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Equity and Trusts > EXAM NOTES - Secret Trusts > Flashcards

EXAM NOTES - Secret Trusts Flashcards

1
Q

general issues

A
  1. what kind of secret trust is it?
  2. is the trust properly created?
  3. communication?
  4. acceptance?
  5. reliance?
    6 Can the trust be carried out properly?
    7 can a secret trust of land be valid?
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2
Q

how is a secret trust created?

A

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

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3
Q

how do the three certainties relate to STs?

A
  • 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
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4
Q

how do statutory formalities relate to STs?

A
  • 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
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5
Q

what is a fully secret trust (FST)

A

one where the existence of the trust is kept completely hiddden in the will?

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6
Q

what must be communicated for a FST

A
  • 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
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7
Q

when must communication happen for a FST

A
  • at any time before death
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8
Q

how can communication happen for a FST

A
  • 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
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9
Q

what is the general rule for communication to trustees in FSTs?

A
  • 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
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10
Q

how can acceptance be made for FST?

A
  • expressly through clear communication
    Implied – acceptance through conduct – happens unless ST actively refuses. Silence constitutes implied acceptance Moss v Cooper
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11
Q

what is the general rule about disclaiming for FST?

A
  • General rule: cannot disclaim a legacy in a will
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12
Q

Explain the different opinions on disclaiming a FST

A
  • 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”
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13
Q

how is reliance found for FST?

A

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

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14
Q

what is a half secret trust (HST)

A

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”

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15
Q

when must communication happen for HST?

A

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

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16
Q

how can communication happen for HST?

A
  • 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
17
Q

who must communication be to for HST?

A
  • 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
18
Q

how is acceptance valid for HST?

A

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

19
Q

how does disclaiming work for HST?

A
  • 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”
20
Q

what is the general rule for a predeceasing secret B?

A
  • General rule: gift lapses so estate does not get it. Property falls into residue of T’s estate
21
Q

what is the exception to the general rule for a predeceasing secret B

A

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

22
Q

what is the rule for a predeceasing T?

A
  • In FST trust will probably fail – will cannot operate to vest property in someone else Re Maddock
23
Q

what is the rule if the secret B acts as a witness for the will?

A
  • 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
24
Q

can trusts of land be secret trusts?

A
  • 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
25
Q

Who has the burden of proving the existence of a secret trust?

A

Re Snowdon - person claiming it exists

- burden is normal civil standard

Equity and Trusts (10 decks)

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