Issues Associated With Secret Trust

Issues Arising from Secret Trusts

There are quite a few issues that secret trusts can cause. These can range from being applied incorrectly and failing to be validly created to problems with the trust itself. If there is no validly created secret trust then there is a chance testator’s intention would not be fulfilled. For example, if the intention of the testator is taken to be an intention to benefit the named beneficiary absolutely then the absence of a secret trust means that the beneficiary will take the gift absolutely. If the intention of the testator is that the beneficiary is intended to take the property only as a fiduciary, it would be inappropriate for the person to take the property absolutely. Instead the fiduciary would be …show more content…
It can be difficult to prove a trust that is meant to be a secret. It causes confusion as to whether it is a gift or a trust. If the trustee were to die before the testator it would be impossible for a secret trust to take effect since the trustee died before the property was vested to them. A fully secret trust would fail because the deceased secret trustee’s personal representatives would not know of the trust and would not be able to carry it out as seen in Re Maddock. However a half-secret trust would still be possible to be known about and worked around since the trustee is named in the will. This can be perceived that fully secret trusts are more prone to issues and have less protection than half-secret trusts. There is ambiguity here since in Re Gardner it was held that a beneficiary receives their interest as soon as the will is made and the trust is created rather than when the testator dies. While this decision has not been overruled it has been looked at with scepticism. This decision is questioned because no complete constitution of the trust could have arisen until after the testator had died without having revoked the will or becoming insolvent. Finally the issue of providing evidence that such a trust was validly created can be hard to establish. The standard of proof that a deceased person intended to create a trust is quite high. Lord Westbury stated in …show more content…
While it can be argued that they are still needed for the sake of avoiding statutory fraud, the justification is limited and unclear. The two theories of Fraud and Dehors used by the courts seem to contradict each other and this causes uncertainty as to whether the courts themselves fully understand when it is necessary to allow secret trusts. There are problems with these theories individually as the fraud theory fails to address the fact fraud is not always involved in cases of secret trusts, such as when an honest trustee seeks the court’s advice on the existence of the trust. The Dehors theory interprets the will as a formal document although in the Wills Act it states that the will is the totality of the testator’s wishes as to the distribution of his rights on his death. The intention that certain rights be held on trust for others should be seen as part of the will and not outside it. The difference of fully and half-secret trusts may not be a negative but it seems unnecessary to have both. Half-secret trusts seem to offer more protection than fully secret trusts since half-secret trusts mention the trustee in the will which alerts the parties to the will the existence of it while fully secret trusts make no mention of a trustee at all. This makes half-secret trusts easier to prove and less likely to fail since the testator’s intention has already been demonstrated. Finally the

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