SECRET TRUSTS

Why are secret trusts enforced? Should they be?

‘Secret trusts are a form of constructive trusts, which is why half-secret

trusts should never be enforced.’

Discuss.

Introduction

Secret trusts create a tension between equitable intervention and the formal requirements of the Wills Act 1837. They arise where property is left in a will to a person who has privately agreed to hold it for another, either wholly or partially in secret. The key issue is whether their enforcement is justified as a principled exception to testamentary formalities or whether it represents an unjustified circumvention of statutory requirements. English law enforces secret trusts, but the doctrinal basis for doing so remains contested.

Types of Secret Trusts

Secret trusts are divided into fully secret trusts, where the will makes no mention of any trust, and half-secret trusts, where the will indicates that the property is held on trust but the terms are not disclosed. In both cases, the trust obligation is not fully reflected in the will itself, raising questions about compliance with the Wills Act 1837.

Why Secret Trusts are Enforced: Fraud Prevention

The primary justification for enforcing secret trusts is the prevention of fraud. In McCormick v Grogan, the House of Lords confirmed that equity will not allow the Wills Act to be used as an instrument of fraud. Accordingly, where a testator has relied on a promise that property will be held for another, it would be unconscionable to allow the recipient to deny that obligation after the testator’s death.

This principle ensures that a legatee cannot rely on statutory formalities to defeat a moral or equitable obligation they knowingly accepted.

The “Dehors the Will” Theory

A further justification was developed in Blackwell v Blackwell. The court held that the obligation arises during the testator’s lifetime and is therefore enforceable outside the will itself. On this view, secret trusts operate dehors the will(outside the will), meaning they do not technically breach the Wills Act 1837.

This allows courts to characterise secret trusts as inter vivos obligations enforced by equity rather than testamentary dispositions.

Doctrinal Difficulties and the Nature of the Trust

Despite these explanations, the doctrinal basis of secret trusts remains controversial. If they are enforced because of unconscionability, this suggests constructive trust reasoning. However, if they operate entirely outside the will, they are difficult to categorise within orthodox trust principles.

As a result, many commentators argue that secret trusts are better understood as a sui generis equitable device rather than a pure constructive trust. This reflects the fact that courts prioritise practical fairness over strict doctrinal classification.

Should Secret Trusts be Enforced?

Arguments in Favour

Secret trusts promote fairness by preventing fraud and ensuring that testators’ genuine intentions are respected. Without enforcement, a recipient could deliberately accept property on false pretences and then rely on statutory formalities to retain it beneficially. Equity intervenes to prevent this outcome.

They also align with broader equitable principles of conscience and unconscionability, which underpin much of equity’s jurisdiction.

Arguments Against

However, secret trusts undermine the certainty and formality required by the Wills Act 1837. The Act exists to prevent disputes, ensure reliable evidence, and avoid fraudulent claims. Secret trusts necessarily rely on extrinsic evidence, increasing the risk of uncertainty and litigation.

This concern is particularly strong in relation to half-secret trusts.

Half-Secret Trusts and Strict Compliance

The courts have imposed stricter rules on half-secret trusts to protect testamentary formalities. In Re Keen, it was held that communication of the trust terms must occur before or at the time of execution of the will. This ensures that the will is not later altered informally through oral instructions, preserving the integrity of the statutory regime.

This stricter approach reflects judicial caution about undermining the Wills Act while still allowing limited equitable intervention.

Supporting Equitable Intervention

Despite formal concerns, courts continue to enforce secret trusts where conscience demands it. In Ottaway v Norman, the court reaffirmed that equity will enforce obligations where it would be unjust to allow denial after reliance. This reinforces the dominance of conscience-based reasoning over strict formalism.

Conclusion

Secret trusts are enforced primarily to prevent fraud and uphold equitable conscience, as demonstrated in McCormick v Grogan and Blackwell v Blackwell. However, their enforcement creates tension with the formal requirements of the Wills Act 1837, particularly in relation to evidential certainty and statutory compliance.

While half-secret trusts are subject to stricter requirements, as confirmed in Re Keen, English law continues to enforce secret trusts to avoid unconscionable outcomes. Ultimately, secret trusts are best understood not as a perfectly coherent doctrinal category, but as a pragmatic equitable exception designed to prevent fraud and give effect to genuine intentions where strict formalism would otherwise produce injustice.