Secret and Semi-Secret Trusts

Question 1

Secret Trusts

Answer 1

If a will makes a gift that is absolute on its face to a named beneficiary (so there is no mention of a trust, trustee, or that the gift was for the benefit of someone else), but the gift was made in reliance on the beneficiary’s promise to in fact hold the gift property in trust for another, then to prevent unjust enrichment of the named beneficiary—the so-called secret trustee—courts will allow the intended trust beneficiary to present extrinsic evidence of the agreement. If the agreement can be proved by clear and convincing evidence, the court will impose a constructive trust on the beneficiary/secret trustee, and compel the beneficiary/secret trustee to comply with the terms of the secret trust.

Question 2

Semi-Secret Trusts

Answer 2

Here, the will makes a gift that is explicitly in trust, but fails to name the actual beneficiary of the trust. Even if the testator communicated the terms to the trustee, courts will not enforce the trust because of the Statute of Wills.