Secret Trusts

Secret Trusts
Fully Secret Trusts
No evidence of Trust in the will
Will appears to give property absolutely
For Example:
Can be created where there is no will
under rules on intestacy
Common Characteristics
Take effect on death
Exceptions to S9 Wills Act [1837]
Are dehors of the will
Half Secret Trusts
Evidence of Trust in the will
but not beneficiary
For Example:
S 9 Wills Act 1837
Will is invalid unless:
(a) It is in writing and signed
(b) Testator intended to give it effect
(c) signature has witnesses
(d) Each witness either:
Attests and signs
Acknowledges his signature to the testator
Applies not only to the declaration of trusts
but also to the transfer of title to the intended trustee.
A dead person cannot be a trustee.
Trust must state:
Who the trustee is
The Terms of the trust
The exception is
Secret Trusts
For Example
Similar to
Rouchefoucauld -v- Boustead
All are required
May reference other documents
(incorporation by reference)
Why are they exceptions?
Prevent Fraud on the part of the trustee
Equity will not permit a Statute to be used as an instrument of fraud
(McCormick -v- Grogan (1869)
Only works where trustee is seeking to deny the trust
Giving effect to the trust
is not the only way to prevent fraud.
Why not resulting trust?
Defeats intentions
Testator is dead
Can't try again
Fraud argument is really
unjust argument
Explains the decision but not the form
They arise and operate 'dehors' of the will and do not invoke the formality rules
The trust has nothing to do with the formality requirements
It was created during the Testators lifetime
Follow the normal requirements for trusts
Do not require writing or attestation
Do Secret Trusts of Land need to satisfy
S 53 (1) (b) LPA [1925]?
Re Baillie (1886)
Half-Secret Trusts do.
However, could apply the principle in:
Rouchfoucauld -v- Boustead [1897]
Ottoway -v- Norman [1972]
Half-Secret Trust upheld
(with no discussion on the point)
Has support in cases:
Blackwell -v- Blackwell [1929]
Re Young [1951]
All that prevents the trust taking effect
is the transfer of property
Fails to interpret the true intention
Testator only intends the trusteeship to take effect on death
Problem Cases
For Example:
Precatory words
Intention clear
Half Secret Fails (Re Keen [1937])
Intention unclear
Fully Secret may succeed
Intention is not derived from the will
therefore not uncertain
Basic Requirments
(a) A's intention that B holds the property on trust for C
Normal test is balance of probabilities
Re Snowden [1979]
Megarry held that the exception is
where the trust can only be shown by fraudulent action
this is unnecessary
(b) A's communication to B of trusteeship
Fully Secret Trusts
Terms of the trust must be
communicated and accepted
prior to Testator's death.
Half-Secret Trusts
Terms of the trust must be
communicated and accepted
prior to or at the same time as
the execution of the will
Terms must be consistent
with earlier instructions
Re Keen [1937]
Rules endorsed in Re Bateman's Will Trusts [1970]
Normally no requirement of communication
Intended Trustee can decline
results in appointment of new trustee
Sealed envelope containing details is sufficient
Re Boyes (1884) Re Keen [1937]
knowledge of an envelope which is not given
but later discovered after death is insufficient
Re Boyes (1884)
Communication to multiple Trustees
Re Stead [1900]
acceptance by B1 as joint tenant
is sufficient regardless of B2's ignorance
Re Stead [1900]
If communication is after death
or B1 and B2 take as tenants in common
only binds B who accepts
Re Colin Cooper [1939]
Only extends to property
that B has agreed to hold on trust
Extra property must be communicated and accepted
Otherwise the trust fails.
Failure of Secret Trusts
Half Secret: Resulting Trust to A's estate
Re Boyes (1884)
Fully Secret: B keeps property
(c) B's acceptance
tacit acquiescence is sufficient
Revocation of acceptance
Re Maddock [1902]
Secret trust fails if B dies or disclaims trusteeship
prior to A's death.
Blackwell -v- Blackwell [1929]
Court would not let this defeat the trust
Particularly where there is insufficient time
to make other arrangements
Secret Trust must fulfill certainty requirements
Normally trust fails when Beneficiary is dead
This may be different in Secret Trusts
Re Gardner [1923]
(was probably wrongly decided)