EXAM NOTES - Secret Trusts Flashcards
general issues
- what kind of secret trust is it?
- is the trust properly created?
- communication?
- acceptance?
- reliance?
6 Can the trust be carried out properly?
7 can a secret trust of land be valid?
how is a secret trust created?
Kasperbauer v Griffith
- normal trust requirements; three certainties
- plus
o Communication to secret trustee (ST)
o Acceptance of role by ST
o In reliance of that acceptance settlor (S) makes a will
how do the three certainties relate to STs?
- T must have the intention to create a legally binding obligation
- Kasperbauer v Griffith wife “knows what to do” too vague
- Margulies v Margulies brother “knowing his wishes” and “giving what’s appropriate” too vague
how do statutory formalities relate to STs?
- Creation of lifetime trusts - s53(1) LPA 1925
- Creation of trusts of land must comply with s53(1)(b)
- Testamentary trusts – s9 Wills Act 1837 – signed by S and witnessed by two people present at the same time
what is a fully secret trust (FST)
one where the existence of the trust is kept completely hiddden in the will?
what must be communicated for a FST
- The trust’s existence, terms and subject matter must be communicated to the ST before the S’s death
o Existence Wallgrave v Tebbs
o Terms/beneficiary Re Boyes
o Subject matter Re Colin Cooper
when must communication happen for a FST
- at any time before death
how can communication happen for a FST
- Orally or through sealed envelope (Re Keen)
o But ST must know the envelope contains the terms of the trust
o And ST must willingly accept the envelop on that basis
what is the general rule for communication to trustees in FSTs?
- communication must be to all trustees
- unless the trustees are joint in a FST (eg “to A and B”); communication to one trustee binds all joint trustees Re Stead
- Re Gardom: all half secret trustees are bound provided you tell at least one before the will is signed.
- but if communication made after execution, only those with actual communication are bound
how can acceptance be made for FST?
- expressly through clear communication
Implied – acceptance through conduct – happens unless ST actively refuses. Silence constitutes implied acceptance Moss v Cooper
what is the general rule about disclaiming for FST?
- General rule: cannot disclaim a legacy in a will
Explain the different opinions on disclaiming a FST
- Two authorities:
o Re Maddock – can disclaim
o Blackwell v Blackwell – cannot disclaim. Decided when STs were more widely used.
Blackwell decided in a higher court and more recently
o But if you have a strong objection on moral grounds and refuse to do it the court might allow you to disclaim and would find a replacement trustee; “equity will not allow a trust to fail for want of a trustee”
how is reliance found for FST?
T usually has made a will in reliance of the FST or has not revoked a gift in a will Hunter v Moss
- FST T can make a will and ask later – if they agree, no need to change the will
what is a half secret trust (HST)
Where the existence of the trust is in the will but the terms and beneficiaries are not
- E.g. “for purposes I have made known to them”
when must communication happen for HST?
before or at the time when your will is executed (i.e. signed and witnessed) Re Bateman’s Will Trust
o What you say in the separate instructions must be consistent with what is in the trust Re Keen
how can communication happen for HST?
- Orally or through sealed envelope (Re Keen)
o But ST must know the envelope contains the terms of the trust
o And ST must willingly accept the envelop on that basis
who must communication be to for HST?
- general rule: all trustees
- unless the trustees are joint (eg “to A and B” - communication to one trustee binds all joint trustees Re Stead
- but if communication made after execution, only those with actual communication are bound
how is acceptance valid for HST?
Express – clear communication
Implied – acceptance through conduct – happens unless ST actively refuses. Silence constitutes implied acceptance Moss v Cooper
- general rule is taht a trustee who has not been told cannot be bound or accept but Re Stead exception for joint tenants
how does disclaiming work for HST?
- General rule: cannot disclaim a legacy in a will
- Two authorities:
o Re Maddock – can disclaim
o Blackwell v Blackwell – cannot disclaim. Decided when STs were more widely used.
o If you have a strong objection on moral grounds the court might allow you to disclaim
o But would find a replacement trustee; “equity will not allow a trust to fail for want of a trustee”
what is the general rule for a predeceasing secret B?
- General rule: gift lapses so estate does not get it. Property falls into residue of T’s estate
what is the exception to the general rule for a predeceasing secret B
Re Gardner (No 2) court held that the property would vest in the deceased secret B’s estate because the trust was created before their deaths
- But criticism:
o This concept makes the will irrevocable
o The trust is not validly constituted until T dies so the deceased B could not receive the property
- As a consequence, Re Gardner may not be followed – STATE THIS
what is the rule for a predeceasing T?
- In FST trust will probably fail – will cannot operate to vest property in someone else Re Maddock
what is the rule if the secret B acts as a witness for the will?
- S1 Wills Act 1837 – witness cannot benefit under the will
- But ‘dehors the will’/‘outside the will’ theory Blackwell v Blackwell argues that the SB will benefit under the trust not under the will
o Re Young SB can still take the benefit
can trusts of land be secret trusts?
- usually requires compliance with s53(1)(b) – signed written evidence
o Re Baillie – HST needed compliance with s53(1)(b)
oOttaway v Nelson – FST did not need compliance with s53(1)(b) - but both cases criticised
- Kasperbauer v Griffiths - secret trusts are constructive and therefore s53(1)(b) will not apply
- Paul Todd - secret trusts do not need to comply
Who has the burden of proving the existence of a secret trust?
Re Snowdon - person claiming it exists
- burden is normal civil standard
