Fully secret trusts, where the will is totally silent as to the existence of a trust; and Semi secret trusts or half secret trusts, where the will provides that the legatee
Legatee
A legatee, in the law of wills, is any individual or organization bequeathed any portion of a testator's estate. Depending upon local custom, legatees may be called "devisees." Traditionally, "legatees" took personal property under will and "devisees" took land under will. Brooker v. Brooker, (Tex.
What is a fully secret trust in a will?
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. The terms of the trust and the trustee’s agreement must be communicated before the testator’s death.
What are the types of secret trusts?
Generally, there are two types of secret trusts: “Fully secret trusts” and “semi-secret trusts”. A fully secret trust is where the existence of a trust is not mentioned at all in the terms of the will documents. The will is completely silent as to the existence of the trust or trust property.
What is a semi-secret trust?
Secret trusts are governed by state law. Often, states require the terms of a disposition of property to be in writing. A wholly or partially oral secret trust would likely be defeated in a state that requires a writing. A semi-secret trust might have a better chance of being upheld than a fully secret trust.
What happens if a secret trust fails?
There are circumstances when a secret trust will fail, such as if the secret trustee pre-deceases the testator. If a fully secret trust fails for any other reason, the secret trustee will be able to gift the trust property to themselves.
What is the difference between half-secret and fully secret trust?
There are two types of secret trust — fully secret and half-secret. A fully secret trust is one with no mention in the will whatsoever. In the case of a half-secret trust, the face of the will names the trustee as trustee, but does not give the trust's terms, including the beneficiary.
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 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.
What is a testamentary secret trust?
A “secret trust” is where property is devised to a person without any indication on the instrument of transfer that the property is to be held in trust for another person. Rather, on its face, the gift appears to be absolute.
What happens if a full 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 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 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.
Are secret trusts inter vivos?
This requires all testamentary dispositions to be in writing, signed by the testator. However, the modern theory of secret trusts suggests that secret trusts are created * inter vivos, hence the Wills Act does not apply. Further difficulties arise in connection with the proper classification of secret trusts.
Are secret trusts outdated?
"Secret and half-secret trusts are outmoded and should be abolished." The formality requirements for putting together a valid document in the form of a 'will' are outlined in the Wills Act 1837 (the “Act”).
How do you set up an anonymous trust?
How to Set Up a Blind TrustGather the documentation for the assets that you want put into the blind trust. ... Appoint a trustee. ... Create the trust agreement. ... Sign the trust and have it notarized, taking care to follow any recording laws that your state has.Officially transfer the relevant assets into the trust.
What is half secret trust?
A half secret trust is where the Will creates a trust, but it does not reveal any of the details, for example, who the beneficiaries are. Usually, the Will would leave the gift to a trustee to hold on trust “for purposes already communicated to them”.
When must a half secret trust be communicated to the secret trustee?
To be enforceable a half-secret trust must be described in the Will as having been communicated to the trustees prior to the execution of the Will or at the same time as the execution. It must also be proven that the trust was communicated to the trustees and that they accepted it.
What is a secret trust?
A secret trust is a trust which arises when property is left to a person (the legatee) under a will on the understanding that they will hold the property as trustee for the benefit of beneficiaries who are not named in the will. Secret trusts are divided into two types:
Why is it important to uphold the rights of the putative beneficiary?
Historically, the courts have felt it more important to uphold the rights of the putative beneficiary and to avoid the unjust enrichment of the legatee than to uphold the general rule of public policy that property must devolve by will on death.
Do secret trusts have to be incorporated into a will?
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 relevant jurisdiction.
What is a secret trust?
A secret trust is an exception to section 9 of the Wills Act with its elements for validity being: Communication to the secret trustee that the gift is intended to be held on trust for a secret beneficiary; Acceptance of that role by the secret trustee; and. In reliance of that acceptance, the testator makes a Will.
What are the two types of secret trusts?
There are two types of secret trust – a half secret trust and a fully secret trust.
What happens if a secret trust fails?
If a fully secret trust fails for any other reason, the secret trustee will be able to gift the trust property to themselves.
Do trusts have to be communicated before death?
The terms of the trust and the trustee’s agreement must be communicated before the testator’s death. These trusts offend Section 9 of the Wills Act as, while the transfer of the property to the Will beneficiary appears in a valid Will, the trust and its terms are not contained in that testamentary document.
Can a secret trust be challenged?
Secret trusts are, by their very nature, secret and arise entirely outside of the Will. As a result, they are very difficult to prove in court as much will depend on the evidence of the parties, particularly if there is limited written evidence available. If you are the beneficiary of a secret trust, you should try to gather as much contemporaneous evidence as possible, such as making attendance notes of discussions with the testator as these could come in useful if the secret trust is later challenged.
What is a fully secret trust?
