Arbitration Clauses in Wills are Unenforceable
In re Hekemian, Docket No. A-3001-24 2026 WL 1073030 (N.J. Super. App. Div. April 21, 2026)
This decision is an update of In re Hekemian, Docket No. A-1774-21, 2023 WL 176098 (N.J. Super. App. Div. Jan. 13, 2023), dealing with the enforceability of arbitration provisions in testamentary instruments. In that earlier decision, the Appellate Division affirmed a trial court ruling denying a motion to enforce the arbitration clause. The case came back before the Appellate Division in a different context and with the widow, Sandra, as an added party, and with the appeals court more squarely addressing whether an arbitration clause in a will is enforceable.
The decedent, Samuel P. Hekemian (“Decedent”), was survived by Sandra and their four sons. One of those sons, Peter, was a co-executor of the estate with the Decedent’s advisor.
The Decedent left a Last Will and Testament dated August 27, 2002 (“Will”). He died in August 2018.
The Will contained an arbitration clause requiring that any dispute regarding the interpretation of the Will and the trusts created thereunder, or arising out of the administration of the Will and the trusts, be submitted for settlement by arbitration. The Will also provided that “[a]rbitration shall be the exclusive remedy for resolving disputes concerning this Will and the trusts created hereunder, including but not limited to the administration of the Will and such trusts ….” Id. at *3.
Facts and 2023 Decision
After the Will was probated, one of the sons, Richard, requested an early distribution or a loan from the trusts. That request was denied. Richard subsequently filed a judicial action to enforce his rights and compel an accounting.
The defendant-executors sought to enforce the arbitration clause in the Will. They argued that the plaintiff was bound by the arbitration clause by (a) failing to challenge the validity of the Will, (b) seeking to receive the benefits of the Will, and (c) seeking an accounting in his capacity as a beneficiary. The defendants also relied on New Jersey’s strong public policy preference for arbitration and the fact that the Decedent inserted an arbitration clause in his Will, evidencing his intent, by the statement in the Will (emphasis added) that arbitration “shall be the exclusive remedy for resolving disputes.” The defendants acknowledged that no New Jersey precedent existed on the issue but cited Rachal v. Reitz, 403 S.W.3d 840 (Tex. 2013), in support of their position.
Additionally, the defendants argued that New Jersey courts have compelled a non-signatory to arbitrate when the non-signatory “engaged in conduct, either intentional or under circumstances that induced reliance, and that [the parties seeking to compel arbitration] acted or changed their position to their detriment.” See Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 189 (2013) (quoting Knorr v. Smeal, 178 N.J. 169, 178 (2003)). Thus, the equitable estoppel doctrine prevents a non-signatory from “cherry picking” the provisions of a contract.
Applying these principles to the facts in this case, the defendants noted that Richard had written to the defendants, requesting either a distribution or a loan from one of the trusts. In addition, Richard made numerous statements which showed that he sought to avail himself of the benefits under the Will and the trusts.
In response, Richard asserted that the arbitration provision was unenforceable under New Jersey law. Richard argued that the Rachal decision (a) has no precedential value to a New Jersey court, (b) involved an inter vivos trust, not a will, and (c) involved a situation in which the beneficiary had received benefits from the trust, whereas the plaintiff had received no such benefits.
Richard further asserted that arbitration is a remedy of a contractual nature, and that mutual assent is a prerequisite for enforcement of an arbitration agreement. He also disputed the defendants’ estoppel theory because they failed to establish Richard engaged in conduct that induced their reliance. Finally, Richard argued that he was only seeking an accounting and cited Article Sixteenth of the Will, which provided that a fiduciary “may submit the account to a court for approval and settlement.”
After an extended analysis, the trial court concluded that Richard could not be compelled to arbitrate, on several grounds.
The defendants appealed. The Appellate Division affirmed the trial court’s decision.
