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Question 2

Secret Trusts and Half Trusts
s 9 of the Wills Act 1837, as amended by the Administrative of Justice Act provides that a will must be in:

• In writing,
• Signed by the testator
• In the presence of two or more witnesses
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A will which simply amends an existing will without replacing it is known as a codicil
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McCormick v Grogan: “Fraud” theory: Equity will not allow a statute to be used as a cloak for fraud
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e
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Blackwell v Blackwell, per Buckmaster LJ: House of Lords suggested equity wishes to prevent fraud in the
wider sense
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The doctrine of incorporation: This enables informal documents to be incorporated into a will if they are
expressly identified by the will and existed when the will was executed
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They change nothing that is
written in the will
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At the beginning of any question whether a problem question or
essay question, explain these theories!!!!!

Burden of proof: Re Snowden: Burden of proof is on the person claiming that the
secret trusts exists, on the balance of probabilities i
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it is the ordinary civil
standard of proof
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It looks like a gift but it will be a full secret trust which will be enforced by the courts
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Ottaway v Norman, per Brightman J:
Establish who the primary and secondary donee’s are:

• A primary donee is the person that trust is imposed on
• A secondary donee is the beneficiary under that trust
REQUIREMENTS
1
...
Communication of that intention to the primary donee has been made
3
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When she died her will stated that her residue
should go to her brother
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There was simply a gift to the brother
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Re Keen: It can be done by sealed letter provided that the recipient knows that it contains the terms of the
trust
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e
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Ottoway v Norman: An oral communication MAY suffice
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Seems to be that fully secret trusts are like constructive trusts - no writing needed
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Contents of the communication
There must be a binding, so legal obligation with no discretion as to its terms:
McCormick v Grogan: The testator on his death bed told D he had left all his property to him
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Held: There was not a fully secret trust because there was no legal obligation imposed upon D
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Sufficient communication
The TERMS of the trust must be communication to the primary donee before the testators death
Re Boyes: A letter stating the terms of the trust, including the name of the beneficiary was not discovered
until after the testatrix had died
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Normally when a fully secret trust fails, the stated beneficiary takes the property BUT in Re Boyes the
solicitor had agreed to act as a trustee and so there was a resulting trust
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Wallgrave v Tebbs: The testator left property to named friends as joint tenants
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If the testator does not
communicate that there is a secret trust before his death, the intended trustee’s can use it as they want
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g
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Sebastian informs Tim of his
intentions - but not Tania
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Tim is bound by the fully secret trust but Tania is not because her
conscience is not affected
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g
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Sebastian informs Tim of his intentions - but not Tania
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If the communication was made before the will they’re both bound
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Re Stead, Per Farwell J: This distinction in joint tenancies regarding timing of communication does not
clearly link up to fraud
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e
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Acceptance?

Acceptance may be informal
Moss v Cooper: Acquiescence (reluctance acceptance without protest) will suffice

Disclaimer/Refusal of trusteeship
Someone who is appointed a trustee can disclaim/refuse the trusteeship provided that he has not done
anything to indicate his acceptance of the trusteeship
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However it was stated in
Blackwell v Blackwell, per Lord Buckmaster: Where the trustee disclaims in order to prevent the testators
intentions, Equity will intervene and replace the intended trustee: The court can appoint trustees under s 41
of the Trustee Act 1925
...
e
...

BUT
For fully secret trusts, it has been suggested obiter in Re Maddock (per Cozens-Hardy LJ):
If the trustee of a fully secret trust dies before the testator, the trust fails because a fully secret trusts imposes
a personal obligation and when the secret trustee dies that personal obligation is extinguished
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• The courts can intervene and replace the secret trustee? Like in s 41 of the Trustee Act 1925
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Can the testator change his mind?

Yes through revocation of the fully secret trust:

• By changing the will i
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do not leave the money to Tim
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If done, there will not be a
completely constituted trust
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This encourage indecisive testators
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Half secret trusts
THE EXISTENCE OF THE TRUST IS APPARENT ON THE FACE BUT THE TERMS ARE NOT
...
E
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“I leave £50k to Tim on trust for the purposes which I have mentioned to him”
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The primary donee takes as a trustee rather than beneficially
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However such trustees can be enforced because they operate outside the will, changing
nothing that is written in it (the “dehors the will” theory)
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s 15 of the Wills Act provides that where a
person witnesses a will as one of the two witnesses, necessary that person cannot benefit under the will
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Held: He took by virtue of the trust rather than under the will and so was not affected by s 15
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Re Gardner (No 2): Testator left property to her husband for life, with a half secret trust in relation to the
remainder
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If the property had been left as a gift in the will, it would have “lapsed” i
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failed: The rule generally is if
you made a will and left property to someone who died before you did, they do not get that gift, it falls back
into your estate
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Construing the Will: Trust or gift?
Must establish the intention of the testator:
Re Rees: The testator left his residue “unto my trustees absolutely they well knowing my wishes
concerning the same”
...
e
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They said the terminology used creates a situation where they were trustees and so they would not take
the surplus money without the direct intention

Recent case of Rawstron v Freud: Para 6 of Lucian Freud’s will: “I GIVE all the residue of my estate… to
the said Diana Mary Rawstron and the said Rose Pearce jointly”
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Held: Looked at the natural meaning of the words in the will and concluded that they took beneficially on
the face of the will and the court accepted there was a fully secret trust but there was no need for
Rawstron to disclose the information
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This change constituted enough
evidence to show that the trustees were to take the surplus as gifts
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Re Keen: It can be done by sealed letter provided that the recipient knows that it contains the terms of the
trust, it is at the trustees disposal at any time and so communicated
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By a codicil (an addition to
the will), he added a further £10k on the same terms but failed to inform the trustees of this fact
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It failed and so went back to the testator’s estate on
resulting trust
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- Late additions must be communicated to the trustees
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Re Keen: If the will refers to past communication, the court will not accept evidence of communication
after the will has been made
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‘To such people or charities as I would notify to them’ - refers to future communication so anything said
before will conflict with the terms of the will and so the trust will be invalid
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Both Tim and Tania are bound because it is a joint tenancy and there is sufficient communication: i
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communication had been made before the time of the will
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The declaration of a half secret trust must be evidence in writing: Law of Property Act 1925, s 53(1)(b)
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Can a trustee be a beneficiary?
If the will refers to a recipient as a trustee, it may not be possible to bring in evidence that he was
intended to take a benefit as well
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If they
were intended to take beneficially, it should have been clearly stated
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However the judge did take reservations of Re Rees saying that there may be cases were the
half secret trustee could take a beneficially if it is very clearly intended
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This makes the case of Re Gardener quite odd: Beneficiary died before testator but still the beneficiary’s
estate took some property
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Furthermore the testator has an opportunity to appoint another trustee
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Where a sole surviving trustee dies, the trust property devolves on his personal representatives who can
choose new trustees under s 36 Trustee Act 1925
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Should secret trusts be recognised today?
The reason for recognising trusts might be considered to be much weaker today than they were in the 19th
or early 20th century
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A reason why secret trusts are made is because the testator is indecisive and would rather someone else
may the decision on their behalf, as in Re Snowden
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A possible solution is to require communication of the key terms of both half secret and fully secret trusts
before the will is execute
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