‘A trust is the binding of the conscience of one to the intention another’ - per Viscount Sumner in

Blackwell v Blackwell (1929) AC 318

In the light of the above statement, illustrate the conditions for validity of both full and half secret trusts.

•The secret trusts comprise both:•Full secret trusts •half-secret trusts• They are a relic of a bygone era and do not conform to established trust principles. Their prior purpose has largely disappeared with the changing patterns and expectations of social behaviour. They do however find a limited place with the testator who is hesitant and cannot make up his mind. Some explanation of the similarities and difference of the two types of secret trust will lead on to an evaluation of why they might be justified.

Definition

• A fully secret trust is where a testator leaves property absolutely to a legatee under his or her will. There is no evidence of the trust on the face of the will. The secret trust arises only because the testator has impressed the property and the donee with the trust. The donee is conscience bound to give effect to the trust because the testator has indicated the trust to him or her before death. The donee therefore knows that he or she does not take the property absolutely under the will but only as a trustee.

Full secret trust

• A half-secret trust is where it is clear on the face of the will that the donee takes the property on trust. For example to A on such trusts as I have communicated to her. There are no details of the trust evident in the will – compared to an express testamentary trust. The deceased must have communicated the terms of the trust to the trustee/donee by a separate document.

Half secret trust

The requirements for a half-secret trust to be valid are similar to those for fully secret trusts, and were laid out in Blackwell v Blackwell, where a testator gave five trustees pieces of property, instructing them (in the will) to hold on to this property as they had been asked. Prior to the

testator's death, the trustees had all been told what to do with the property. Lord Sumner said that:

The necessary elements [to create a half-secret trust], on which the question turns, are

1. INTENTION : If the trust is secret then clearly there must

be some evidence of it somewhere if it is to be

enforceable. An expression of a mere hope or “precatory”

words is not sufficient. In the case of Re Snowden [1979} All

ER 172, the deceased left property to her brother in the hope that he would do with it

what he thought she would have wanted. This was held not to be sufficient to give a

clear indication of intention to set up a trust.

2. COMMUNICATION : communication of the trust to the trustee – otherwise his or

her conscience will not be bound. Thus the legatee must know before or at the time of receiving the property that he

takes it as a trustee

3. ACQUIESCENE : The trustee must also agree either expressly or implicitly –

silence may be sufficient – to hold as trustee. It can be

communicated either directly, or tacitly.

1st element : Intention to subject the trustee to an obligation

Thus an intention to impose a moral obligation on the legatee is not sufficient

to create a trust

In the case of Re Snowden, court held that it was only a moral obligation which

cannot be construe as a positive intention to create a trust. The property thus

passed beneficially under the brother’s will

2nd element : Communication of the intention of the settlor of trustee

The terms of the secret trust must be communicated to the trustee otherwise

there is no trust

* Re Keen* Communication can take place anytime during the life

of the testator. * Communication of the terms of the trust may be made

by the settlor orally/letter/sealed envelope - containing the terms – before the death of testator –

instruction not to open the letter until testator’s death.* In this case the trustee acknowledged of the terms and

knows the existence of the trust* A valid trust was created

3rd element : Acquiescene/that the trustee accepted his obligations

To prevent fraud on the part of the trustee its important that the

trustee has accepted office of trustee otherwise there is no

fraud in the gift of the testator

Ottoway v Norman 1972Testator left property to housekeeper

provided she left it to his son and daughter-in-law [Ottoways] after her

death – she agreed – he died – she took – she died – left not to the Ottoways but to

Norman – held the Ottoways took.

FULL SECRET TRUST / HALF SECRET TRUST

TIME OF COMMUNICATION

In the case of a fully secret trust it is sufficient if communication takes place sometime before the property vests in the trustees.

In the case of a half-secret trust the communication must occur before or at the same

time as the will is made. It was indicated obiter in Blackwell that a testator cannot reserve to

himself to make future unwittnessed dispositions of his property.

ACQUIESCENE

COMMUNICATION

INTENTION

• Communication and acceptance in a full can happen at any time before death; in half, before or at time of execution of the will

• Full, it doesn’t matter if the will contradicts the trust; half, no contradiction

• Under s15 Wills Act 1837, a beneficiary or their spouse who witnesses a will loses the interest. In full and half, trustees appears to be beneficiaries - but it doesn’t matter if he witnesses the will

• If the trustee dies first – the full will probably fail Re Maddock 1902

• In a half, the trust is set up by the will – equity won’t allow it to fail for want of a trustee

Differences between full and half:

WHY ?

A secret or half secret trust enables the settlor to keep secret certain beneficiaries.

Whereas the will is a public document, the trust is not.

Such secret beneficiaries may be illegitimate children who are ineligible to inherit under the rules of inheritance, a mistress or lover or second wife whom the settlor did not want his family to find out about, or a recipient of his charity who he did not wish to advertise.

A secret trust might also be used to avoid restrictions on the disposition of certain property to certain people.