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Secret Trusts Notes

GDL Law Notes > GDL Equity and Trusts Notes

This is an extract of our Secret Trusts document, which we sell as part of our GDL Equity and Trusts Notes collection written by the top tier of Cambridge/Bpp/College Of Law students.

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Equity & Trust

SECRET TRUSTS

1 A secret trust is a trust where all or some of the terms of the trust are not apparent on the face of the will.
o Meager: secret trusts are still commonly used today.
Two types:
o Fully Secret Trusts ('FSTs') - a trust which appears on the face of the will as an outright gift.
 Can arise in will or on intestacy (Re Gardner (No.2)
[1923] - where the owner of property refrains from making a will and so allows the property to pass to the donee as on an intestacy)
o Half Secret Trusts ('HSTs') - a trust which appears on the will as a trust but with beneficiaries unnamed.
 Can only arise in the will.
A valid will must comply with s.9 of the Wills Act 1837 (as amended)
o i.e. it must be in writing, signed by testator and attested by two independent witnesses.
o Secret trusts violate this as not all in writing, signed and attested.
The onus is on the person claiming that a trust exists. The standard of proof for establishing the trust is the normal civil standard,
namely proof on a balance of probabilities (Re Snowden [1979]).
Requirements of secret trusts:
o These conditions will not be satisfied in the will itself but in the circumstances surrounding the will.
o Peter Gibson LJ in Kasperbauer v Griffith [2000]:
 1) There must be a valid intention to create a trust (as well as other of the three certainties)
 2) The settlor must communicate the intention to create a trust to the trustee
 3) The trustee must accept the trust;
 The testator then relies on that acceptance by making a will, leaving a will unrevoked or not making a will at all.
o If a trust is lacking these:
 FST:
 If no intention/communication, then the 'trustee'
takes it as an absolute gift
 If partial communication/no acceptance then this creates a resulting trust for the estate/residuary beneficiary.
 HST:
 Intention should be clear on face of the will (if not then gift)
 If not validly communicated/accepted then resulting trust.
1) Valid Intention:

Hugh Rowan Equity & Trust

Examples:
 Kasperbauer - wife 'knows what to do' was insufficient for intention.
 McCormick v Grogan (1869) - property left to legatee on conditions of a letter. Letter said that the legatee was not to be fully bound therefore no certainty of intention.
 Re Snowden [1979] - Testator wasn't sure how to divide property. Left property to brother for him to make the decision as to who the property should go to.
This was held to lack a certainty of intention.
o Other certainties must comply with standard tests.

2 2a) Valid Communication of FST
o Method
 Express communication is preferred. May be oral or in writing.
 Can be constructive communication:
 Re Keen [1937] - terms of trust contained in a sealed envelope opened after death. Trustee must know the envelope contains these instructions.
Envelope must be given to trustee (cannot be found among possessions)
o Lord Wright: a ship sails under sealed orders.
o Need for 'double' acceptance: The trustee must accept that they will become trustees and accept that they will find out who the beneficiaries are after the testators death.
o Timings
 At any time before the death of the testator.
 This is regardless of when the will has actually has been created: Wallgrave v Tebbs (1855)
2b) Valid Communication of HST
o Method
 Express communication is preferred. May be oral or in writing.
 Can be constructive communication:
 Re Keen [1937] - need for double acceptance.
 Cannot contradict the terms of the will:
 If the communication only took place to one of the trustees but will says all have been communicated to then will fail
 If the will says 'I will communicate to the trustees' but the trustees were told days before then the contradiction of tenses is sufficient to make the will fail.
 Re Spence [1949]
o Timings

Hugh Rowan

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