There is nothing unusual about creating a Trust within a Will. A common example of this is where a person wishes to place monies in trust until a child reaches suitable maturity to receive those funds.
Once created a Trust places serious obligations upon the Trustee, who is compelled to hold property for the benefit of another. This is why the law requires a Trust to be sufficiently certain in order to be valid and enforceable. The requirements of a standard Trust are often referred to as the three certainties and are:-
- Certainty of intention;
- Certainty of subject matter;
- Certainty of object.
Usually, when preparing a Will, the intention is to set out your wishes as clearly as possible, in the hope that your estate will be administered smoothly when you pass away. A Secret Trust is a different animal. Contrary to creating certainty, by its nature a Secret Trust is not what it appears to be. A fully Secret Trust arises where a Testator gives property to a person in their will, but has actually told that person that they are to hold the property for the benefit of another. For a Secret Trust to be valid, it is crucial that the Testator communicates with the Trustee the details of the Trust during their lifetime.
There will sometimes be reasons why a person wishes to hide the true beneficiary of their estate. For example such Trusts have been used to benefit mistresses in a discrete manner to save family embarrassment.
If someone seeks to enforce a Secret Trust, the Court will require clear and distinct evidence to establish the Trust. This means that where the existence of such a Trust is found, the Trustee (or even their Solicitor) may be compelled to give evidence of its terms.
Lucian Freud’s estate
Judgement has recently been given in the disputed estate of Lucian Freud requiring the Court to consider the enforceability of a Secret Trust created in a Will.
Lucian Freud left an estate worth in the region of £96,000. His Executors (his Solicitor and one of his 14 children) claimed that the residue of the deceased’s Estate was the subject of a Secret Trust, the terms of which the deceased specifically did not wish to be disclosed.
Another of Freud’s children sought to argue that if the Secret Trust was not valid, the rules of intestacy would apply (i.e. as if there was no Will) and he would be entitled to a share of the residue as a child of the deceased.
The Executor’s claim succeeded and the Court accepted that a Secret Trust had been created. As in Marley –v- Rawlings 2014 the Court found that the correct approach was that the Will should be interpreted in a similar way to a contract. This meant that the words in the Will should be given their ordinary meaning, taking account of the overall purpose of the document, any facts known or assumed by the parties when it was executed and applying common sense.
This is an unusual case but it represents a further example of the increasingly pragmatic approach which Judges are taking to Will disputes and their increased willingness to apply contractual principles when looking to establish a Testator’s true intentions.