Equity and Trusts Revision Notes
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A) TYPES OF SECRET TRUSTS
Fully Secret
→ Definition: This is a trust which is completely hidden on the face of the will, the only people that know about it being the testators
and trustees.
→ When is it created? A fully secret trust is created when a testator leaves property to a specified person in his will who has agreed
that he will hold the property left to him on trust for a third party. In a fully secret trust, neither the fact of the trust nor the identity
nor the identity of the beneficiary under the trust are revealed in the will.
EXAMPLE: Imagine that George wants to leave something to his first wife, Henrietta, without his second wife discovering her existence.
He, therefore, leaves £50,000 in his will to his close friend, Ian, who has agreed that he will ensure that Henrietta receives the money.
On the face of George's will, it appears that Ian is the absolute beneficiary of the bequest, whereas in fact, behind the scenes,
Henrietta is intended to benefit. This arrangement would give rise to a fully secret trust. On the death of George, Ian will receive the
money under the terms of the will, but he will be required to hold it as trustee for Henrietta. Ian, is, therefore, the trustee of the secret
trust and Henrietta, the beneficiary.
→ How to enforce the ST (per the above example)?
Ian might willingly accept the obligation (in which case there is no need for proof)
There might be witnesses who can testify to the discussion between George and Ian.
Ian's agreement might have been recorded in an exchange of letters or e-mails.
! The trust is only secret in not being disclosed by will: that does not mean it has to be covert in the sense that no one knows about it.
→ The leading authority stating the requirements of a fully ST is:
Ottaway v Norman (1972): O left his bungalow by will to E, a woman he had been living with. There was clear evidence that,
both before and after the will was made, O had informed E and his son that his intention was for E to live in the house until her death
(life interest) after which his son would get the house. Immediately after O’s death, E honored the request and made a will leaving
the house to the son. However, she later changed her will and left the house to the N, her neighbors whom she had become close
friends. After she died, the son claimed the house from her executor under a secret trust.
Arguments: E’s son argued that she was obliged to give it to him and that she was bound by a trust obligation. When she agreed to
hold the cottage for him, he became beneficiary of trust and she was no longer able to leave it in her will. Following E’s death in
1968, it was claimed that the bungalow was held by N (potentially as E’s executors) on trust for them.
Held: Brightman J held that a fully secret trust had been created. In the course of his judgement, he referred to the secret trustee as
the 'primary donee' and the secret beneficiary as the ' secondary donee'. He held that subjection of property to a fully secret trust
required the three elements of intention, communication and acceptance. In the context of this case, three elements were fulfilled in
the following manner:
1) Intention of the testator was to subject the primary donee (E) under an obligation in favour of the secondary donee
(E’s son). There was clear evidence that it was the H’s intention that E should be obliged to dispose of the bungalow at her
death in favour of the son. That is because H had communicated that intention to her and she had accepted it. Accordingly
the defendants, N, were bound by a ST and therefore held the bungalow on trust for E’s son absolutely.
2) Communication of that intention to the primary donee.
3) Acceptance of that obligation by the primary donee either expressly or by acquiescence.
! The method by which the primary donee was to carry out the obligation, whether by making a will in favour of the secondary donee
or by some form of inter vivos transfer is immaterial. Note that it is perfectly possible for a secret trust to confer a life interest on the
trustee with an obligation to dispose of the property in a certain way by will.
, Equity and Trusts Revision Notes
Half Secret
→ What is a half ST? You can see that it exists on the face of the will but you are unable to see its content. Appears on the will, the
provision would be something along the lines of "I do this for purposes I communicated to X person" without necessarily saying
who stands to benefit.
! This type of trust is less risky than the previous one as here, it is impossible for the trustee recipient to deny the existence of the trust.
EXAMPLE: If George were to leave £50,000 to Ian in his will 'on trust', without disclosing that Henrietta was the ultimate beneficiary,
a half-secret trust would have been created. The trust is described as half-secret because the fact that the property is subject to a
trust obligation appears on the face of the will, but the identity of the true beneficiary is not disclosed by the will.
→ The leading case stipulating the requirements for half STs is Blackwell v Blackwell, where Lord Sumner stated that the essential
criteria were 'intention, communication and acquiescence'.
