Law541: Secret Trusts and Half Secret Trusts

A hypothetical scenario: "A testator leaves $£50,000$ in their will to their best friend, Emma. After the testator’s death, it’s revealed that Emma had promised to use the money to support the testator’s secret child. Should the courts enforce that promise?"

Purpose and Formalities of Wills

Rationale for Formalities: Reduces fraud and undue influence, protects asset value, and provides a written record for trustees.
$Article 5(1)$ Wills and Administration Proceedings (Northern Ireland) Order $1994$: Wills must be in writing, signed by or on behalf of the testator, and witnessed by two individuals.
Testamentary Capacity ($Banks v Goodfellow (1870)$): The testator must understand the nature of the act, the extent of their property, and the claims they are including or excluding without "insane delusion."

Definition and Types of Secret Trusts

Nature: Equity enforces secret trusts despite non-compliance with statutory formalities to prevent fraud and allow for secrecy or flexibility.
Fully Secret Trust: Nothing on the face of the will indicates a trust (e.g., "I leave $£10,000$ to Mary").
Half Secret Trust: The will indicates that the legatee holds property on trust, but hides the terms/beneficiaries (e.g., "I leave $£10,000$ to Mary for the purposes I have communicated").

Requirements for Validity ($Ottaway v Norman [1971]$)

Intention: The testator must intend to impose a legally binding obligation, not just a moral wish ($McCormick v Grogan$; $Re Snowden$).
Communication: The intention and terms must be communicated to the primary donee ($Re Boyes$).
Acceptance: The donee must accept the obligation expressly or by acquiescence ($Blackwell v Blackwell$).

Rules of Communication

Fully Secret Trusts: Communication can occur anytime before the testator's death, even after the will is executed ($Moss v Cooper$).
Half Secret Trusts: Communication must occur before or at the time the will is executed ($Blackwell v Blackwell$).
Method: Communication can be oral or written. A sealed envelope is sufficient if the trustee knows it contains trust terms ($Re Keen$).

Consequences of Failure

Fully Secret Trust: If it fails, the property remains an absolute gift to the named donee.
Half Secret Trust: If it fails, the property is held on a resulting trust for the testator's estate.

Theoretical Rationale

Fraud Theory: Equity will not allow the Wills Act to be used as an "instrument of fraud" to keep property contrary to the testator's wishes ($McCormick v Grogan$ ; $Blackwell v Blackwell$).
Dehors the Will Theory: Secret trusts operate "outside" (dehors) the will and are inter vivos in nature, meaning they are not subject to the Wills Act ($Re Snowdon$; $Re Young$).

Case References Summary

$McCormick v Grogan (1869)$: Established that Equity will not allow fraud.
$Blackwell v Blackwell (1929)$: Validated half-secret trusts.
$Ottaway v Norman (1972)$: Applied secret trust principles to real estate.
$Re Keen (1937)$: Clarified timing requirements for communication in half-secret trusts.
$Wood v Smith [1992]$: Relates to statutory compliance for signatures.