Secret Trusts

Question 1

Onus is on the person claiming that the trusts exists on the balance of probabilities

Answer 1

Re Snowden

Question 2

Requirements for a valid secret trust

Answer 2

Kasperbauer v Griffith:

• an intention by the testator to create a trust binding an inheritor of the property
• communication of the trust to the intended trustee
• acceptance of the trust by the trustee

Question 3

Statement that wife “knows what she has to do” with the house was too vague to create legal obligation on wife

Answer 3

Kasperbauer v Griffith

Question 4

“knowing his wishes” and “giving what’s appropriate” did not create legally binding obligation

Answer 4

Margulies v Margulies

Question 5

Fully secret trust- communication must take place before death, whether before or after signing the will

Answer 5

Walgrave v Tebbs

Question 6

Existence of trust must be communicated

Answer 6

Walgrave v Tebbs

Question 7

Terms of the trust must be communicated

Answer 7

Re Boyes - if terms not communicated, property held on resulting trust

Question 8

Property subject to the trust must be communicated

Answer 8

Re Colin Cooper

Question 9

Envelope given to intended trustee during the testator’s lifetime, only to be opened after testator’s death was sufficient communication, provided that the trustee is aware that the envelope contains terms of the trust and accepts it on that basis

Answer 9

Re Keen

Question 10

Communication not made to all trustees?

Answer 10

General rule: only those to whom communication is made are bound by the trust

Question 11

If gift is to joint tenants, as opposed to tenants in common, all are bound if communication to any one took place before the execution of the will. If communication took place after execution, only those to whom communication was made are bound by the trust

Answer 11

Re Stead

Question 12

Re Stead does not apply to half secret trusts if the will permits communication to be made to only one of the intended half-secret trustees, when such communication is made before or at the time of executing the will

Answer 12

Re Gardom

Question 13

Acceptance of the trust can be express or inferred or by silence (acquiescence)

Answer 13

Moss v Cooper

Question 14

In reliance of the acceptance, the gift is made/left unrevoked

Answer 14

Moss v Cooper

Question 15

In reliance of the acceptance, the deceased refrained from making a will

Answer 15

Strickland v Aldridge

Question 16

Carrying out the secret trust: in most cases the obligation is to make some intervivos transfer of property, but may also apply to an obligation to make a will in favour of the secret beneficiary

Answer 16

Ottaway v Norman

Question 17

Half secret trust arises where it is clear from the face on the will that the property is left on trust, but the will does not contain the terms of the trust

Answer 17

Blackwell v Blackwell

Question 18

For half-secret trust, communication must take place before or at the time of the execution of the will

Answer 18

Re Keen, following obiter in Blackwell v Blackwell

Question 19

Will allowed for future communication of half-secret trust so trust failed

Answer 19

Re Bateman’s WT

Question 20

Consistency with the will is essential - will left property to trustees “as may be notified to them during my lifetime”. Sealed envelope containing terms given to trustees before will executed. Trust failed for reference to future communication, inconsistent with communication already made

Answer 20

Re Keen

Question 21

Liberal decision allowing a beneficiary under a half-secret trust to benefit from will that he witnessed due to the dehors the will theory

Answer 21

Re Young - but beneficiary does take by virtue of a testamentary disposition as testator can change mind up until death.

Question 22

Trustee witnesses will?

Answer 22

s15 Wills Act - person benefits from will cannot witness it

But trustee does not take the legacy beneficially, so s15 should not defeat the trust?

Question 23

Gift of secret predeceasing beneficiary was held not to lapse

Answer 23

Re Gardner (No 2) - but this decision should not be followed

Question 24

Fully secret trust will fail if the secret trustee predeceases the testator or disclaims the gift

Answer 24

Re Maddock

Question 25

Trustee of a fully secret trust will not be allowed to defeat the testator’s purpose by renouncing the legacy - the trust will not fail because the trustee fails to carry out his duties

Answer 25

Blackwell v Blackwell

Question 26

Equity will ensure that the intended trustee holds the property on trust, rather than fraudulently keeping it

Answer 26

McCormick v Grogan

Question 27

Dehors the will theory

Answer 27

Blackwell v Blackwell - secret trusts operate outside the will and therefore are not subject to the Wills Act; the will is merely the instrument for constituting an inter vivos trust

Question 28

Unclear whether secret trusts are express trusts or constructive trusts

Answer 28

do declarations of trust of land have to comply with s53(1)(b) formalities?

Question 29

Court enforced oral trust of land, but issue of s53(1)(b) not raised

Answer 29

Ottaway v Norman

Question 30

Suggested that half-secret trust of land was not enforceable without written evidence

Answer 30

Re Baillie

Question 31

Constructive trust would be imposed to compel a secret trustee to hold trust land as had been agreed with the testator (obiter)

Answer 31

Kasperbauer v Griffith