A fully secret trust arises where a testator leaves money to a beneficiary who, on the face of the will, appears to take absolutely, but who is in fact a trustee for someone else. The trust is ‘secret’ because, whereas the will is public and can be seen once the testator dies, the terms of the trust are contained in another document which can remain private. A half-secret trust arises where the testator leaves property to a person who is expressed in the will to be a trustee, so it is clear that person cannot take the property absolutely.
Why are secret trusts important?
They arose because in most common law jurisdictions, wills are public documents after they have been admitted to probate, and where the testator wishes to leave a legacy to (for example) a mistress or an illegitimate child without causing pain or embarrassment to his family, he could devise the property to a trusted person to avoid the name of the mistress or illegitimate child appearing in the will. They fall outside of the Wills Act.
Why are half secret trusts effective?
The rationale for half-secret trusts which emerges from the modern cases is quite distinct from the rationale of fraud prevention which underpins the cases on fully secret trusts. It is that half-secret trusts are effective only when they can be treated as having been incorporated in the will. It follows that they must precede the execution of the will and that inconsistency with the will renders the half-secret trust invalid. Thus, in relation to half-secret trusts, the Wills Act 1837 still has nothing “to do with the matter’.
What are the different types of trusts?
Secret trusts are divided into two types: 1 Fully secret trusts, where the will is totally silent as to the existence of a trust; and 2 Semi secret trusts or half secret trusts, where the will provides that the legatee is to hold the property on trusts, but does not specify the terms of the trust or the beneficiary.
What are the three certainties of a trust?
These are a certain intention to create a trust (i.e, words and conduct which create an imperative obligation); certainty as to the subject (property) of the trust; and certainty as to the object (beneficiaries or purposes) of the trust. The three certainties must be satisfied for the protection of the trustees. The three certainties must also be satisfied for the benefit of the court. It is obvious that the testator must make hiss intentions clear in order to create a binding trust. The motive behind the testator’s will is not relevant here as long as it is clear that a trust has been made out.
What is the purpose of a testator?
The reason for such an arrangement are various, but the underlying motive of testators is to keep secret, for whatever reason, the dispositions that they make of their property at death. The will of a deceased person is a public document and family members and others will be able to find out who has received what under it. If the testator does not wish this to happen he may simply leave money to a ‘front’ whom he has previously instructed on the disposal of the property. Either written or oral evidence may be sufficient to prove the existence of the trust and contradict the express terms of the will. As with all trusts, the evidence must clearly show the intent to create a trust, to bind the beneficiary under the will to carry out the testator’s wishes.
When can a half secret trust be communicated?
The trusts arising under a fully secret trust may be communicated to the trustees any time before the property vests in them, i.e, at any time before the death of the testator. However, in the case of half-secret trust the communication must be before or at the same time as the will is made .
What are the requirements for a fully secret trust?
The final requirement is acceptance from the secret trustee ; it is irrelevant if this acceptance occurs before or after the date of the will. These three requirements further support the argument that fully secret trusts operate ‘au dehors’ and therefore can exist because they demonstrate that what is being asked of from the trustee is much more personal and different from what is asked of from a normal trustee in a will. It is therefore essential that clear instructions are given, as there is no will to direct the transfer to the true beneficiary and they must genuinely accept their duties themselves because they do not have a duty under a testament to pass the property and not keep it for themself.
What is the purpose of Section 9 Wills Act?
Section 9 Wills Act 1837 sets out the formalities that testament must comply with to be valid, these are construed strictly by the courts in order to ensure that a testator is genuine and that the will is not fraudulent. The provision clearly states that if you want to leave a testament, a testator must do so in writing, ensuring that everything that he/she wants to be passed on is in the testament; anything that is left out, will not be passed on. The will must then be signed in front of two witnesses. Wills are public documents for a reason and the purpose behind this statute is to make sure that citizens do not defraud wills.
Can a fully secret trust be a testamentary trust?
The alternative justification for fully secret trusts is the Dehors theory, which essentially argues that a fully secret trust can lawfully exist – despite the Wills Act – because fully secret trusts are not a testamentary disposition, they are outside of a will and are therefore not classifiable under s. 1 of the Wills Act 1837.
Can a secret trustee defraud a testator?
According to the fraud theory, equity will not allow a testator or secret trustee to deny the existence of a trust because of statutory guidelines, hence equity’s maxim: ‘Equity will not permit statute to be used as an instrument of fraud.” As per McCormick v Grogen (1869) LR, what this also means is that a secret trustee cannot defraud a testator and keep the property for himself.
Does equity allow a testator to deny the existence of a trust?
According to the fraud theory, equity will not allow a testator or secret trustee to deny the existence of a trust because of statutory guidelines, hence equity’s maxim: ‘Equity will not permit statute to be used as an instrument of fraud.”.
Can a private citizen create a secret trust in their will?
