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GDL Law Notes GDL Equity and Trusts Notes

Secret Trusts, Purpose Trusts And Unincorporated Associations Notes

Updated Secret Trusts, Purpose Trusts And Unincorporated Associations Notes

GDL Equity and Trusts Notes

GDL Equity and Trusts

Approximately 631 pages

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Secret Trusts

  • - Secret trust: trust to take effect on death not mentioned/fully disclosed in will.

    - Exempt from testamentary trust formalities (s9 Wills Act 1837): (a): in writing, signed by testator; (b): intended to be given effect by testator; (c): witnessed + attested by 2 or more witnesses.

    - Justifications.

    • 1. fraud theory: fraud vs. settlor if t. keeps gift (McCormick v Grogan) – but does not work for HST.

    • 2. dehors the will theory: trust declared inter vivos, merely constituted on death (Blackwell v Blackwell).

    - Proof: burden on person claiming trust; standard: balance of probabilities (Re Snowden).

    1. Identify type: Fully Secret Trust or Half Secret Trust?

    - FST: apparent outright gift to intended t.

    • if intention not communicated: absolute gift.

    • if intention communicated but trust fails: RT.

    - HST: gift in will to t. ‘on trust’, but terms not specified.

    • if trust fails: RT.

    2. Requirements: i. Intention; ii. communication; iii. acceptance by t.; iv. reliance by testator (Kasperbauer v Griffith).

    - Communication.

    • Content (mirrors 3 certainties: deal with at same time).

      • a. fact/existence of trust (Wallgrave v Tebbs: orders to hold on trust not given before death took free).

        • certainty of intention (Kasperbauer v Griffith: ‘wife knows what she has to do’ too vague).

      • b. terms of trust (Re Boyes: testator failed to give promised instructions before death RT).

      • c. property subject to trust.

        • Re Colin Cooper: addition of 5k by codicil to existing 5k ST not communicated RT of 2nd 5k.

        • Marguiles v Marguiles: proportion of property unclear RT.

    • Method (Re Keen)

      • generally: oral/writing.

      • sealed envelope opened on death IF t. aware (Re Keen, [Ld Wright]: cf. ship sailing under sealed orders).

    • Timing

      • FST: any time before death (Wallgrave v Tebbs) – unless Re Stead exception applies (see below).

      • HST: before/at time will executed (Re Keen; Re Bateman) + must be consistent with will (Re Keen).

        • rationale: prevent testator bypassing s9 Wills Act (Blackwell v Blackwell, [Vis Sumner] obiter).

    • To Whom?

      • general rule: all trustees.

        • if not: only those to whom communication made bound (Wallgrave v Tebbs; Moss v Cooper).

          • FST: if not communicated to 1 takes share absolutely.

          • HST: if not communicated to 1 holds on RT for settlor.

      • exception for FST: bequest to joint tenants if comm. to 1 before will executed (for FST) (Re Stead).

        • if fails: t. told bound, others ts. take absolutely.

        • HST: Re Stead prob. does not apply (comm. to all ts. must be before will anyway).

    - Acceptance by t.

    • can be implied (silence, conduct) (Moss v Cooper) – but: may be challenged in future.

    • testator must have reasonable belief in acceptance.

    - Reliance on acceptance by testator – must be reasonable (Moss v Cooper).

    • a. makes gift/new will.

    • b. (FST only) leaves gift unrevoked (Moss v Cooper).

    • c. (FST only) refrains from making will (Stickland v Aldbridge) – dep. on statutory heir being secret trustee.

    - Means of carrying out ST immaterial: inter vivos transfer to b. or obligation to make will in favour of b. (Ottaway v Norman).

    3. Other Issues

    - Beneficiary predeceases testator.

    • general rule: gift lapses property to testator’s residuary estate.

    • Re Gardner (No 2), [Romer J]: dehors the will – STs take effect inter vivos (from comm. + accept.) to b’s estate.

      • but dubious: ignores rule of constitution (not until death) + undermines revocability of will.

      • may not be followed: only HC case.

    - Beneficiary witnesses will.

    • general rule: s15 Wills Act 1837: witness cannot benefit under will (rationale: coercion).

    • Re Young, [Danckwerts J]: following Re Gardner (No 2), b. benefits under inter vivos trust, not will s15 not apply.

      • but dubious.

      • limited application?: not if secret b. knows they are b. (Re Young: b. did not know no duress).

    - Trustee witnesses will.

    • general rule: s15 Wills Act 1837.

    • HST: no problem – will shows that trustee, so no benefit (Creswell v Creswell).

    • FST: more problematic – appears as outright gift to t. – but: does not take beneficially s15 may not apply.

    - Death/disclaimer by trustee: position unclear.

    • Re Maddock (CoA obiter): possible – trust not constituted till death trust fails if t. predeceases/disclaims.

    • Blackwell v Blackwell (HoL obiter): not possible – FS trustee cannot defeat trust by renouncing.

      • rationale: otherwise acceptance not binding.

      • + HST?: equity will not permit trust to fail for want of trustee.

    - Secret trust of land: express ( must comply with s53(1)(b) LPA 1925) or constructive ( no formalities: s53(2) LPA 1925)?

    • case law inconclusive:

      • FST of land: constructive (Ottaway v Norman, BUT: s53(1)(b) not considered).

      • HST of land: express (Re Baillie, BUT: before HST formally recognised).

    • academic theory:

      • FST of land: constructive – justified by prevention of fraud (Kasperbauer v Griffiths obiter).

      • HST of land: express – referred to in will + fraud theory does not apply.

      • [Paul Todd]: both FST + HST based on equity if not defeated by s9 Wills Act 1837, should not be defeated by s53(1)(b) LPA 1925 – but weak argument.

        Purpose Trusts

    - Beneficiary principle: non-charitable trust must have ascertainable beneficiary who can enforce terms (Morice v Bishop of Durham, [Grant MR]; confirmed in Re Astor’s ST).

    - Exception: charitable purpose trusts – A-G enforces on public behalf; no perpetuity issues.

    - CL exceptions (Re Endacott, [Ld Evershed MR]).

    • 1. monuments + graves (Mussett v Bingle: trust to erect monument valid, but maintenance trust void for perpetuity).

      • poss. charitable: if (1) attached to church or (2) in churchyard + trust for churchyard in general (Re Douglas).

        • e.g. Re Hooper: trust for upkeep of tablet + window in church charitable; trust for maintenance of graves in churchyard valid PPT.

      • N.B. monument = small (CL definition).

    • 2. private masses (Bourne v Keane).

      • poss. charitable: if public (Gimour v Coats: not cloistered nuns).

    • 3. individual animals (Pettingall v Pettingall: mare; Re Dean: horses + hounds...

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