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47 Cards in this Set
- Front
- Back
- 3rd side (hint)
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When are secret trust used? |
When the settler does not want it to be known who should benefit from a trust |
Privacy |
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What is a half secret trust ? |
•settler will leave property to A for B knowingly to the trust •B will be communicated to A separately •this reduces the chance of the trustee acting fraudulently •A valid trust although contrary to the wills act 1837 |
List characteristics of a secret trust |
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Why is a half secret trust contrary to the wills act 1837? |
It involves a disposition of property after the testator's death where significant terms of the trust were not incorporated in the will. |
Disposition, property, terms |
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What is a fully secret trust ? |
•leaves property absolutely to A in the will •testator has hidden intention for the trustee to hold on trust for B • heightened chance of fraud B/C the wills act gives the legatee absolute rights to the property •if trustee try to rely it would be fraud |
List characteristics |
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What are several issues relating to both types of trusts? |
A key controversy is whether recognition is compatible with the WA 1837 b/c property is disposed after the testator's death with terms not in the will which is a strict formality Sometimes justified since trustee knows of the trust and intention and can't rely on the WA fraudulently & unable to invalidate trust They are treated as testamentary and not an exception but a separate element which operates outside the will
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Key contraversy Sometimes justified Outside |
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What is the dehors theory? |
Secret trusts are analysed as express trusts that are validly declared in the testator's lifetime following the communication by testator and the acceptance by the trustee There is an argument that it's not testamentary b/c created inter vivos & only constituted after death |
Testament |
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Re snoweden deohors theory |
Dehors operates outside the will changing nothing in it allowing it to operate to its tenor fastening the trust to the property in hands of the recipient is not |
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What are some points made on this theory by Re Snowden? |
Not a perfect explanation Trust declared while testator is alive but constituted after death Equity allows trust to bind property to estate that may have been acquired after trust declared Contravenes rule; it is not possible to declare an immediate trust of property However on the face it's property being left in a will |
Why imperfect and what rule it contravenes but what explanation combats this |
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Key principle to secret trusts |
The formality requirement of the Wills Act 1837 are not relevant to a secret trust |
Formality of wills act |
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Dackners |
The beneficiary under a trust does not take under the will, only the trustee does |
Who takes the trust property under the will |
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Re Young |
The husband left money to the wife for the chauffeur who witnessed the will but he was still entitled to the gift under the trust Principle- a beneficiary may witness a will without going against the Wills Act which states that someone receiving under the will may not also witness the will |
Who may witness a will |
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Kincaid |
Secret trust are not constituted until after the testator's death, hence it can be revoked/ changed as any aspect of a will may Ben/c a trust is not sufficiently constituted to stand on it own right |
Revoked/ changed |
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Principles on when the trustee dies before the testator |
Wilde: death of a testator should not invalidate a trust Maxim: trust will not be allowed to fail for the lack of a trustee unless the identity holds significance Re Maddock: fully secret trust does not indicate a trustee so their death may invalidate the trust BUT Kincaid would still apply b/c the trustee may still be changed upon such a trustees death |
Wilde Maddock Kincaid maxim |
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What is the significance of Re Gardner No 2 to deceased beneficiary? |
The personal representative of the deceased beneficiary should receive the same share of the estate BUT should be declared as wrongly decided The gift should lapse and go to the residuary of the beneficiary as a result of resulting trust |
No significance b/c wrongly decided |
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What does Re Baillou say on land? |
Where the subject of a half secret trust is land there should be evidence in writing |
Half secret trust |
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What is the significance of Re Gardner No 2 to deceased beneficiary? |
The personal representative of the deceased beneficiary should receive the same share of the estate BUT should be declared as wrongly decided The gift should lapse and go to the residuary of the beneficiary as a result of resulting trust |
No significance b/c wrongly decided |
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What does Re Baillou say on land? |
Where the subject of a half secret trust is land there should be evidence in writing |
Half secret trust |
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Re Ottoway on land? |
Fully secret trust of land without writing is valid This may class it as a constructive trust b/c LOP Act 1925 s 53(2) states such is a valid trust without writing Bousted: this does not invalidate is as an express trust but it may be classed as both |
Fully secret trust |
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What is a half secret trust? |
Testator leave property in will for someone to hold on trust Terms of trust must be admitted or it will be held on resulting trust for residuary |
Terms admitted or what? |
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What are the two explanations for why terms of trust must be admitted so that the trustee may hold property on behalf of testator? |
1)Matthews doctrine of incorporation 2) such trust exist to prevent fraud |
The two theories |
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What does the theory of the doctrine of incorporation say? |
The requirement for such are consistent with half secret trust: Testator must communicate terms Must include beneficiary already communicated to trustee Must occur at time of will or before Once satisfied the trust may be incorporated into will & satisfy formalities act |
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What does the doctrine of incorporation explain and why insufficient? |
Theory explains why communication of the terms after a will has been created won't be affective unless confirmed by these requirements But insufficient because it does not include oral communication which doesn't comply with wills act But: blackwell- there must be communication along with the inclusion of documents Critchley: if half secret trust were limited to written documents it would be a stronger expo nation but this would have caused discrepancy between the two trust types |
Blackwell and critchley |
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What is the second explanation why half secret trust exist? |
If the trustee fails to hold for the beneficiary fraud will not be an issue because the trust is in the way. Unless the terms were communicated after the will but slim chance unless the beneficiary of residuary is also the trustee |
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What is fraud? |
When the trustee tries to benefit from such fraud as to including unconscionability |
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When do trustees act unconscionable? |
