- Tom Cummins
Is a trust agreement a contract?
Kelly v. Giuliano (Fairfax Cir. Ct. Sept. 21, 2020)
A woman creates a revocable trust, naming her niece and nephew as trustees. The trust agreement has an arbitration clause. The nephew sues the niece, claiming she stole from the trust. The niece argues that the nephew must submit this claim to arbitration because arbitration clauses are binding when contained in a valid contract. Is the trust agreement a contract?
Trust agreements are not contracts. Contracts require mutual assent of the parties. Trust agreements, like wills, have only one party. (For wills, that’s the testator; for trust agreements, the settlor.) And because “a trust agreement, like a will, is the independent act of the settlor, it cannot be considered a contract.”