Equity and Trust exam notes written from textbooks and lectures for Secret Trusts. Formatted to be memorised and contains all the necessary information to achieve a 2:1 or 1st on the exam.
*Secret Trusts: A trust where the testator makes a gift of property in a will to a recipient who
agrees to hold that property on trust for a third party.
Wills
*-Testamentary dispositions (including trusts) must be executed and attested in accordance
with the formalities laid out in s.9 of the Wills Act 1837; this includes:
1) Writing
2) Signature
3) Attestation
-Secret trusts are an exception to the rule that any testamentary trust or legacy is ineffective
unless contained within the Will.
*-It is possible to make a fully secret trust when the person dies intestate (without a will):
Sellack v Harris (1708): A father was induced by his son not to make a will. The son assured
the father that he would make provisions for the mother, wife and child of the intending
testator.
Held (Legal Principle): The Court compelled the son to perform the secret trust. As there was
no will, this was necessarily a fully secret trust. Therefore, fully secret trusts can be written or
oral.
1) Fully Secret Trust
*-Fully Secret Trusts: Where the existence of the trust, its terms, and the beneficiary are not
reflected on the will such that the legatee is entitled to take the legacy absolutely (i.e.
£500,000 for Fred).
*-If precatory wording is used (i.e. words of hope and aspiration) then there is no half secret
trust, however, if a previous communication imposes legal obligations on the trustee then the
trust will be fully secret.
a) Proving a Secret Trust
*-It is usually more difficult to prove the existence of a fully secret trust in circumstances
where the intended trustee falsely denies that any communication and acceptance of the trust
has occurred, which allows for the possibility of fraud.
-The testator (and/or his legal adviser) should take precautionary measures such as:
1) Keeping copies of letters,
2) Maintaining a private record of what was said and when.
3) Disclosing the details of the arrangement to another confidant (i.e. the beneficiary).
2) Half-Secret Trust
*-Half-Secret Trusts: On the face of the will, the existence of the trust is not secret, but it is
the terms of the trust (particularly, the identity of the beneficiary) will remain private and
undisclosed (i.e. £500,000 for Fred to be held on trust for such a purpose as I have
communicated to him).
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