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Summary The Principles of Equity and Trusts

- Graham Virgo
ISBN-10 0199570043 ISBN-13 9780199570041
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A snapshot of the summary - The Principles of Equity and Trusts Author: Graham Virgo ISBN: 9780199570041

  • 3 Secret Trusts

  • Consequences of Not Complying Formalities
    The will will be invalid and the properties will be devolved intestacy.
  • Definition of Fully Secret Trusts
    Fully ST is completely hidden from the will. B will appear to all intents and purposes to take the property beneficially. But the T intends the B to hold the gift on trust for somebody else.
  • Definition of Half Secret Trusts
    A half secret trust arises where a testator leaves property to a named person in a will to hold on the trusts that have been or will be declared. The existence of the trust is disclosed in T's will but the terms of the trust remain undisclosed.
  • Other Possibilities of Secret Trust Arising

    Both on the basis that B will deal with the property as agreed:
    • When the testator fails to revoke a gift made in an existing will
    • When the testator fails to make a will at all
  • Rationales of Courts Upholding ST
    • to prevent section 9 WA 1837 to be used as an instrument of fraud;
    • secret trusts arise outside the will and is wholly separated from the will, so the WA does not apply
  • General Requirements of Establishing Secret Trusts
    In order for the court to recognise and enforce a secret trust, it is necessary to prove intention, communication and acceptance. 

    Test applied in fully ST: Ottaway v Norman
    Test applied in half ST: Blackwell v Blackwell
  • When Does The Secret Trust Take Effect?
    It seems sensible to assume that a ST is completely constituted at the time of T's death.
  • 3.1 Fully Secret Trusts

  • Intention to Create an ENFORCEABLE MANDATORY TRUST OBLIGATION, not An UNENFORCEABLE MORAL OBLIGATION
    The court demands evidence of an intention of the testator's part to create a trust in favour of secret beneficiary, rather than simply creating an unenforceable moral obligation on the secret trustee.
  • Difference between Creating A Trustee Obligation and A Moral Obligation
    The precatory and permissive wordings on the relevant trust instrument or letter are concerned. If the words used by the testator are permissive instead of mandatory, and there is no suggestion of it will be the court's authority, instead of the authority of the legatee, if the sanction is not carried out, then the court is likely to find there is no intention to create ST.
  • Intention to Create An Immediate Trust Obligation
    For example, T left £10,000 and a house to B and allows B to live in the house for as long as she lives and the remainder of the money will be passed on to the secret beneficiary. This is a sufficient intention on the testator's part to create a trust obligation on B even though the subject matter of the trust is not going to be certain until B dies.
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