A settlement agreement can be beneficial to all parties – it may help reduce litigation costs, facilitate dispute resolution, or guide the parties to a common understanding. However, settlement agreements do not come without risk. Settlement agreements should be entered into with care and with an understanding of the terms—and their implications. Austin Trust Co. v. Houren presents a good example of these considerations. In Austin Trust, an agreement contained language in a release that barred the parties from bringing future claims. The case serves as a cautionary tale to parties who wish to settle.
Background
Following the death of their father, the beneficiaries of an estate realized that their distributions would be delayed until a federal estate tax return had been filed. Seeking to speed up the distribution process, the beneficiaries entered into a family settlement agreement (“FSA”) with all interested parties. The FSA was negotiated by the parties, who acknowledged that they were either represented by counsel, or consciously chose not to be represented by counsel.
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