Secret trust

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FULL AND HALF SECRET TRUST

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<ul><li> 1. A trust is the binding of the conscience of one to the intention another - perViscount 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. </li> <li> 2. 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 disappearedDefinition 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. </li> <li> 3. A fully secret trust is where a testator leaves Full 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 thesecret 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 trust before death. The donee therefore knows that he or she does not take the property absolutely under the will but only as a trustee. Half 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 Isecret have communicated to her. There are no details of the trust evident in the will compared to an express testamentary trust. The deceased must trust have communicated the terms of the trust to the trustee/donee by a separate document. </li> <li> 4. 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 trusteespieces of property, instructing them (in the will) to hold on to this property as they hadbeen asked. Prior to the testators 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 issecret then clearly there must be some evidence of it somewhere if it is to beenforceable. An expression of 2. COMMUNICATION : 3. ACQUIESCENE : The trustee a mere hope or precatory communication of the trust to must also agree eitherwords is not sufficient. In the the trustee otherwise his or expressly or implicitly silencecase of Re Snowden [1979} All her conscience will not be may be sufficient to hold as ER 172, the deceased left bound. Thus the legatee must trustee. It can beproperty to her brother in the know before or at the time of communicated eitherhope that he would do with it receiving the property that he directly, or tacitly. what he thought she would takes it as a trustee have wanted. This was held not to be sufficient to give aclear indication of intention to set up a trust. </li> <li> 5. 1st element : Intention to subject the trustee to an obligationThus an intention In the case of Re Snowden, court held thatto impose a moral it was only a moral obligation which cannot obligation on the be construe as a positive intention to legatee is not create a trust. The property thus passed sufficient to beneficially under the brothers will create a trust </li> <li> 6. 2nd element : Communication of the intention of the settlor of trustee * Re Keen * Communication can take place anytime during the life of the testator. * Communication of the terms of the trust may The terms of the be made by the settlor orally/letter/sealedsecret trust must envelope - containing the terms before thebe communicated death of testator instruction not to open the to the trustee letter until testators death.otherwise there is no trust * In this case the trustee acknowledged of the terms and knows the existence of the trust * A valid trust was created </li> <li> 7. 3rd element : Acquiescene/that the trustee accepted his obligations Ottoway v Norman 1972 To prevent fraud Testator left property to on the part of the trustee its housekeeper provided she left itimportant that the to his son and daughter-in-law trustee has [Ottoways] after her death she accepted office of trustee otherwise agreed he died she took shethere is no fraud in died left not to the Ottoways the gift of the testator but to Norman held the Ottoways took. </li> <li> 8. COMMUNICATION In the case of a fully secret trust it is sufficient if communication takes place sometime before the property vests in the trustees. TIME OF COMMUNICATIONFULL SECRET TRUST / HALF SECRET TRUST ACQUIESCENE 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 INTENTION dispositions of his property. </li> <li> 9. Differences between full and half: 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 doesnt 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 doesnt 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 wont allow it to fail for want of a trustee </li> <li> 10. A secret or half secret trust enablesWHY ? 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. </li> </ul>