Secret trusts - theory
Are they outdated?
- Historically used to leave property to illegitimate children that could not
be revealed to public (wills public documents) or to avoid religious
persecution (Bertie (Duchess of Suffolk) Herenden)
- ‘temptation to treat secret trusts as a historical anachronism’ – Garton
- But 16% solicitors said involved in making fully secret trust and 20% half
secret 2001
- Humans inherently secretive, may not be using them for the same reason
but still using
- Can be used where don’t know how want to distribute property.
Encouraging indecisiveness?
Don’t these conflict with the Wills Act 1837?
- No because these trusts are
considered to operate (‘dehors’)
outside the will. Communication and
acceptance must be done inter vivos.
Don’t change anything written in the
will. Megarry VC Re Snowden, affirmed in Blackwell v Blackwell
- But, like testamentary gifts, they are revocable whilst the testator is alive
and are only operative on the death of the testator. So share
characteristics of testamentary gifts yet don’t come under Wills Act 1837,
illogical. Critchley argues this point, s9 applies to any testamentary gift.
Since secret trusts share so many characteristics of testamentary gifts,
should be deemed testamentary. Just because outside the will does not
mean outside the Wills Act 1837.
- Even if it does conflict, needed to avoid fraud. Allowing legatee to rely on
not complying with formalities in Wills Act 1837 to gain property would be
fraud. But why should this mean secret beneficiary should take property?
Why not just find resulting trust for residuary estate? Hodge argues this
because legatee fraud makes secret beneficiary a victim as well.
- Also needed to enforce the wishes of the deceased.
- Critchley – secret trusts are just a pragmatic compromise, not in line with
equitable principles or Wills Act.
- Garton justifies by saying that not many people use them so not a huge
threat to formal will making. Whilst this true, cannot justify allowing
something by saying not many people do it. Not many people commit
crimes, but this doesn’t mean we shouldn’t have criminal laws.
Express trusts or constructive?
- Most academics, like Oakley, see them as express. Expressly declared in
the will that the person will be a beneficiary.
- But Sheridan suggests half secret are express as stated in will, but fully
secret are constructive, relies on fact that not allowing them would be
fraud.
- Not of much practical importance? Arguable that if express, have to
comply with writing requirement in s53(1)(b) LPA 1925, whereas
Are they outdated?
- Historically used to leave property to illegitimate children that could not
be revealed to public (wills public documents) or to avoid religious
persecution (Bertie (Duchess of Suffolk) Herenden)
- ‘temptation to treat secret trusts as a historical anachronism’ – Garton
- But 16% solicitors said involved in making fully secret trust and 20% half
secret 2001
- Humans inherently secretive, may not be using them for the same reason
but still using
- Can be used where don’t know how want to distribute property.
Encouraging indecisiveness?
Don’t these conflict with the Wills Act 1837?
- No because these trusts are
considered to operate (‘dehors’)
outside the will. Communication and
acceptance must be done inter vivos.
Don’t change anything written in the
will. Megarry VC Re Snowden, affirmed in Blackwell v Blackwell
- But, like testamentary gifts, they are revocable whilst the testator is alive
and are only operative on the death of the testator. So share
characteristics of testamentary gifts yet don’t come under Wills Act 1837,
illogical. Critchley argues this point, s9 applies to any testamentary gift.
Since secret trusts share so many characteristics of testamentary gifts,
should be deemed testamentary. Just because outside the will does not
mean outside the Wills Act 1837.
- Even if it does conflict, needed to avoid fraud. Allowing legatee to rely on
not complying with formalities in Wills Act 1837 to gain property would be
fraud. But why should this mean secret beneficiary should take property?
Why not just find resulting trust for residuary estate? Hodge argues this
because legatee fraud makes secret beneficiary a victim as well.
- Also needed to enforce the wishes of the deceased.
- Critchley – secret trusts are just a pragmatic compromise, not in line with
equitable principles or Wills Act.
- Garton justifies by saying that not many people use them so not a huge
threat to formal will making. Whilst this true, cannot justify allowing
something by saying not many people do it. Not many people commit
crimes, but this doesn’t mean we shouldn’t have criminal laws.
Express trusts or constructive?
- Most academics, like Oakley, see them as express. Expressly declared in
the will that the person will be a beneficiary.
- But Sheridan suggests half secret are express as stated in will, but fully
secret are constructive, relies on fact that not allowing them would be
fraud.
- Not of much practical importance? Arguable that if express, have to
comply with writing requirement in s53(1)(b) LPA 1925, whereas
