should secret trusts be abolished

Are secret trusts allowed?

Despite their rarity, secret trusts still remain a staple of many law courses at university level, as they represent a rare exception to the rule that any disposition on death must be by way of a will (or a document incorporated by reference into a will) which complies with the applicable statutory requirements in the ...

What is the doctrine of secret trusts?

A secret trust is an arrangement between a testator and a trustee to benefit a person without having to specify that person in a will. The trustee is transferred property under the terms of the will which he or she then holds on trust for others. The courts recognise two forms of secret trust.

What is required for the creation of a secret trust?

There are three requirements for a secret trust: (1) intention to create the trust; (2) communication of the trust to the trustee (which is subject to slightly different rules on timing depending on whether the trust is half-secret or fully secret) and (3) acceptance of the trust by the trustee.

Why are secret trusts good?

One reason for creating a secret trust is to keep the identity of the ultimate beneficiary outside the will, which is a public document. For a discussion of the case law on secret trusts, see Legal update, Secret and half-secret trusts considered by High Court.

Are secret trusts still needed in equity?

[28] Evidently, although there remains a need for a clear justification for them, secret trusts remain an essential area of the law of Equity, and in their enforcement, the courts seek to give effect to the testator's final intentions when possible.

What happens if a 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 happens when a 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.