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Secret Trusts Notes

GDL Law Notes > GDL Equity and Trusts Notes

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Equity & Trust


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

 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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