Formalities of Trusts (By Will)

Question 1

What formality requirements must be satisfied for a trust in a will to be effective?

Answer 1

S9 Wills Act 1837, as amended by S17 Administration of Justice Act 1982
No will shall be valid unless
* It is in writing and signed by the testator, or by someone in his presence and direction
* It appears they intended by signature to give effect to the will
* Signature is made by the testator in the presence of two witnesses present at the same time
* Each witness either attests and signs the will; or acknowledges the signature in the presence of the testator

Question 2

What is the difference between a fully secret and half secret trust?

Answer 2

• Fully Secret: Will purports to leave property to X absolutely, but the testator actually intends for X to hold the property on trust for another, and this is known to them
• Half Secret: Testator states in the will that property will be held on trust by X for the benefit of people that will be told to them separately

Question 3

What are the requirements for a secret trust to be valid?

Answer 3

Ottoway v Norman:
1. Testator intended X to be subject to an obligation to hold the property (this must be intention to impose a trust obligation and not a mere moral one per McCormick v Grogan)
2. This intention is communicated to X
3. X accepts such obligation either expressly or by acquiescene

Blackwell v Blackwell: same principles apply to a half secret trust, however communication and acceptance must occur before the will is made

Question 4

How can communication of a secret trust occur?

Answer 4

Acceptance occurs either through express promise or silent implication (not declining) and can be either written or oral. It must take place prior to death

Re Keen
* In a fully secret trust, a sealed envelope that was to be opened after death was sufficient communication as it was understood to contain names of beneficiaries
* However, half-secret trust void as the clause could only refer to a trust that is created after the execution of the will

Question 5

How does the Wills Act 1837 affect the operation of secret trusts?

Answer 5

Re Young
Formality requirements of the act are not applicable to secret trusts. In this case, it did not matter that the intended beneficiary was also a witness to signing of the will (s15 usually prevents this)

Question 6

What is the position if beneficiary predeceases the testator?

Answer 6

Re Gardner No 2
B’s interest arose as soon as the trust was communicated and accepted, source of the right was not the will but X’s acceptance of obligation, and thus interest did not lapse but instead property formed part of B’s estate

However, decision should be treated with caution:
* Secret trusts cannot be constituted until death of testator, so it seems strange to argue the interest has already arisen
* Goes against the idea of a will being revocable

Question 7

What are the two ways in which we might explain secret trusts?

Answer 7

Secret trusts are constructive trusts that arise to prevent fraud:
* MacCormick v Grogan: Where a person knows property is not to be used for their own benefit and promises to apply it for others he cannot go back on this
* Equitable doctrine of not allowing a statute to be used as an instrument of fraud
* Does this truly apply to half secret trusts? How would fraud occur here

Secret trusts are express trusts taking effect outside of the will:
* Re Young: Wills Act has no application to secret trusts because the people take by virture of the secret trust imposed on the beneficiaries
* Re Snowden: Basis of secret trusts is that they operate outside the wull, changing nothing inside of it and allowing it to operate according to its tenor

Question 8

What is the standard of proof in establishing a secret trust?

Answer 8

Burden of proof is on the person seeking to establish the secret trust
McCormick v Grogan
Standard of proof requres the clearest and most indisputable evidence

Re Snowden
* Fraud is not an essential ingredient for the application of a secret trust
* Where there is no issue of fraud, the standard of proof is the ordinary civil standard of proof required for an ordinary trust

Re Keen
The parol evidence rule will prioritise written evidence over oral evidence