Secret Trusts

What is a fully secret trust?

A fully secret trust is when the existence of the trust is kept completely hidden in the will.

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What is a half-secret trust?

The will discloses the existence of a trust, but not the terms of it

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Do the formality requirements under the Wills Act apply to secret trusts?

No.

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How can secret trusts be justified?

It is justified by equity not permitting the statute to be used as an instrument of fraud. The fraud being, diverging from T’s intentions.

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What are the two additional rules to a valid half secret trust (If intention, communication and acceptance are already proved)?

1. These must all take place before or at the time the will is made. 2. The will must actually state that C + A have taken place before or at the time the will is made

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Re Snowden

A secret trust must impose a binding obligation, not just a mere moral obligation

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What are the three requirements for a secret trust and which case established this?

Ottaway v Norman; Communication, intention and acceptance- ALL THREE MUST TAKE PLACE BEFORE THE TESTATOR'S DEATH

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Explain the intention requirement for a secret trust

There must be acceptance of that obligation by the primary donee.

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What does intention mean for a FST?

That the testator intended to create an express trust that satisfies all three certainties under Knight v Knight.

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Explain the communication requirement for a secret trust

Re Boyes; The trust, terms, property and beneficiary must be communicated to the secret trustee BEFORE death

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When must communication be for a half-secret trust?

Before or during the execution of a will

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Wallgrave v Tebbs

The existence of the trust must be communicated

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Moss v Cooper

Silence can be acceptance. Communication must take place before death.

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Is communication by sealed envelope acceptable and what case says this?

Yes. Re Keen. As long as the trustees are aware that the letter contains details of the beneficiary.

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What happens if only a certain amount of money is communicated, and after communication the testator decides to increase the amount? Back up with case that established this.

Re Colin Cooper; Only the amount of money communicated was accessible (if the amount is lowered the trust is still valid)

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What happens if a secret trust fails?

Ottaway v Norman; The trustee will be entitled to the trust property absolutely with no obligation to the beneficiary

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When can communication be made for a FST?

Anytime before the testator's death

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How can acceptance for a secret trust be given?

Expressly or acquiescently i.e. silence

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Who is the burden of proof on to prove a secret trust?

Re Snowden; On the balance of probabilities

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What happens if a half-secret trust fails?

There would be an automatic resulting trust in favour of the testator's estate

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Secret trusts must comply with which legislation?

S.9 Wills Act 1837

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Are precatory words allowed in a fully secret trust?

No

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Moss v Cooper contends that communication...

Can be through an agent

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According to Re Boyes, is future communication sufficient?

No.

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What is the rule in R v Stead?

If the property is left to legatees as tenants in common, only those communicated to are bound

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Can a beneficiary witness a will?

No. If a beneficiary witnesses the will or is married to the witness, the gift to him is void.

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What does Re Gardner say about if the beneficiary predeceases the testator?

The personal representatives of deceased beneficiary could claim the share of the estate

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Secret Trusts

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