First, the Appellate Division analyzed the arbitration clause under the New Jersey Arbitration Act (“NJAA”), which provides, in relevant part, that “[a]n agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract.” N.J.S.A. § 2A:23B-6(a). The Appellate Division grappled with the meaning of “agreement” under the NJAA, which is not defined in the statute. Applying the word’s common definition under Black’s Law Dictionary (i.e., a manifestation of mutual assent between two or more persons), the appeals court distinguished an agreement from a contract (i.e., an agreement results in an obligation enforceable at law.) The court concluded the Legislature intended for “agreements” and “contracts” to be treated differently under the NJAA.
The appeals court further concluded that an agreement to arbitrate must result from mutual assent and that the waiver of rights in such agreements must be “clearly and unmistakably established.” Hekemian, slip op. at *16. Because the execution of a will is a “unilateral disposition of property” and therefore does not require mutual assent of the parties to be bound by an arbitration provision, there was no meeting of the minds to make the arbitration agreement in the Will under the NJAA. Id. at *17.
The Appellate Division also found that the plaintiff’s underlying request for an accounting did not constitute a “dispute” within the scope of the arbitration clause as drafted. The court rejected the defendants’ argument that, even without mutual assent to the arbitration clause, the plaintiff was bound by it under the equitable principle of the “substantially similar doctrine of equitable estoppel.” Id. at *19.
The court was similarly not persuaded by the defendants’ reliance on Rachal, discussed above, and found that defendants did not detrimentally rely on the application of the arbitration provision, such that equity would require the arbitration provision be upheld in the Will.
Likewise, the Appellate Division did not find a “substantial nexus” between the arbitration provision in the Will and the plaintiff’s statutory right to receive an accounting, nor did it find compelling circumstances warranting the application of equitable estoppel principles.
Finally, the Appellate Division considered how the New Jersey Legislature has allocated authority to the courts to hear “controversies respecting wills, trusts and estates” under N.J.S.A. § 3B:2-2.
The Appellate Division declined to opine on the validity of arbitration clauses in wills as a general matter — which became the focus of the 2026 decision — but decided that any arbitration provision of a will that removes the court’s ability to resolve the controversies contemplated under N.J.S.A. § 3B:2-2 is invalid.
2026 Decision
The 2026 decision expressly holds that arbitration provisions in testamentary instruments are invalid.
More specifically, after the appellate ruling in 2023, the Decedent’s widow, Sandra, joined the proceedings. Eventually, the executors filed a complaint for settlement of their first interim accounting for the administration of the estate. Sandra and Richard filed exceptions to the accounting. The executors then moved to compel arbitration.
The trial court denied the motion to enforce the arbitration clause for several reasons, some of which overlapped with the 2023 rulings.
The executors appealed on several grounds, including: the provision was valid and enforceable under the New Jersey Arbitration Act; Sandra had agreed to arbitration since she and the Decedent had executed reciprocal wills in 2001 that contained the same arbitration provision; Richard should be compelled to arbitrate as a third-party beneficiary of the Decedent’s testamentary trusts; and the Decedent’s testamentary intent required arbitration.
The Appellate Division rejected these arguments and held that the arbitration provision in the Will (1) failed for lack of mutual assent and (2) was contrary to New Jersey’s statutory scheme covering the administration of estates.
As to the first point, the appeals court explained that an agreement to arbitrate is a contract that must be the product of mutual assent, especially since arbitration entails a waiver of the right to pursue a judicial proceeding. Unless the parties have agreed to arbitration and knowingly waived their right to go to court, the parties are not required to arbitrate. The court also observed that a will is not a contract.
In regard to the second point, the Appellate Division observed that in the NJAA, the Legislature had not codified the enforceability of arbitration clauses in wills and trusts. At the same time, the New Jersey Probate Code grants the Superior Court full authority to hear and determine all controversies regarding wills, trusts, and estates, including fiduciary accountings. N.J.S.A. §3B:2-2. Therefore, arbitration clauses eliminate the judiciary’s role in resolving such disputes.