Texas Supreme Court Ruled in Favor of Enforcing Arbitration Clause

Recently, the Texas Supreme Court ruled that state policyfavors enforcing written commitments to arbitration.  Andrew Reitzcreated a self-declarating trust in 2000 choosing his two sons as thedesignated beneficiaries. Upon Andrew’s death his attorney, Hal Rachel was thenew trustee. In 2009, beneficiary John Reitz, sued successor trustee Rachel fornot providing an accounting, and misappropriating trusts assets. Rachel deniedthe accusations and moved to enact the arbitration clause in the trust.

In Rachel v. Reitz, the courtheld that an arbitration clause in a trust was enforceable. The court reasonedthat the settlor’s intent was to attach an arbitration condition on his gifts,which is permissible. Additionally, the Texas Arbitration Act requires writtenagreements with arbitration clauses to be enforced. Moreover, the beneficiarieshave accepted the benefits and should be compelled to comply with the otherclauses in the agreement. 

See Rachel v. Reitz, NO.11-0708, (Tex.2013).

Special thanks to J. Barrett Shipp (The Law Office of J. Barrett Shipp, San Antonio, Texas) for bringing this article to my attention.