Contract Law - Secret trusts

What this page is about: An essay on secret trusts which students may find useful.

Secret trusts arise where a testator explains to X that they want property to be held on trust for Y and then leaves the property to X in their Will. It is also possible that a secret trust arises where in reliance on a promise to implement the trust by X, no Will is made (Strickland v Aldridge 1804 9 Ves 516 1).

The onus of proving a secret trust is on the person claiming that it exists, on the balance of probabilities - the 'ordinary civil standard of proof' (Re Snowden 1979 3 All ER 172 REF2). 

There are three elements necessary for a secret trust (Ottaway v Norman (1971) 3 All ER 1325 REF3).

Intention

The Testator must intend that the property be used in accordance with a direction.  This must be intended as a binding obligation on the trustee, not merely an "unfettered discretion".  In Re Snowden (REF2), Megarry VC asks, "does it impose a trust or a mere moral or family obligation?"  If the testator gives over the property in the will and separately, expresses their wishes to assist in the donee's distribution of property (citing McCormick), this isn't a secret trust but an expression of wishes, not legally enforceable in the Court of Justice. The expression of wishes' is indicative of precatory words as opposed to an imperative direction (Margulies v Margulies and others [2000] All ER (D) 344 REF4). 

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