However, many have dared to undermine this statute. The more private and secretive citizens amongst us can create a secret trust in their wills. There is no doubt that this alleyway into strictly applied probate law has had some good, the case of Katherine, Duchess of Suffolk v Herenden (1560) is a clear demonstration of a time in our legal system where the law did not allow a man to leave property to woman, the only way around this injustice was to cleverly swerve around the rigid corners of the law and create a secret trust.
Is there a legal basis for a secret trust?
Evidently, there is very little credible legal basis for the existence of fully secret trusts, but they certainly do and that is somewhat of a mystery.
What is a secret trust?
Secret Trusts are a means by which a testator is able to bypass the formality requirements laid down in the Wills Act 1837. As Dankwerts J [1] put it, ‘ the whole theory of the formation of the secret trust is that the Wills Act has nothing to do with the matter’. Fully secret trusts have certain testamentary characteristics they are valid, ...
Why is a trust secret?
The trust is ‘secret’ because, whereas the will is public and can be seen once the testator dies, the terms of the trust are contained in another document which can remain private. A half-secret trust arises where the testator leaves property to a person who is expressed in the will to be a trustee, so it is clear that person cannot take ...
Why are half secret trusts effective?
The rationale for half-secret trusts which emerges from the modern cases is quite distinct from the rationale of fraud prevention which underpins the cases on fully secret trusts. It is that half-secret trusts are effective only when they can be treated as having been incorporated in the will. It follows that they must precede the execution of the will and that inconsistency with the will renders the half-secret trust invalid. Thus, in relation to half-secret trusts, the Wills Act 1837 still has nothing “to do with the matter’.
Why does the testator have to make his intentions clear?
It is obvious that the testator must make hiss intentions clear in order to create a binding trust. The motive behind the testator’s will is not relevant here as long as it is clear that a trust has been made out. In the above case, all three elements have been satisfied.
What does a testatrix do?
A testatrix must make her intentions to create a binding trust clear. She must express herself in terms which are sufficiently certain in order that the trustees may know what they are obliged to do, and to enable the courts, if need be, to identify the obligations which it must enforce against the trustee.
What is the purpose of a testator?
The reason for such an arrangement are various, but the underlying motive of testators is to keep secret, for whatever reason, the dispositions that they make of their property at death. The will of a deceased person is a public document and family members and others will be able to find out who has received what under it. If the testator does not wish this to happen he may simply leave money to a ‘front’ whom he has previously instructed on the disposal of the property. Either written or oral evidence may be sufficient to prove the existence of the trust and contradict the express terms of the will. As with all trusts, the evidence must clearly show the intent to create a trust, to bind the beneficiary under the will to carry out the testator’s wishes.
What are the three certainties of a trust?
These are a certain intention to create a trust (i.e, words and conduct which create an imperative obligation); certainty as to the subject (property) of the trust; and certainty as to the object (beneficiaries or purposes) of the trust. The three certainties must be satisfied for the protection of the trustees.
What is a Semi-Secret Trust?
On the other hand, a “semi-secret trust” is a type of trust where the will mentions a trust, but it does not specifically name any beneficiaries or is unclear on the specific terms of the trust. Thus, it is semi-secret because only part of the trust is written in the will. However, important key provisions are left out.
What happens if a will contains a secret trust?
Thus, if a will contains a secret or semi-secret trust, the court will usually provide some sort of equitable remedy to resolve any ambiguities or uncertainties regarding the trust.
What are Some Common Disputes and Issues Involved with Secret or Semi-Secret Trusts?
As with any type of trust (and will) arrangement, various disputes and legal issues can be involved. These may have to do with different aspects of the trust or will document as a whole. Some common concerns and conflicts related to these types of trusts may include:
What are the issues with trusts?
As with any type of trust (and will) arrangement, various disputes and legal issues can be involved. These may have to do with different aspects of the trust or will document as a whole. Some common concerns and conflicts related to these types of trusts may include: 1 Disputes Over the Property: There can often be disputes over the property involved. This can involve disputes such as those related to a specific item, or those related to the amount of money supposedly held in the trust. Oftentimes, there can be uncertainties since the trust is not referred to or described in the will document. 2 Disputes Over Beneficiaries: A common trust and will dispute is where other people contest the rights of others to receive property as a beneficiary. That is, there may be disputes as to which persons are entitled to receive property.#N#Again, such conflicts could have been avoided if a more clear will or trust document existed to provide instructions regarding the names and identities of beneficiaries.
Why are secret trusts discouraged?
Secret and semi-secret trusts are discouraged,because many parties may lose their rights to property items. If you are facing a dispute over secret or semi-secret trusts, you should contact an attorney in your area right away.
What is constructive trust?
A constructive trust means that the judge will issue a new trust which more clearly establishes the various parties’ rights. This is often the appropriate remedy, since in a secret trust the parties may not be aware of their rights when the trust is not mentioned at all.
What is a common trust dispute?
Disputes Over Beneficiaries: A common trust and will dispute is where other people contest the rights of others to receive property as a beneficiary. That is, there may be disputes as to which persons are entitled to receive property.