Secret Trusts

Question 1

What is a secret trust?

Answer 1

A trust that arises where testator leaves property to a named person in their will but only in the expectation that the property will be issued for the benefit of some other unnamed person.
A. Testator wants to keep identity of real beneficiary secret- re Freud
B. Testator wants to give himself time to decide whilst vesting in on a trusted person in the interim

A secret trust is a unique vehicle of equity to prevent the invalidation of a trust that violates the requirements of the wills act 1837. Secret trusts ‘dehor the will’- re snowden

Question 2

Types of secret trusts

Answer 2

• fully secret trusts
• half-secret trusts

Question 3

Fully secret trusts

Answer 3

Trust is completely hidden on the face of the will; no hint or indication of the trust on the will

Conditions: intention of testator and validity requirements, communication to trustee and acceptance by trustee

Intention and validity: three certainties present- re Freud

Communication to trustee: testator must have communicated his intention to create a secret trust which can be direct or indirect.
- must cover the trust, its terms, identity of trust property and beneficiaries- wallgrave v Tebbs
- crucial issue= communication made before death of testator- kasperbauer v Griffith
- re keen- unopened letter is sufficient

Acceptance by trustee- must accept to hold property on trust for benefit of third party
- absence= no trust
- can be done expressly or impliedly
- expressly= orally or writing
- impliedly= acquiescence (silence)

Question 4

Half-secret trust

Answer 4

Where the testator specifies that there is a trust over the property on the face of the will but does not indicate the real beneficiary of the property
‘ to hod for the beneficiaries I have indicated to her’
- as certainty of objects isn’t satisfied, equity will intervene to preserve the trust and prevent fraud

Conditions: same as fully secret

Difference for communication: communication must be done before execution of the will
- testator must have communicated terms of trust, identity of beneficiaries to the trustee before executing the will and reference to trust must be made in the will- re keen

Batemans will trust- sealed letter at time of death not sufficient

Re keen- sealed envelope before executing will was sufficient

Question 5

Communication to one of several legatees

Answer 5

In tenancy in common- secret trust only binds trustee whom the testator communicated the trust to and who accepted the instructions
- other legatees can take their share of the property absolutely- re stead

Joint tenants- if acceptance was made prior to will it will bind all parties because acceptance by that one legatee induced testator to confer the property- Russel v Jackson. However if the promise was made subsequent it will only bind the legatee/trustee who accepted it and others can take their share absolutely- Burnley v Macdonald

Question 6

Changes to secret trust property

Answer 6

Any changes made to a half-secret trust after the will has been executed wont be effective unless the changes are communicated to the trustees

Re cooper

Question 7

Burden of proof

Answer 7

Burden on establishing one exists is on the person seeking to claim the property under the trust- ottoway v Norman

Fully secret trust- clear evidence is required to prove it