Secret Trusts Flashcards
Does the trust need to be created in writing?
It doesn’t not need to be - it is not essential and not a legal requirement
S53 LPA states?
The instruments which are legally required to be in writing
Declaration of a trust
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
Transfer of legal title to trustees of
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
Disposition of a legal interest in land
S53(1)(c) LPA
What is a secret trust?
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
What maxims are suitable?
- equity will not allow a statute to be an instrument of fraud
- equity acts on conscience
How many types of ST’s are there?
2 - fully secret trusts and half secret
What are Fully secret trusts?
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
In McCormick V Gorgan 1972 it said?
That fully secret trusts will prevent fraud when the intention of the settlor / testator is not clear - B must not take the property beneficially
Blackwell v Blackwell
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
Half-secret trusts
It’s existence on the will is that there is a trust so the existence is named yet the beneficiary is still concealed
Requirements for valid secret trusts
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
Communication - fully secret trust
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
Communication - half secret trusts
Communication must take place before or during the making of the will (Blackwell v Blackwell)
- communication must be in line with the wills provision
Re cooper 1939 : half secret trusts says what?
If legatee is left more than what is declared in the will, then the surplus is held on trust for the residuary estate
Re keen: half secret trusts what does it say?
The letter which stated the intended beneficiary was given to the trustee before the will was created meaning it was inadmissible
Who is the legatee in half secret trusts?
The equivalent to a Trustee / donee
Formalities with half secret trusts
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)
Formalities re bailie
Half secret trust of land held to be invalid because the transfer of land had to be in writing
Ottoway v Norman
Fully secret trust was upheld even if it did not comply with the formalities because of the fraud theory
See the comparison between half secret trusts and express trusts OR fully secret and constructive trusts
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
Are formalities required?
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
