What is the purpose of a secret trust?
A secret trust arises when a testator makes a gift in a will to a donee, intending that the donee should receive the gift as trustee for an ultimate beneficiary or beneficiaries, under an express or implied agreement between the testator and the donee, made outside the will.
Are secret trusts necessary?
Secret trusts are not necessary for an individual to hide gifts that would result in social repercussions. Individuals can achieve the same secrecy by making an inter vivos gift, an inter vivos trust or a contract for the benefit of a third party.
Can secret trusts be justified?
In practice, this means a beneficiary cannot enforce a secret trust through a will, fully secret trusts are solely justified and governed through the equitable jurisdiction; so by the law of trusts as oppose to probate law.
Should secret trust be abolished?
The purported reasons in favour of enforcing secret trusts are not only unfounded, but often also result in negative consequences. Hence, it is necessary to abolish secret trusts, rather than to quietly allow them to continue.
What type of trust is a secret trust?
There are two types of secret trust – a half secret trust and a fully secret trust. Fully secret trusts arise where a Will contains an absolute gift to a beneficiary but, outside the Will, the testator has asked him/her to hold the legacy on trust for someone else and the Will beneficiary has agreed.
Are secret trust express or constructive?
constructive trusts
The third is that secret trusts operate as constructive trusts which arise in circumstances where there has been some kind of ‘wrong’, the courts will impose such a trust on the holder of legal title.
Is secret trust inter vivos?
26 He argued that secret trusts involve an inter vivos (lifetime) declaration of trust: so the lifetime formality rules apply – which generally allow declarations without satisfying any formal requirements. 27 The settlor’s death then merely constitutes the declared trust; by transferring the property to the trustee.
Does a secret trust need to be in writing?
In English law, secret trusts are a class of trust defined as an arrangement between a testator and a trustee, made to come into force after death, that aims to benefit a person without having been written in a formal will.
What is the problem with secret trusts?
Evidential issues also exist. Because secret trusts are by definition secret, they are difficult to prove in court. The parol evidence rule states that where there is written evidence, oral testimony cannot be introduced to the court if it contradicts that evidence.
What happens if secret trust fails?
If a fully secret trust fails, the apparent beneficiary inherits absolutely. If a half-secret trust fails, the property, in the absence of a gift over, passes to residue or on intestacy.
What does a fully secret trust look like?
A fully secret trust is where the will does not make reference to any trust. Accordingly, anyone reading the will in isolation would not be aware that a trust exists. The gift in the will would look like an outright gift, when really the testator has intended for the gift to go somewhere else.
What is needed for a secret trust to be valid?
For a Fully Secret Trust to be valid, the Testator must communicate the true intention of the gift to the Trustee and acceptance of this intention must be provided by the Trustee at any time up to the date of the Testator’s death.
What is a secret trust?
107633 Introduction The secret trusts include fully secret trusts and half secret trusts. They are mechanisms whereby estate can be disposed of without the details of the beneficiary becoming common knowledge.
What are the rules of a half secret trust?
The rules of the secret trusts Inspection of the will reveals nothing about the existence of a secret trust and no details about the beneficiary’s identity in the case of a half secret trust. In a secret trust the testator tells the legatee that he is a secret trustee and what he must do with the property; Ottaway v Norman [1971]. [1]
What are the best books about secret trusts?
19) Hodge, D. R. Secret Trusts: The Fraud Theory Revisited (1980) Conv 341 – Reading 10 Resource Book 4 Units 23 – 32 – W301: Law: Ownership & Trusteeship – rights & responsibilities, The Open University, Milton Keynes
Are secret trusts testamentary dispositions?
Secret trusts are testamentary dispositions as the testator can revoke the trust at any time before death by communicating with the secret trustee, by destroying the will or creating a new one.