Basic requirements for a valid secret trust

Secret trust is can be categorise into two, which is fully secret trust and half secret trust. A fully
secret trust is when there is no sign of trust at all stated on the will. The existence of the trust
are not disclosed by the instrument, only the trustee and settlor are aware of the secret trust. On
the other hand, a half secret trust, the existence of the trust is known but the beneficiaries and
the term are not stated. In order to create a valid secret trust, there are three essentials that need
to be fulfilled, which is intention, communication and acceptance.

In the case of Blackwell v Blackwell [1929]1, a testator gave an amount of money to

five people on trust, saying the money should be invested for the purposes indicated. Four were
given general object, and a detailed instructions were given to the fifth one. The instruction
were all accepted. The residuary legatees then claimed that any of the trust was invalid because
there were no parol evidence to establish the testator’s purposes. The Court of Appeal held that
there was a valid secret trust. Hammond J accepted that the necessary element of a secret trust
would be intention, communication and acceptance and in this case, all the elements are
fulfilled. The testator has intended that the money given is to be employed as what he desires,
not as the trustee’s. His intention were then be told to the trustee, and the proposed trustee has
encourage the testator to bequeath the money in the faith that his intention will be carried out,
which indicates that the trustee accepted the trust. If any of the element is not satisfied, then
the existence of the secret trust is invalid and any claim will be unsuccessful.

There are not much difference between the requirements for a valid full secret trust vs.
the requirements for a valid half secret trust. The differences would mainly be seen on the
communication and a little bit on the acceptance part, which will be further explained later.

Full Secret Trust requirements

a) Communication
The fundamental element of a secret trust is communication. If the testator intends to create
a secret trust, it must be communicated to the trustee. The communication may take place
at any time during the lifetime of the testator, in other word, it must be made before the
testator dies. It doesn’t matter whether the communication happen either before or after the
will is drafted, but if the trust is only communicated after the death of the testator by virtue

1
[1929] UKHL 1
 of a letter found amongst the deceased’s papers, legatee can still take the property
absolutely. In the case of Wellgrave v Tebbs [1855]2, an amount of £12,000 is left by the
testator jointly to Mr Tebbs and Mr Martin in his will. But however, a draft letter was found
specifying how the testator wanted them to hold the money a draft letter specifying how the
testator wanted them to hold the money was only be found after the testator’s death. The
court held that, the secret trust is invalid because there had been no communication made
before the testator’s death. Hence, Tebbs and Martin can take the money absolutely as there
could be no binding trust. Secret trust would have been effective only if it is communicated
before the testator’s death. If no communication took place, it should be noted that the
trustee takes absolutely if he has no knowledge at all of any trust.
Next, see the case of McCormick v Grogan [1869]3, the court stated that the nature of
communication must be of a legally binding rather than merely just a moral obligation. In
this case, the testator made a will leaving all of this property to Grogan. On this deathbed,
he informed Grogan regarding the content of his will and told him that a letter would be
found with it. The letter contained the names of various person, and the testator mentioned
that he does not wish Grogan to strictly act as per the instruction, he leaves it entirely to
Grogan’s good judgement to who he thinks the testator would if he’s still living and as the
parties are deserving. Grogan then excluded one of the person whose name are on the list
from receiving any benefit, and that person brought an action claiming the secret trust as it
should give effect to the instruction contained in the letter. The House of Lords held that
there was no secret trust on the claimant as the testator had communicate to Grogan that
there are no legally binding obligation on him.
If the trustee knew that he was to take the property on trust but did not know the terms
of the trust, there would still be a resulting trust to the estate. In Re Boyes [1884]4, a property
was given to the testator’s solicitor in direction that the estate was to be held upon trust.
However, the details of this direction is not being informed until the death of the testator.
Upon the death of the testator, two unwitnessed documents were found which state that the
testator wished the estate was to be held on trust for a lady whom the testator was not
married. The issue in this case is whether the secret trust is valid or invalid? The court held
that the trust failed because the directions were not communicated during the life time of

2
[1855] 2 K & J 313
3
[1869] LR 4 HL 82
4
[1884] 26 Ch D 531
 the testator. Kay J was of the view that the solicitor held the property as trustee for the
testator, but only holding it on a resulting trust for the testator’s next-of-kin.

b) Acceptance
The secret trust must be expressly or impliedly accept the trust. The trustee can either
directly stating his acceptance, or implying it through not declining. In the case of Ottaway
v Norman [1972] 5, the testator has agreed with his housekeeper that she would have the
bungalow after his death, but provided that she must left it to the testator’s son and daughter-
in-law after her own death. The housekeeper agreed to this, so the testator left the bungalow
to her absolutely. The housekeeper then left the property to Norman, when she died. The
court held that the plaintiff were entitled to the property as Brightman J is in view that the
required elements which must be demonstrate for a valid full secret trust are all fulfilled in
this case which were intention to benefit the plaintiff, communication of his intention to the
housekeeper and the acceptance of the housekeeper of the obligation.
For implied acceptance, which by way of silence, it may amount to tacit acceptance.
The key is whether the trustee conduct induced the testator to make such will and pursue the
arrangement of the secret trust. In lieu to the equity maxim “he who comes to equity must
come with a clean hand”, equity will not allow a man to profit by fraud. It is open for the
person to decide whether he want to refuse to act or to continue to act as a secret trustee.
Other than that, if the trustee rejects after the trust had been communicated, the trustee holds
on trust for the residuary beneficiary.

