitration clauses in these documents harp on positive factors like:

  • the practicality,
  • the efficiency,
  • the less adversarial nature, and
  • the sensitive subject-matter of one's relationship with a loved one who has passed.

It should also be noted that if arbitration is not preferred, any party can file a petition to object to the arbitration, which the court will then ultimately approve or deny.

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