Secret Trusts Flashcards
A secret trust
A trust which some or all of the terms of the trust are not apparent on the face of the will
Secret trusts contravene the principles of the Wills Act and should be void
Equity has recognised the existence of Secret trusts and enforced them provided the relevant condition are met
A Fully Secret trust
A trust which appears on the face of the will to be an outright gift
A Half Secret trust
A trust which appears in the will as a trust with unnamed beneficiaries
Rationale for enforcing Secret Trusts
Fraud Theory
- ST’s are upheld on the basis that ‘equity will not allow a statute to be used as an instrument of fraud’
Dehors The Will
- the trust is established ‘dehors’ (outside) the will, and is not a testamentary disposition.
The Dehors will theory is widely accepted to be the basis for the courts’ enforcing secret trusts
Re Snowden
The requirements of a secretat trust
Laid out in Kasperbauer v Griffiths
- Intention
- Communication
- Acceptance
- Reliance.
ST: Intention
An intention by the testator to create a Trust.
- the rest of the three certainties must also be satisfied too
Kasuperbauer: his wife ‘knows what to do’ was insufficient
The intention can be seen either form the will or from communications outside the will
No communication: gift
Partial Communication: resulting trust
ST: Communication
Communication of the trust to the intended trustee outside of the will (Re Keen)
ST: Acceptance
Acceptance of the trust by the trustee
ST: Reliance
Reliance by the testator upon the trustee’s acceptance.
ST: Communication, when
Communication must take place any time before death (Wallgrave v Tebbs)
ST: Communication, what
- Existence of the trust (Wallgrave v Tebbs)
- Terms of the trust (inc beneficiaries) (Re Boyes)
- The property subject to the trust (Re Collin Cooper) (this cannot be increased at a later date)
- Any additions to secret trusts must be communicated (Re Collin Cooper)
ST: Communication, how
- Oral or writing
- If terms are in a sealed envelope to be opened after death, this will count as valid communication if the trustee is aware that the letter contains the terms and accepts on that basis (Re Keen)
ST: Communication, who
Trustees
- Tenants in common: only one
- Joint tenants: all of them
ST: Acceptance
Can be express (Ottaway v Norman)
Implied (Moss v Cooper)
Qualified acceptance counts as acceptance if relied on.
Moss v Cooper
- a trustee was held to have accepted when he said he would try to carry out the testator’s wishes as far as he could.
ST: Reliance
The testator must act in reliance upon the trustee’s acceptance (Stickland v Aldridge)
HST: Intention
The testator must clearly intend to create a trust.
Kasperbauer - insufficient
HST: Communication, when
Must be before or at the same time as the execution of the will (Re Keen)
Any reference to a HST must also be consistent with the will (Re Keen)
The trust will fail if the will mentions future communication (Re Keen)
HST: Communication, what
- Existence of the trust (Wallgrave v Tebbs)
- Terms of the trust (inc benficiaries) (Re Boyes)
- The property subject to trust (Re Collin Cooper) (Cannot be changed at a later date)
HST: Communication, how
Same as for Fully Secret trusts
HST: Communication, who
Same as for Fully Secret Trusts
HST: Acceptance
- express (Ottaway v Norman)
- Implied from silence of acquiescence (Moss v Cooper)
- Qualified Acceptance (Moss v Cooper)
Reliance
The testator must act in reliance upon the trustee’s acceptance (Stickland v Aldridge)
What if a trustee or beneficiary also witnesses the will?
The general rule is that a witness to the will is not allowed to benefit from the will (Wills Act)
This is not an issue for HST.
It can be argued that a FST is ‘dehors’ (outside) the will, so this would not affect the validity of the trust (Re Young)
What if the secret trustee disclaims the legacy?
Will not defeat a HST (Blackwell v Blackwell)
- equity will not allow a trust to fail fro want of a trustee
It will probably not defeat a FST (Re Maddock)
- the trust is not constituted until the property vests with the trustee.
What if the beneficiary predeceases the testator?
The beneficiary under the will cannot predecease the testator (S. 25 Will Act)
- the gift would normally fail and return to the testators estate or a residuary beneficiary under a resulting trust
FST: beneficiary obtains an interest in the property at the moment the will is executed, so the property goes to the beneficiary’s estate (Re Gardner)
What if it is a secret trust of land? What formalities are necessary
A disposition of land under a secret trust must be compliant with s. 52 LPA 1925 (Re Baillie)
Ottaway v Norman
- an oral disposition of a bungalow not evidences by signed writing was allowed.
