2022 Year in Review for Trust and Estate Disputes

In today’s blog post, I discuss a few notable developments from this past year in the field of trust and estate disputes.

New Standard For Undue Influence In Will Contest Cases

First, probably the most notable development from this past year is that Virginia’s General Assembly adopted a law that provides for a new standard for undue influence in will contest cases. Senate Bill 554 added a new provision to the Virginia Code in Section 64.2-454.1. I wrote a lengthy blog post this past summer on the bill (which blog post can be found here), so I won’t repeat myself in this post. But I do have some observations to make now that the new law has been in effect for a few months.

Some estate planning attorneys opposed the new law because they were concerned that it could lead to a “wave” of new will contest lawsuits. In short, that has not happened. My team and I have filed quite a number of will contest lawsuits since the new law went into effect this past July, and we unquestionably would have filed all of them even if the old standard was still in place. The new law is certainly helpful to litigants seeking to overturn a will on the basis of undue influence, but as I pointed out in my earlier blog post, the new law is hardly a silver bullet. In fact, it does nothing to help a litigant who is contesting a will on some ground other than undue influence, and it also arguably does nothing to help a litigant who is concurrently contesting the validity of a trust.

In sum, we can safely say that Senate Bill 554 has not increased estate litigation in Virginia; all that it has done is even a playing field that was previously slanted against a party seeking to prove undue influence. We will need to watch to see if the next step for the Virginia General Assembly is to expand the law to also provide for a new standard in the context of trust contests on the basis of undue influence. There is no principled reason that the law on the two subjects should not be the same.

Friction Between Co-Executors

While not technically from 2022 (it was from 2021), the Virginia Supreme Court handed down a decision that explicitly held that “friction” between co-executors could constitute a ground for the trial court to remove one or both of them as executor. This is notable because previously, numerous attorneys thought (based off the Supreme Court’s holding in Clark v. Grasty, 210 Va. 33, 37 (1969)) that the trial court could only remove an executor who is “guilty of fraud, breach of trust, or gross negligence.”

In the Supreme Court’s new holding, it provided that “‘friction’ between individuals can justify the removal of an executor when removal would achieve some beneficial end.” As a result, litigants now have an additional tool in their toolkit by which to seek the removal of an executor.

Arbitration Clauses in Trusts Will (Largely) Not Be Enforced

The Virginia Supreme Court issued a decision in Boyle v. Anderson, 871 S.E.2d 226 (2022), in which it held that neither the Virginia Uniform Arbitration Act, Code §§ 8.01-581.01 to -.016, nor the Federal Arbitration Act, 9 U.S.C. §§ 1-16, compels enforcement of an arbitration clause in a trust.

The Supreme Court stated: “We conclude that a trust is not a contract and, therefore, the [Virginia Uniform Arbitration Act] and the [Federal Arbitration Act] do not require arbitration on that basis. We further conclude that a beneficiary of a trust is not a party to an agreement to arbitrate and, therefore, the provision of the [Virginia Uniform Arbitration Act] compelling arbitration when there exists a written agreement to arbitrate likewise does not apply.” Id. at 227.

I’m going to be writing a more detailed blog post about this case in the near future, but for now I want to point out one interesting part of the holding. In its conclusion, the Court stated: “Whether an arbitration clause in a trust can be enforced on some basis other than the [Virginia Uniform Arbitration Act] or the [Federal Arbitration Act] is not a question before us, and we express no opinion on the point.” This raises the following interesting question: on what grounds could a litigant attempt to argue that arbitration clauses contained in trusts may be legally enforceable against trust beneficiaries? I’ll explore that topic in a future blog post, so stay tuned.

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