c) Changes/addition
If the testator intends to make any change or addition to the secret trust, it must be
communicated and accepted by the trustee. In the case of Re Collin Cooper [1939]6, the
testator left £5,000 to two trustees. He had communicated the terms and executed his will
in February 1938, and the trustees accepted it. However by a letter of will in March 1938,
the testator cancelled the earlier will except for certain bequest. He then added that the
amount would be increased to £10,000. The increase has never been communicated by the
testator to the trustee. The court held that only £5,000 was subject to a secret trust as what

5
[1972] 2 WLR 50
6
[1939] 3 All ER 586
 has been communicated and accepted previously. The additional £5,000 would went on a
resulting trust.

d) Revocation
When the three essential requirement of a valid secret trust; intention, communication and
acceptance are fulfilled, revocation does not appear to be possible as the beneficiary
immediately acquires interest. However this has been strongly criticised as it does not even
comply with the basic elements of equity’s law on trusts. See the case of Re Gardner (No.2)
[1923]7, if the beneficiary dies before the testator, the interest does not then lapse as how it
would be in a normal trust, and it would not result back to the testator who still has legal
title to the property. Instead, the benefit would be passed to the beneficiary’s estate. In this
case, a wife left her estate to her husband for life, and there was an agreement which state
that on the death of the husband, the property should be divided among certain beneficiaries.
The husband however died intestate. As per Romer J, the will is irrevocable and both the
trustee and the testator can never change their minds.

e) Attestation of the will

Section 9 of the Wills Act 1959, equivalent to Section 15 of the English Wills Act 1837,
states that gifts to an attesting witness or the wife or husband of an attesting witness is void.
This means that witness or their spouse cannot benefit under a will. However, in equity, if
the trust operates outside the will, the beneficiary can take the benefit. In the case of Re
Young [1951]8, Danckwerts J held that, where a beneficiary under a secret trust witnessed
the will under which the trust was created, he would not be deprived of his benefit. An
attesting witness is the beneficiary of a secret trust, hence the Act had nothing to do with it.

The difference to Half Secret Trust requirements

a) Communication
In half secret trust, the communication must be before or at the same time as the execution
of the will. In the case of Blackwell v Blackwell [1929]9, the testator on his will gave five
persons the sum of £12,000 to be used “for the purposes indicated by me to them”, with the

7
[1923] 2 Ch 230
8
[1951] Ch 344
9
[1929] UKHL 1
 power to apply £8,000 of it “to such person or persons indicated by me to them, as they
thought fit”. It were communicated orally to the trustees and they have accepted it prior to
the execution of the will. The trust was in favour of a lady and her illegitimate son. The
widow of the testator challenged the validity of the trust and claimed £12,000 as part of the
residue. The court held that the trust was valid, and there was oral evidence to prove it.
If the trust did not meet the communication requirement where it failed to be
communicated before or at the same time as the execution of the will, it is held that the
trustee hold on resulting trusts. If there were no residuary beneficiary under the will, then it
would be on those entitled on intestacy. The trustee cannot take the beneficially for
themselves. This can be shown in the case of Re Bateman’s WT [1970] 10, where the testator
has directed his trustee to set aside £24,000. It is said to be paid to “such persons and in such
proportions as shall be stated by me in a sealed letter in my own handwriting addressed to
my trustees”. However, there was no evidence as to whether the testator had been written
and addressed the said letter to the trustees at the date of the will. This indicates that the
requirement which the communication must be done before or at the same time as the
execution of the will, hence the court decide that the direction of this secret trust was invalid.
The decision for the time of communication is based on public policy, which is the law
should not encourage indecision. A testator should make up their mind before executing the
will.
In another case, Re Keen [1937]11, the testator had left a letter to the trustee before the
execution of the will. It is stated on the will that the property is to be held upon trust and
disposed by them among such person, persons or charities as may be notified by the testator
to them during his life time. However, the court held that the communication although being
communicated before the execution of the will, it is inconsistent with the term of the will.
The property were therefore fell into residue. A trustee does not need to know precisely
regarding the term of the trust, the trust can just be communicated constructively. This
would occur when a sealed envelope has been given to the trustee by the testator, but only
to open after his death. As long as it is handed out during the lifetime of the testator and the
trustee has the knowledge that he hold on trust, then the trust is valid and the trustee is bound
to it.

10
3 [1970] All ER 817, 1WLR 1463
11
[1937] All ER 432, Ch 236
 Another issue is what will happen if the testator leaves the property to two or more
trustees and failed to communicate to all of them? In half secret trust, the trustees will always
take as ‘join-tenants’ in equity. With this, all will always be bound with each other. If one
accepts after the date of the will, the half secret trust will fail in any event.

b) Acceptance
Just like full secret trust, a half secret trust also must be expressly or impliedly accepted.
The acceptance may be expressly or impliedly stated before or at the same time as the
execution of the will. In the case of Moss v Copper [1861] 12, the secret trustee who had
been informed of the testator’s intention then informed the other two trustees. The
acceptance of the trust had been made expressly by one, while the other remain silent. The
court held that the silence would amount to acceptance, as it was clear that they had
knowledge of the existence of their obligation yet they failed to make any objection.
Communication may be made either before or after the date of the execution of the will, as
long as it is within the life time of the testator and it may be made through an agent.

12
[1861] 4 LT 790