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A) TYPES OF SECRET TRUSTS
Fully Secret
→ Definition: This is a trust which is completely hidden on the face of the will, the only people that know about it being the testators
and trustees.
→ When is it created? A fully secret trust is created when a testator leaves property to a specified person in his will who has agreed
that he will hold the property left to him on trust for a third party. In a fully secret trust, neither the fact of the trust nor the identity
nor the identity of the beneficiary under the trust are revealed in the will.
EXAMPLE: Imagine that George wants to leave something to his first wife, Henrietta, without his second wife discovering her existence.
He, therefore, leaves £50,000 in his will to his close friend, Ian, who has agreed that he will ensure that Henrietta receives the money.
On the face of George's will, it appears that Ian is the absolute beneficiary of the bequest, whereas in fact, behind the scenes,
Henrietta is intended to benefit. This arrangement would give rise to a fully secret trust. On the death of George, Ian will receive the
money under the terms of the will, but he will be required to hold it as trustee for Henrietta. Ian, is, therefore, the trustee of the secret
trust and Henrietta, the beneficiary.
→ How to enforce the ST (per the above example)?
Ian might willingly accept the obligation (in which case there is no need for proof)
There might be witnesses who can testify to the discussion between George and Ian.
Ian's agreement might have been recorded in an exchange of letters or e-mails.
! The trust is only secret in not being disclosed by will: that does not mean it has to be covert in the sense that no one knows about it.
→ The leading authority stating the requirements of a fully ST is:
Ottaway v Norman (1972): O left his bungalow by will to E, a woman he had been living with. There was clear evidence that,
both before and after the will was made, O had informed E and his son that his intention was for E to live in the house until her death
(life interest) after which his son would get the house. Immediately after O’s death, E honored the request and made a will leaving
the house to the son. However, she later changed her will and left the house to the N, her neighbors whom she had become close
friends. After she died, the son claimed the house from her executor under a secret trust.
Arguments: E’s son argued that she was obliged to give it to him and that she was bound by a trust obligation. When she agreed to
hold the cottage for him, he became beneficiary of trust and she was no longer able to leave it in her will. Following E’s death in
1968, it was claimed that the bungalow was held by N (potentially as E’s executors) on trust for them.
Held: Brightman J held that a fully secret trust had been created. In the course of his judgement, he referred to the secret trustee as
the 'primary donee' and the secret beneficiary as the ' secondary donee'. He held that subjection of property to a fully secret trust
required the three elements of intention, communication and acceptance. In the context of this case, three elements were fulfilled in
the following manner:
1) Intention of the testator was to subject the primary donee (E) under an obligation in favour of the secondary donee
(E’s son). There was clear evidence that it was the H’s intention that E should be obliged to dispose of the bungalow at her
death in favour of the son. That is because H had communicated that intention to her and she had accepted it. Accordingly
the defendants, N, were bound by a ST and therefore held the bungalow on trust for E’s son absolutely.
2) Communication of that intention to the primary donee.
3) Acceptance of that obligation by the primary donee either expressly or by acquiescence.
! The method by which the primary donee was to carry out the obligation, whether by making a will in favour of the secondary donee
or by some form of inter vivos transfer is immaterial. Note that it is perfectly possible for a secret trust to confer a life interest on the
trustee with an obligation to dispose of the property in a certain way by will.
, Equity and Trusts Revision Notes
Half Secret
→ What is a half ST? You can see that it exists on the face of the will but you are unable to see its content. Appears on the will, the
provision would be something along the lines of "I do this for purposes I communicated to X person" without necessarily saying
who stands to benefit.
! This type of trust is less risky than the previous one as here, it is impossible for the trustee recipient to deny the existence of the trust.
EXAMPLE: If George were to leave £50,000 to Ian in his will 'on trust', without disclosing that Henrietta was the ultimate beneficiary,
a half-secret trust would have been created. The trust is described as half-secret because the fact that the property is subject to a
trust obligation appears on the face of the will, but the identity of the true beneficiary is not disclosed by the will.
→ The leading case stipulating the requirements for half STs is Blackwell v Blackwell, where Lord Sumner stated that the essential
criteria were 'intention, communication and acquiescence'.
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