Equity & Trusts -> Secret Trusts

Secret Trusts

Where a settlor leaves property to X apparently beneficially, and communicates to X his intention that X is to hold the property on certain trusts or conditions, which X accepts which X accepts either expressly or impliedly by silence (McCormick v Grogan). This is because a will becomes a public document once executed and the settlor for whatever reason wishes to keep the identity of the true beneficiary a secret. Secret trusts are problematic because their exact nature is unclear nor meet the requirements of s9 Will Act 1837.

Req for Fully Secret Trust as per Ottaway v Norman:

1. Intention: Did the settlor intend the legatee to be bound by a legal/moral obligation? (McCormick). Re Snowden suggests it MUST be a trust obligation and not a moral or family obligation.
2. Communication: There must be communication of the intention and also the terms of the trust. Communication can take place anytime during the lifetime of the settlor (Wallgreve v Tebbs). However where the trustee knew in general terms that he was expected to act a trustee and communication of the terms of the trust might take place after the settlors death (Re Keen).
3. Acceptance: the secret trustee must agree to act as such expressly, but silence can amount to acceptance (Moss v Cooper).

Half-Secret

However ‘Half-Secret Trusts’ is where a gift by will is made but the legatees are identified as trustees on the face of the will. i.e. ‘to X for the purpose which I have made known to him’ (Blackwell v Blackwell = KEY CASE for everything half-secret).

Req for Half-Secret Trust

1. Intention: Did the settlor intend the legatee to be bound by a legal/moral obligation? (McCormick).
2. Communication: must take place before or at the time of the execution of the will (Re Keen).
3. Acceptance: The intended trustee must accept the office of trustee and accept to the terms of the trust be it expressly or by implied silence. (Blackwell v Blackwell)

Consequences of failure of ST: The property is dealt with in one of two ways:

• The named legatee takes absolutely.
• The name legatee would be required to hold the property on resulting trust for the settlors residuary estate (Re Boyce).