2. LEARNING OUTCOMES
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Students will be able to:
1) To define and illustrate the concept of Secret Trust.
2) To identify and distinguish the various types of Secret Trust.
3. What is Secret Trust ?
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The trust fund for the one’s you love.
The creator doesn’t want anyone to know
about it.
He will instruct the trustee to distribute the
fund after his death.
4. HOW?
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The formality requirements under the English Wills Act
1837, section 9 was not complied with.
S. 9 stated that will have to be made in writing, and properly
signed and witnessed.
Its purpose is to prevent fraud.
5. 5
General rule : failure to comply, if provisions of s. 9 are
not complied with, the will is completely void and any
trusts which it purports to create will be invalid.
However a secret or half secret trust may take effect on
the death of the testator without any need
- to specify the terms of the trust
- to reveal its existence
Formalities can sometimes encourage fraud
EQUITY WILL NOT PERMIT A STATUTE T0 BE
USED AS A CLOAK FOR FRAUD
The doctrine of secret and half secret trust have evolved
to prevent this.
6. Reasons
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Two reasons why a testator may wish to avoid formality;
1) He may wish the identity of the beneficiary to remain
secret.
2) He may simply not have made up his mind at the time of
making the will relating details of all the dispositions
7. Methods of Avoiding Formalities
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1) A can leave property by will to B, (complies with the
provision of the Act) but having come to an (unwritten)
understanding that B is merely trustee of it in favour of
C - Fully Secret Trust
2) A can leave property by a valid will ‘to B on trust’, but
where the beneficial interest under the trust (for
example, in favour of C) is undeclared.- Half Secret
Trust
8. Fully Secret Trust
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A testator bequeths property to a specified person in his will
who has agreed that he will hold the property left to him on
trust for a third party.
Fact of the trust and identity of the beneficiary are not
revealed.
9. Dr. Zuraidah Ali9
A
(testator)
B
(primary donee/trustee)
C
(secondary donee/
Beneficiary)
Identity Concealed)
A wanted to leave some property
to C secretly.
Leave the property in his will to
B, whereby B agreed
that C will receive the property.
on the death of A.
FULLY SECRET TRUST
10. Blackwell v Blackwell (1929) AC 318
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Dicta of Viscount Sumner;
“ The necessary elements. . . are intention,
communication and acquiscence. The testator intends his
absolute gift to be employed as he and not as the donee
desires; he tells the proposed donee of his intention and ,
either by express promise or by tacit promise, which is
signified by acquiscence, the proposed donee encourages
him to bequeath the money in the faith that his intention
will be carried out.
11. Leading Authority : HOL in McCormick v
Grogan (1869) LR HL 82
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The basis of enforcement is fraud.
It would be fraudulent for B to take beneficially, he will be
required to enforce the trust in favour of C
12. Ottoway v Norman [1972] 2 WLR
50
12
Mr. Ottoway devised some of his property to Miss Hodges for her
to use during her lifetime provided always that she was, in turn,
to bequeath this property to the claimant after her death.
She failed to do so in her will.
Rather, she left the property by her own will to Mr. and Mrs.
Norman.
After Hodges’s death, the claimant brought action against
Hodges’s executors claiming entitlement under ST to the
property which had been left in Ottoway’s will.
13. 13
Brightman J.
a) “ It will be convenient to call the person on whom such a
trust is imposed the “primary donee’ and beneficiary
under the trust the ‘secondary donee’.
b) set out the elements necessary to prove the existence of a
fully secret trust:
1) The intention to subject the secret trustee to an obligation
in favor of beneficiary
2) Communication of that intention to the trustee
3) Acceptance of that obligation by the trustee either express
or impliedly
14. 14
It was found that Hodges had known of
Ottoway’s intention and had agreed.
Held: therefore, the property should pass to
the claimant.
It is immaterial whether these element exist
before or after the will of the donor
(testator).
16. Intention
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i) Need to illustrate sufficient certainty of intention.
ii) Need to show that the testator intended to subject the
secret trustee (primary donee) to a mandatory obligation
to hold property for the benefit of secret beneficiary
(secondary donee).
iii) Case : Re Snowden [1979] 2 All ER 172
17. Communication
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1) Communication of both fact of the trust and the terms of
the trust.
2) Communication of the extent of trust.
3) Communication must be made before the death of the
testator.
4) Communication to joint trustee.
19. Half Secret Trust.
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1) The existence of the trust is disclosed by the will but not
the term
2) The testator indicates in his will that the recipient of the
bequest is not intended to take the property absolutely but as
a trustee.
3) The identity of the ultimate beneficiary remain concealed.
4) The beneficiary in the will be seen as a secret trustee.
20. 20
The substance of a half secret trust:
A will leaves a legacy to B “to be held upon trust as I have
declared to him.”
Hence: existence of trust is known but NOT the term.
Situation :Secret trustee will ignore a property and take the
property left in a will.
22. Requirements : Half Secret Trust
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1) Intention.
2) Communication.
a) Communication must be made before the execution of
the will.
b) Evidence will not be admissible of communication
inconsistent with the face of the will.
3) Acceptance.
23. 23
Important consideration is the time of the communication
of the objects to the trustee
1) Communication to trustee before of at the time of
execution
- Trustee accepts the trusteeship - he is bound to effect the
trust
24. 24
2) Communication to the trustee after the execution of the
will
- English decisions deny that there had been a valid
communication and acceptance of half secret trust.
- If communication took place after the will, X the trustee will
hold the property for the testator’s estate : objects have not
been effectively specified
- Cannot allow testator to create a valid trust through a valid
will but bypass the Wills Act
25. Re Keen [1937] Ch 236
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Testator left £10,000 to two trustees “to be held upon
trust and disposed of them among such person, persons
or charities as may be notified by me to them during my
lifetime…”
Prior to this one of the trustee had been given a sealed
envelope with the name of intended beneficiary.
Ct : Not a valid trust as the letter was inadmissible and
unattested.
Inconsistent with will.
