Secret trusts

Question 1

What is a half secret trust?

Answer 1

A will which details that a trust exists for someone else, but not the terms of that trust

Question 2

What is a full secret trust?

Answer 2

Where on the face of it, it appears a gift has been made, but a meeting has occurred instructing that person to be a trustee for someone else

Question 3

What is necessary for the creation of an express trust?

Answer 3

The 3 certainties
Statutory formalities
Constitution

Question 4

Are secret trusts exempt from formalities?

Answer 4

Yes other than some aspects of land trusts

Question 5

A secret trust allows you to change who is entitled to our property, true or false?

Answer 5

True

Question 6

How do secret trusts work?

Answer 6

Constitution when gift vests property to secret trustee

Declaration of the trust occurs when the secret trustee is informed of the trust

Question 7

What are the 2 theories of the justification of secret trusts?

Answer 7

Fraud theory (FST only)
Dehors the will theory (FST and HST)

Question 8

What does the Fraud theory state?

Answer 8

That a FST must be enforced otherwise it will be a fraud against the beneficiary

Question 9

What does the Dehors theory of trusts state?

Answer 9

That s9 of the Wills act does not affect secret trusts as secret trusts operate outside the will, so are not subject to the normal formalities of a trust

Question 10

How do you create a secret trust?

Answer 10

Communication
Acceptance
Reliance

Question 11

What must be communicated?

Answer 11

The existence - Wallgrave v Tebbs
Terms - Re Boyes
Subject matter - Re Colin Cooper

Question 12

When must a secret trust be created?

Answer 12

FST - before death

HST - Before will executed

Question 13

What is the case which states that the terms of the will must be consistent with the trust?

Answer 13

Re Keen

Question 14

How must a trust be communicated?

Answer 14

Oral

Sealed Envelope re Keen

Question 15

What conditions are there on the use of a sealed envelope?

Answer 15

The person it is intended for must know that the envleope contains terms and that it is accepted on that basis.

Question 16

Who can a secret trust be communicated to?

Answer 16

All trustees, if joint tenants then if only one trustee is informed before execution of will then all trustee’s will be bound. However if there are joint trustees and only one is informed after the execution of the will then only the informed party shall be bound, and the other trustee shall become a beneficiary (re Stead).

Question 17

Can you disclaim against the terms of a secret trust?

Answer 17

Yes - Re Maddock

No - Blackwell v Blackwell

Question 18

What happens when the beneficiary dies before the testator?

Answer 18

The trust lapses in general however in Re Gardner it was decided that the property would pass to the beneficiaries estate on the death of the testator as a FST is valid on communcation and acceptance

Question 19

Is a secret trust of land valid?

Answer 19

No Re Baillie - a trust of land must be made in writing in concordane with s53 (1)(b) LPA1925
Yes Ottoway v Norman
Depends whether secret trusts are regarded as express or constructive

Question 20

What does s15 of the Wills act 1837 state?

Answer 20

A beneficiary to a will cannot be a signatory

Question 21

Are secret trusts bound by s15 of the Wills Act 1837?

Answer 21

No if beneficiary benefits under trust not will, as a trust operates outside the will (dehors theory) (Re Young).