While it is a skill rarely taught in law school, the art of settling a dispute, particularly a complex or hotly contested dispute, is one of the most important parts of a successful lawyer's practice. In the trusts and estate world, one creative way to resolve a dispute is to have the paying party contractually agree to pay the settlement amount from his or her estate.

Such a provision has the benefit of addressing short-term liquidity issues, situations where the paying party currently lacks sufficient assets but is expected to earn and/or receive significant sums in the future, and can induce the paying party to settle for a larger amount than would otherwise be achievable today. However, such benefits come with significant potential traps for the unwary. This article identifies the most common traps (e.g., negotiating for an illusory percentage of a decedent's estate, and failing to put in place safeguards that reasonably limit the paying party's ability to deplete their assets prior to death through gifting and other means), and provides useful practical tips to maximize the effectiveness of such provisions.

The Benefits of Settling a Dispute Via a Payment From the Paying Party's Estate. One tried and true way of reducing the perceived burden on the paying party (i.e., the person having to make a settlement payment to the receiving party) is to defer payment until the paying party passes away. While this type of settlement provision is common in separation agreements and settlements of other family-related disputes, it is a tool that a skilled negotiator can utilize in virtually any settlement discussion.