Blackwell when they are bound to hold on trust and decide not to after the death of the testator and the trust can't be recognised to prevent such |
Blackwell |
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What is the essential condition for recognising a half secret trust? |
Re keen: the testator communicated the purpose of the trust to the legaty who agrees and makes a promise which forms an estoppel because of the key requirements; communication acceptance and reliance |
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Ball case |
Terms of trust must be communicated to the trustee before or at the time the will was created |
When terms of trust to be communicated in half secret trust |
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Ball case |
Terms of trust must be communicated to the trustee before or at the time the will was created |
When terms of trust to be communicated in half secret trust |
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In half secret trust what happens when the communication takes place after creation of will? |
re Pugh: the half secret trust is not valid and held on the zulting trust The same occurs where the terms were not communicated at all Re keen: it would go against the wills act where the testator does not halve power to informally change the will relic lance would have been satisfied by not having the option to change the will |
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Re keen on a sealed envelope on half secret trust |
A sealed envelope given to a trustee was sufficient to identify the beneficiary even if not read until after the death of a testator Nb where communication is received by one of multiple trustees it is sufficient for a half secret trust |
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Re keen on a sealed envelope on half secret trust |
A sealed envelope given to a trustee was sufficient to identify the beneficiary even if not read until after the death of a testator Nb where communication is received by one of multiple trustees it is sufficient for a half secret trust |
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Re Batenan |
The trust failed because there was no evidence to show the letter had been delivered before the date of the will The wording of the will must reflect that the letter was already delivered |
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Re rees |
He orally have the right to the trustee to take any access but it would contradict the wills act where the terms of the will stated him as trustee not beneficiary Re Tyler: not incomplete agreement with Rees because id he can hold it in trust for another why not himself but recognise a risk of fraud |
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Re rees |
He orally have the right to the trustee to take any access but it would contradict the wills act where the terms of the will stated him as trustee not beneficiary Re Tyler: not incomplete agreement with Rees because id he can hold it in trust for another why not himself but recognise a risk of fraud |
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Re cooper |
Any changes made to the terms of a half secret trust must be communicated to the trustee or else the original terms of the will will be carried out but any excess will be held on resulting trust But if changed to less the greater will cover the less |
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What is a fully secret trust? |
This occurs when property is given absolutely to another on the face of a will for the benefit of an unknown Does not comply with the formalities of the Will Act In such it would be unconscionable to enforce the strict right of the W. A. Hence such trust is recognised to prevent fraud |
List the characteristics |
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Thynn v thynn |
The son convinced the mother to convince the father to allow him to hold the father estate on fully secret trust for her to avoid her any trouble as the executrix then denied the trust after the father's death The court held it was a fraud but also a trust |
Fraud case |
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Griffith Case |
FST will only be valid if satisfies the following: Intention and three certainties required by every trust Communication to the legatee Acceptance which can also be silent |
Conditions to be met for a valid FST |
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Griffith Case |
FST will only be valid if satisfies the following: Intention and three certainties required by every trust Communication to the legatee Acceptance which can also be silent |
Conditions to be met for a valid FST |
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Moss v Cooper |
Acceptance for a FST can be silent |
FST acceptance |
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Intention necessary for FST |
It must be evidenced by imperative language The testator must intend to place obligation on the trustee to hold for an identified beneficiary but not necessarily immediately after testator death |
Describe the type of intention |
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Ottoway on FST intention |
An lef house to housekeeper to hold on FST for his son upon her death. She made a will in accordance with the trust but later made a new will leaving it to D. Son claimed it was being held on FST & court upheld this -it is immaterial as to whether the requirements are fulfilled before or after the will -where the legatee is obliged to hold property on trust which will crystallise after the legatees death, this will be held on constructive trust for the beneficiary unless property dissipate legally then no trust exist |
Case and 2 principles |
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Ottoway on FST intention |
An lef house to housekeeper to hold on FST for his son upon her death. She made a will in accordance with the trust but later made a new will leaving it to D. Son claimed it was being held on FST & court upheld this -it is immaterial as to whether the requirements are fulfilled before or after the will -where the legatee is obliged to hold property on trust which will crystallise after the legatees death, this will be held on constructive trust for the beneficiary unless property dissipate legally then no trust exist |
Case and 2 principles |
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Communication to legatees for FST |
Tebbs : testator must communicate trust, its terms, the identity of the trust property & beneficiary before his death Re Bayes: communication by letter must be deliver to the legatee including all info or will be held for next of kin of testator Re keen a letter is sufficient communication |
1st hint: Cases on communication for FST 2nd hint: case names as above |
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Ottoway on FST intention |
An lef house to housekeeper to hold on FST for his son upon her death. She made a will in accordance with the trust but later made a new will leaving it to D. Son claimed it was being held on FST & court upheld this -it is immaterial as to whether the requirements are fulfilled before or after the will -where the legatee is obliged to hold property on trust which will crystallise after the legatees death, this will be held on constructive trust for the beneficiary unless property dissipate legally then no trust exist |
Case and 2 principles |
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Communication to legatees for FST |
Tebbs : testator must communicate trust, its terms, the identity of the trust property & beneficiary before his death Re Bayes: communication by letter must be deliver to the legatee including all info or will be held for next of kin of testator Re keen a letter is sufficient communication |
1st hint: Cases on communication for FST 2nd hint: case names as above |
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Acceptance by legatee of FST |
Any acceptance must be expressly Moss v Cooper: silence will constitute but before testator's death Re Stead: tenants in common: if one accepts but the other knows nothing until after testator death then only the one who accepted is bound Tee v Ferris: all that don't accept before death may keep their share Joint tenants: one acceptance bounds all |
Cases on acceptance FST Case names as extra hint |
