Types of secret trusts
English law recognises two categories of secret trust, namely ‘fully secret trusts’ and ‘half-secret trusts.’ The central difference between these categories is the extent to which the testator’s will discloses that the person named as the recipient of a bequest is intended to take the property as a trustee rather than for himself. Whilst the difference might appear slight, for a long period of time it was held that only fully secret trusts should be recognised as valid, and even though half-secret trusts are now accepted, the rules governing their creation are somewhat more restrictive.
A fully-secret trust is created when a testator bequeaths property to a specified person in his will who has agreed that he will hold the property left to him on trust for a third party. In a fully-secret trust neither the fact of the trust nor the identity of the beneficiary are revealed in the will.
The performance of a fully secret trust is to some extent dependent on the integrity of the beneficiary who has agreed to act as the secret trustee.
For more information on:
- Secret trusts arising on intestacy
- Why does equity enforce secret trusts?