Secret trusts Flashcards
What are secret trusts
Normal statutory formalities waived to give rise to them
What is a fully secret trust
Property left to someone in a will but not explicitly said if its given on a trust.
If person doesn’t know/ pretends to not know, they get it beneficially
What’s a half trust
trustee named but no beneficiaries
Trustee cannot gain beneficially as they have been given trust obligation
Results in resulting trust
Joint tenants and tenants in common
State cases
When multiple legatees given trust obligation and only one person told ant it and offer acceptance occurs, traditionally the person that gets told is the trustee and the others get it beneficially
Re Stead
Geddis ve stemple
Re stead
when tenant in common doesn’t know/ is believed to not know , then they can take free of it beneficially
Drew distinction between promise made antecedent to will and promise made subsequent to the will
Geddis v Semple
Can take free if they hadn’t known provided that they weren’t induced by their co- tenants obligation
What’s Perrins Inducement theory
Distinction drawn in re stead incorrect
Doesn’t matter whether promise made before or after
Doesn’t matter if joint tenants or tenants in common
inducement is key: Easier to show inducement if promise is made before the will
Onus of proof
Way simpler and more rational in Ireland compared to england
Onus on the person trying to prove the existence of the secret trust, on the balance of probabilities
English approach to burden of proof
Re snowdon
Normal civil standard but if there’s fraud, then the standard should be higher
Virgo- ironic to say that it should be higher in allegations of fraud when the secret trust itself also prevents fraud
Irish approach
Banco
Onus of proof same regardless of whether fraud existed or not
Half Secret trusts
State cases
When legatee named testator but no bens
Courts try to positively give rise to intention of testator
Irish more simpler and pragmatic- England not really
Riordan v Banon
Blackwell v Blackwell
Re Keen
Prendvile v Prendville
Riordan v Banon
Facts: Concerned property that was to be disposed of from a named legatee and the will used language that contemplated instructions being given after the will had been drawn up.
The testator had already informed the legatee that he intended for him to hold it on trust and the legatee accepted.
Held: Obiter: Accepted that communication and acceptance can occur before the will is drawn up and accepted that it can be made after, provided that it was in the testator’s lifetime.
Blackwell v Blackwell
Facts: Concerned a legatee in a will where the trust was accepted by the trustees. There was evidence that the obligation had been accepted before the will was drawn up. All of them agreed to honour the obligation.
Issue: Could the half-trust be enforceable by law?
Held: It is the communication coupled with the acceptance from the legatee that removes the transaction from the scope of the will.
As a result, this kind of arrangement does not need to comply with the formalities of the will.
A testator cannot reserve to himself the power to make future unwitnessed dispositions.
Re Keen
Facts: Concerned a testator that willed property to trustees and the will stated that they would be notified of the details of the disposition in the future.
Held: The courts accepted that the terms had been communicated and accepted- they were satisfied that they had taken place before the will was drawn up.
However, the trust was not enforceable because it reserved part of the testator to dispose of property by a future undisclosed disposition.
Prendville v prendville
Facts: Concerned a house with land attached to it. It was offered to one of the sons at a reasonable valuation. The wife had made a statutory declaration acknowledging that she had carried out the husband’s wishes but when she died a dispute arose on whether there was a half-secret trust to the son.
Held: The principles to be applied to fully and half secret trusts were the same in Ireland as in England.
There was sufficient evidence that the terms of the half-secret trust had been communicated by the testator to the wife and accepted during his lifetime.
