Full Secret Trusts

Question 1

What is the case of Crook v Brooking about?

Answer 1

A testator bequeathed £1,500 to two brothers (Simon and Joseph) to hold on secret trust, the testator told only Simon the terms. Testator died, Simon revealed the secret trust to Joseph. The beneficiaries claimed £1,500.
HELD: this was enforceable as the testator had declared the terms to Simon. As long as the terms of the trust are communicated to one of the legatees while the testator is alive its fine. An equitable obligation becomes attached to the legacy.

Question 2

Why are secret and half secret trusts enforced despite their non-compliance with the Wills Act 1837? Cases.. And what is the best answer?

Answer 2

1. Fraud theory
   McCormick v Grogan- equity will not allow a statute to be used as a cloak for fraud. If equity did not intervene the fraud would be the secret trustee simply takes the money. However you could simply have a resulting trust this isn’t the best answer.
2. Dehors the will theory
   Blackwell v Blackwell- Lord Buckmaster suggested that secret trusts are enforced in order to prevent fraud as they frustrate the testators intentions and deprive the true beneficiaries of their property. Secret trusts arguably do not run contrary to the Wills Act at all. This is because the trust operates outside the will and its existence is not dependent upon finding of fraud or the terms of the will.

Question 3

What did Megarry VC say in Re Snowden?

Answer 3

The whole basis of secret trusts is that they operate outside the will, changing nothing that is written in it.

Question 4

What are the requirements of fully secret trusts? Ottaway v Norman?

Answer 4

Justice Brightman said:
1. Intention of the testator to subject the primary donee to an obligation in favour of the secondary donee

2. Communication of that intention to the primary donee
3. Acceptance of that obligation by the primary donee either expressly or by acquiescence.

Question 5

Is there a legal obligation and must the property be transferred under the will for a fully secret trust?

Answer 5

Yes there is a legal obligation and yes. If the will never gives the property there is no secret trust.

Question 6

What is the standard of proof required to establish that a secret trust was intended? What case?

Answer 6

In the absence of fraud its on the basis of a civil standard of a balance of probabilities.
Re Snowden- testatrix was undecided as to how to benefit her family, many conversations with brother, she died and the will states residue went to her brother. Was there a secret trust for the family members?
HELD- no because the conversations were too vague. If fraud is alleged there is a higher standard of proof required.

Question 7

When must communication occur? What happened in Wallgrave v Tebbs?

Answer 7

It can be at any time up until death. Must occur before the testator has died.

The testator left the ferry to named friends as joint tenants. He never told his friends about his wishes.
HELD: no secret trust as there was no communication with his friends. If you don’t know about it your conscious is not affected.

Question 8

How should communication occur? Re Keen

Answer 8

It can be done orally or in writing

It can be done by sealed letter provided that the recipient knows that it contains the terms of the trust (Re Keen)

Question 9

Does a fully secret trust of land need to be evidenced in writing in order to comply with s.53(1)(b) LPA 1925?

Answer 9

Express trust you need evidence in writing

Constructive trusts there is no need, s.53(2) LPA 1925, secret trusts are constructive trusts.

Question 10

What happened in Ottaway v Norman?

Answer 10

A testator left his house to his housekeeper so that when she died she would leave the house to his son. She fell out with the son and changed her will so the house would go to a neighbour.
HELD: this was a valid secret trust, she must leave the house to the son. No evidence in writing but no objection was made to this fact.

Question 11

Must the testator impose a legal rather than a moral obligation? 2 cases.. Chat too much.. Letters of legal wishes..

Answer 11

Yes must be a legal obligation.
Re Snowden- undecided conversations with brother. No secret trust, vague obligation.

McCormick v Grogan- the letter the testator left gave G an option as he could do exactly what he wanted.
HELD: no secret trust, as there was no legal trust. Today letters of legal wishes have no legal force at all.

Question 12

For communication to be effective, communication must state what? Re Boyes

Answer 12

It must state the terms of the trust and not simply that the recipient should act as a trustee.
Re Boyes- letter discovered after the death with details of the trust, not valid as the communication was too late. Solicitor knew he was to have been a trustee, resulting trust to the estate.

Question 13

What does Moss v Cooper say about acceptance?

Answer 13

It may be informal and acquiescence not saying anything will suffice

Question 14

In a tenancy in common, divided shares. What happens with communication? ‘In equal shares’

Answer 14

The position is that only those who know are bound.

Question 15

Joint tenancy undivided shares, what happens with communication? Who critiqued this in Re Stead?

Answer 15

Before the will everyone is bound, after the will only those who know are bound.
Re Stead- Justice Farewell- law is too complicated, stated that it should depend on whether a persons conscious is affected or not.

Question 16

What happens if a trustee dies in ordinary trusts? Are they joint tenants? What statute?

Answer 16

Yes they are joint tenants, they hold their office as joint tenants so when one dies the property passes to the other trustees by right of survivorship. S.18(1) Trustees Act 1925. Their never never affects the validity of an ordinary trust, you can just appoint another one.

Question 17

What was said in obiter in Re Maddock regarding the death of a trustee before the death of a testator?

Answer 17

They said the trust would fail because secret trusts are enforced because the individuals persons conscious is affected, so if they die their conscious dies with them.

Question 18

If someone refuses to carry out a trust, what do you do? Statute. Case?

Answer 18

S.41 of the Trustees Act 1925 you appoint another one.
Blackwell v Blackwell- Lord Buckmaster, equity would insist a replacement trustee because it would be fraud on the testator and the beneficiaries if someone would agree to be a trustee then change their after the trustees death and refuse to carry out the trust.

Question 19

Can the testator change their mind and what does the testator need to do if this happens?

Answer 19

Revoke the fully secret trust either orally or in writing and create a new secret trust either in writing or orally. You can dismantle one the same way you crate one through communication and acceptance.

Question 20

What is a codicil? What statute of the Wills Act? What does it also say about the formalities of a will?

Answer 20

S.9 of the Wills Act 1837, a codicil is an extra complimentary will, the statute also states that a will must be:

1. In writing
2. Signed by the testator in front of two or more witnesses