What are secret trusts?

An individual’s final will and testament becomes a public document when probate has been granted. The Wills Act 1837 is an anti-fraud device used to make sure a will is genuine and complies with certain formality requirements.

Section 9 of the Act outlines that a valid will should be:

  1. in writing;
  2. signed by the testator with intention;
  3. the signature is made or acknowledged by the testator in the presence of two witnesses present at the same time; and
  4. each witness then attests and signs the will or acknowledges their signature in the presence of the testator.

However, the testator may wish for certain gifts within the will to not become public knowledge, so they may decide to create a secret trust. A secret trust is an exception to section 9 of the Wills Act, with its elements for validity being:

  1. intention to create a secret trust;
  2. communication to the secret trustee that the gift is intended to be held on trust for a secret beneficiary;
  3. acceptance of that role by the secret trustee; and
  4. in reliance of that acceptance, the testator makes a will.

There are two types of secret trusts – a half secret trust and a fully secret trust.

Fully secret trusts arise when a will contains an absolute gift to a beneficiary but, outside of the will, the testator would have asked them to hold the legacy on trust for another individual, and the will beneficiary will agree. The terms of the trust and the trustee’s agreement must be communicated before the death of the testator. These trusts offend Section 9 of the Wills Act as, while the transfer of the property to the will beneficiary appears in a valid will, the trust and its terms are not contained in that testamentary document.

For example, Adam leaves £15,000 to Rita in his will but had previously communicated to her that he intends to give the money to two specific charities when he dies. He then tells Rita that he did not want to make provisions for the charities openly because he did not want his family or the public to know about the decision made. On the surface, this appears to seem like Adam intends to have Rita receive the £15,000. However, provided that certain trust formalities were met, a secret trust was created; Rita will therefore hold the money as a trustee for the charities.

There are circumstances when a secret trust fails. An example of this would be if the secret trustee dies before the testator. If a fully secret trust fails for any other reasons, the secret trustee will be able to gift the trust property to themselves.

With a half secret trust, the will contains a gift to be held on trust, but the identity of the secret beneficiary will be kept out of the will and is communicated to the secret trustee before or at the time of the will’s execution. The testator also communicates to the secret trustee the terms of the intended trust (verbally or through the use of a secret envelope), and this obligation must be accepted. For example, Adam’s will may read, “I leave £15,000 to Rita for her to act as a trustee for the purposes that have already been communicated to her”.

Secret trusts are, by their very nature, secret, and they can arise entirely outside of the will. As a result, they can be very difficult to prove in court. This is because a lot will depend on the evidence of the parties, particularly if there is limited written evidence that is available. If you are the beneficiary of a secret trust, you should aim to acquire as much existing evidence as possible. This can be done by making attendance notes of discussions with the testator, which could become useful if the secret trust is challenged later.

Should you require any further information regarding trusts, you can contact the Contentious Probate Team at Myerson Solicitors

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