Explanation of Secret Trusts: Where they Arise and How they Operate

Secret trusts arise where a testator explains to X that they want property to be held on trust for Y and then leaves the property to X in their Will. It is also possible that a secret trust arises where in reliance on a promise to implement the trust by X, no Will is made (Strickland v Aldridge 1804 9 Ves 516 REF1). The onus of proving a secret trust is on the person claiming that it exists, on the balance of probabilities - the 'ordinary civil standard of proof' (Re Snowden 1979 3 All ER 172 REF2). There are three elements necessary for a secret trust (Ottaway v Norman (1971) 3 All ER 1325 REF3). Intention The Testator must intend that the property be used in accordance with a direction. This must be intended as a binding obligation on the trustee, not merely an "unfettered discretion". (Re Snowden (REF2), McCormick REF44, Margulies v Margulies and others [2000] All ER (D) 344 REF4 on 'precatory words'). Communication The Testator must communicate their intention to the intended trustee, along with the terms of the trust. An example may be a sealed envelope to be opened on the testator's death, provided that the intended trustee knows the property is to be dealt with in accordance with the contents of the envelope (Obiter in Re Boyes (1884) 26 ChD 531 REF5, and confirmed in Re Keen 1937 Ch 236 REF6). A mere request to hold "as instructed by any papers left with the will" would not amount to acceptable communication. Oral communication is effective but in the case of a half secret trust, must be consistent with the terms of the Will (Re Keen REF6). If however the intended trustees do not find out about the intentions until after the testator's death, there will be no secret trust (Wallgrave v Tebbs 1855 2 K & J 313 REF7). Agreement There must be agreement or acquiescence, including silent acquiescence (Moss v Cooper 1861 1 John & H 352 REF8) of the intended trustee, which may be express or implied (Wallgrave v Tebbs 1855 REF7). If there is no evidence of the trust

References: 1) Strickland v Aldridge 1804 9 Ves 516 cited in Re Boyes (1884) 26 Ch D 531, Reading 7 - Resource Book 4 Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes 2) Re Snowden 1979 3 All ER 172 in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.129, Butterworths/LexisNexis. 3) Ottaway v Norman (1971) 3 All ER 1325 quoted in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.114, Butterworths/LexisNexis. 4) Margulies v Margulies and others [2000] All ER (D) 344 found online using ixquick. 5) Re Boyes (1884) 26 ChD 531 - Reading 7 - Resource Book 4 Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes 6) Re Keen 1937 Ch 236 Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.114, Butterworths/LexisNexis. 7) Wallgrave v Tebbs 1855 2 K & J 313 in Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) pg.107, Sweet & Maxwell, London 8) Moss v Cooper 1861 1 John & H 352) cited in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.114, Butterworths/LexisNexis. 9) Wills Act 1837 in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.113, Butterworths/LexisNexis. 10) Blackwell v Blackwell 1929 AC 318 (HL) in Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) pg.111, Sweet & Maxwell, London 12) Re Edwards 1948 Ch 440 - can 't figure where I found this case, perhaps found online? 13) Critchley, P. Instruments of Fraud, Testamentary Dispostions and the Doctrine of Secret Trusts (1999) 115 LQR 631 - Reading 6 - Resource Book 4 Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes 14) Unit 24 - Secret Trusts and Mutual Wills - A: Secret Trusts, Manual 4 Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes 15) Pearce & Stevens, The Law of Trusts and Equitable Obligations (2nd Edition, Butterworths) pp.324-326 - Reading 14 Resource Book 4 Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes 16) Maudsley, R. H. Incompletely Constituted Trusts in R Pound (ed) Perspectives of Law (1964) pp254-256, in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.116, Butterworths/LexisNexis. 17) Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) Butterworths/LexisNexis. 18) Sheridan (1951) as for 12, - can 't figure where I found this case, perhaps found online? 19) Hodge, D. R. Secret Trusts: The Fraud Theory Revisited (1980) Conv 341- Reading 10 Resource Book 4 Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes 20) Re Young 1951 1 Ch 344 - Reading 9 Resource Book 4 (pg.33) Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes 21) s.15 Wills Act 1837 Reading 9 Resource Book 4 (pg.33) Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes 22) s.33(1)(i) Trustee Act 1925 in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.213, Butterworths/LexisNexis. 23) Re Walker (1939) Ch. 974 in Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) para 4.92 - 4.112, Sweet & Maxwell, London 24) Re Stoneham 's Settlement 1953 Ch 59 (p.85) Unit 25 Control of Trusts: Control of Trustees - B: Appointment, Retirement and Removal of Trustees, Manual 4 Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes 25) Re Beloved Wilkes Charity (1851) 3 Mac & G440 in Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) para 9-319, Sweet & Maxwell, London 26) Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) para 9-319 - 9-320, Sweet & Maxwell, London 27) s.19 TLATA 1996 in Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) para 8-17, Sweet & Maxwell, London 28) Saunders v Vautier (1841) 4 Beav 115 in Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) para 9-154, Sweet & Maxwell, London 29) Unit 23 Discretionary and Protective Trusts - B: Protective Trusts, Manual 4 Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes. 30) s.33 Trustee Act 1925 in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.213, Butterworths/LexisNexis. 31) Re Smith (1928) Ch 915, Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) para 4-98, Sweet & Maxwell, London 31) s.310 Insolvency Act 1986 33) Klug v Klug (1918) 2 Ch 67 cited in Unit 25 Control of Trusts: Control of Trustees - D: Controlling the Trustees, Manual 4 Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes 34) Scott v National Trust (1998) 2 All ER 1936 discussed in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.427 and Chapter 13, Butterworths/LexisNexis. 35) s.8(1)(b) Trustee Act 2000 cited in Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) para 9-124, Sweet & Maxwell, London 36) Khoo Tek Keong v. Ch 'ng Joo Tuan Neoh (1934) AC 529 cited in Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) para 9-125, Sweet & Maxwell, London . 37) Re Manisty 's Settlement (1917) Ch 17 used in Hayton, D. J. Hayton & Marshall Commentary and Cases on The Law of Trusts and Equitable Remedies (11th Edition, 2001) para 9-208 onwards, Sweet & Maxwell, London 39) Vestey v IRC (No 2) [1979] Ch 198 at 206, [1979] 2 All ER 225 at 235, DC, per Walton J; affd [1980] AC 1148, [1979] 3 All ER 976, HL - butterworths/halsburys online. 40) s.1(1)(a) Variation of Trusts Act 1958 41) Re Tinker 's Settlement (1960) 1 WLR 1011 cited in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.267, Butterworths/LexisNexis. 42) Knocker v Youle 1986 2 All ER 914 cited in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.263, Butterworths/LexisNexis. 43) Unit 25 Control of trusts: Control of Trustees - A: Variation of Beneficial Interests, Manual 4 Units 23 - 32 - W301: Law: Ownership & Trusteeship - rights & responsibilities, The Open University, Milton Keynes. 44) McCormick v Grogan (1869) LR 4 HL 82 quoted in Moffat, G. Trusts Law - Text and Materials (3rd Edition, 2002) pg.113, Butterworths/LexisNexis.