Secret Trusts

Question 1

Does the trust need to be created in writing?

Answer 1

It doesn’t not need to be - it is not essential and not a legal requirement

Question 2

S53 LPA states?

Answer 2

The instruments which are legally required to be in writing

Question 3

Declaration of a trust

Answer 3

S53 for inter vivid trusts and interests therein must be in writing
- this is evidence of existence of trusts in land
- trust is unenforceable if this is not followed
Gardner v Rowe 1828

• s53(2) formalities only apply to express trusts

Question 4

Transfer of legal title to trustees of

Answer 4

S52(1) LPA
All conveyances of land or of May interest therein are void for the purpose of conveying of creating a legal estate unless made by deed

Question 5

Disposition of a legal interest in land

Answer 5

S53(1)(c) LPA

Question 6

What is a secret trust?

Answer 6

It is the testator’s wish:
S9 wills act 1837
It must be signed by the testator and there must be two witness’s present
- the secret trust is set out Dehors the will

Question 7

What maxims are suitable?

Answer 7

• equity will not allow a statute to be an instrument of fraud
• equity acts on conscience

Question 8

How many types of ST’s are there?

Answer 8

2 - fully secret trusts and half secret

Question 9

What are Fully secret trusts?

Answer 9

Fully secret trusts are trusts which do not state the beneficiary of the trust, nor the existence.
- an example is where A leaves his property on will to B, yet outside of the will there will be an agreement of understanding between A and B that upon Bs death, C will get the money that A had given B therefore B is a trustee

Question 10

In McCormick V Gorgan 1972 it said?

Answer 10

That fully secret trusts will prevent fraud when the intention of the settlor / testator is not clear - B must not take the property beneficially

Question 11

Blackwell v Blackwell

Answer 11

Necessary requirements are:

• intention
• communication and
• acquiescence

Also
The trustee in a fully secret trust is a primary donee and the beneficiary is a secondary donee

Question 12

Half-secret trusts

Answer 12

It’s existence on the will is that there is a trust so the existence is named yet the beneficiary is still concealed

Question 13

Requirements for valid secret trusts

Answer 13

1) all 3 certainties must be satisfied
- if the intention is unclear then the secret trust will fail, Kasperbauer v Griffiths (1997)
- court allows flexibility: ottoway v Norman 1972

2) communication to the intended trustee

3) acceptance by the intended trustee
- it can be revoked any time before the death of the testator

4) fully constituted

Question 14

Communication - fully secret trust

Answer 14

Communication and acceptance can take place before or after the execution of the will but before the testator’s death

• moss v cooper
• re boyes

If communication happens after the death, then the trustee will take beneficially even if the intention was clear - wallgrave v tebbs

If intended trustee agrees to be a trustee but details are not communicated until after death, then he will hold on trust for whoever is entitled to the testator’s residuary estate

Testator can change his or hers mind though evidence is required - Kasperbauer v griffiths

Question 15

Communication - half secret trusts

Answer 15

Communication must take place before or during the making of the will (Blackwell v Blackwell)

• communication must be in line with the wills provision

Question 16

Re cooper 1939 : half secret trusts says what?

Answer 16

If legatee is left more than what is declared in the will, then the surplus is held on trust for the residuary estate

Question 17

Re keen: half secret trusts what does it say?

Answer 17

The letter which stated the intended beneficiary was given to the trustee before the will was created meaning it was inadmissible

Question 18

Who is the legatee in half secret trusts?

Answer 18

The equivalent to a Trustee / donee

Question 19

Formalities with half secret trusts

Answer 19

Communication may not need to comply with s53 LPA

If the trust is not express then it will be a trust by operation of law which will make it exempt from formalities (s53(2) LPA)

Question 20

Formalities re bailie

Answer 20

Half secret trust of land held to be invalid because the transfer of land had to be in writing

Question 21

Ottoway v Norman

Answer 21

Fully secret trust was upheld even if it did not comply with the formalities because of the fraud theory

Question 22

See the comparison between half secret trusts and express trusts OR fully secret and constructive trusts

Answer 22

Remember that a constructive trust is where the court will imply a trust to benefit a party which has been deprived of its rights due to a person holding the legal right to property which they should not possess

Question 23

Are formalities required?

Answer 23

No - formalities are not required of the subject matter of the trust is personality. Trusts are only required when the subject of the trust is land which must comply with s53 of the LPA 1925