Secret Trusts

A person’s last Will and Testament becomes a public document once probate has been granted. The Wills Act 1837 is an anti-fraud device to make sure a Will is genuine by complying 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 in the Will to not become public knowledge and so wants 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 trust – a half secret trust and a fully secret trust.

Fully secret trusts arise where a Will contains an absolute gift to a beneficiary but, outside the Will, the testator has asked him/her to hold the legacy on trust for someone else and the Will beneficiary has agreed. The terms of the trust and the trustee’s agreement must be communicated before the testator’s death. 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 when he dies, he wants her to give the money to two specific charities. He tells Rita that he did not want to make provision for the charities openly as he did not want his family or the public to know about his decision. On the face of it, this looks like Adam intends Rita to have £15,000, however, provided that certain formalities of the trust were met, a secret trust has been created and Rita, therefore, holds the money as a trustee for the charities.

There are circumstances when a secret trust will fail, such as if the secret trustee pre-deceases the testator. If a fully secret trust fails for any other reason, 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 is kept out of the Will and is communicated to the secret trustee before or at the time of the execution of the Will. The testator also communicates to the secret trustee the terms of the intended trust (orally or in 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 arise entirely outside of the Will. As a result, they are very difficult to prove in court as much will depend on the evidence of the parties, particularly if there is limited written evidence available. If you are the beneficiary of a secret trust, you should try to gather as much contemporaneous evidence as possible, such as making attendance notes of discussions with the testator as these could come in useful if the secret trust is later challenged.

If you would like to discuss the above issue with a member of our team then please contact our Probate Litigation team on 0161 941 4000 or lawyers@myerson.co.uk for advice on this area.