SECRET TRUST

A secret trust helps keeping the identity of the beneficiaries’ secret from the
public and also enables the testator to dispose of his or her assets in such a
way which is both confidential as well as untraceable. For instance, the
testator could want to leave something in his will for his second wife, but he
might also want to keep this purpose a secret from his first wife. It's possible
that he'll accomplish this goal by utilizing a secret trust, in which the identity
the trust's beneficiaries and its trustees are kept a secret. This suggests that
the will does not disclose the identity of those individuals in question. One can
have a secret trust that is fully legitimate or one that is partially valid.
Two types of secret trusts exist in trust law. Secret trusts that don't violate any
laws are the norm. The only type of secret trusts that do not violate any laws
are those in which the identity of the beneficiary, the identity of the secret
trustee, and the conditions of the trust are all concealed from the view of the
general public. Half valid secret trusts are a type of secret trust that are similar
to traditional secret trusts in that they disclose the identity of the trustee and
the fact that a trust is being formed; nevertheless, they continue to conceal the
name of the beneficiary as well as the provisions of the trust.
Since that this side of secret trusts is one of the primary concerns that is
debated in academic circles, there are a variety of theories which can be found
regarding it. There are two primary arguments put out in support of
maintaining secret trusts despite the fact that doing so is contrary to the Wills
Act of 1837. Both of these assumptions are utilized to support the position that
secret trusts are within the bounds of the law. To get things started, we are
going to talk about the fraud hypothesis, which is one of the legal arguments
that the courts employ for a secret trust. The concept that a trustee might hold
property for a beneficiary but then use the Wills Act of 1837 to keep the
property for himself rather than delivering it to the actual beneficiary is one of
the theory that is used the most frequently. In the case of McCormick v.
Grogan, this was validated as being true. In the case of McCormick v. Grogan,
the court acknowledged the validity of this line of reasoning. Lord Hatherley
made the observation that the fraud theory is only utilized when it is glaringly
evident that the trustee is engaging in fraudulent activity, as was the
circumstance here. The result in the case of Re Gardner upheld a broad
definition of fraud, and it included trusts that were only partially secret and in
which the testator's purpose could be determined. Academics utilize this more
comprehensive understanding of fraud to explain their position in the debate.
The case of Rochefoucould v. Boustead, in which the discrepancies between the
wills act and the fraud theory were accepted, is one of the primary reasons why
many researchers favor the adoption of fraud theory. This is one of the primary
reasons why many researchers favor the adoption of fraud theory. In this
particular scenario, there was not a legal agreement in place to back the land
trust that had been established. As a result, the trust was deemed legitimate
by the court despite the fact that it violated the Law of Property Act of 1925.
Still there are a few people who believe that the idea of fraud is very flawed. The
evidence which was given by the house of Lords shows us that this fraud
argument is somewhat flawed. Lord Hatherley said that there is a contradiction
between the words of the will and between enforcement of a secret trust. The
idea of a half secret trusts is a very good rebuttal to the fraud theory which can
be presented. A half secret trust is that which the public knows about that the
property at issue is being held for the benefit of an unknown beneficiary but
the name of the trustee is written on will. In this type of trust, the public is
aware that the property at issue is being held for the benefit of an unknown
beneficiary. As he is aware that he cannot prevail in a legal dispute by lying, a
trustee will never engage in fraudulent activity in order to retain ownership of
the property for himself. In the landmark case of Blackwell v. Blackwell, Lord
Buckmaster contributed to the development of the fraud theory by shifting the
emphasis from the trustee's interests to those of the beneficiary. As a
consequence of this, the receiver, as opposed to the trustee, became the major
focus of the fraudulent plan. According to Lord Buckmaster, the fact that a
legatee violates his pledge to a testator is not evidence that the legatee
committed fraud on behalf of the testator. It is not possible to establish that
the trustee engaged in fraudulent activity unless it can be shown that the
beneficiaries of the trust were cheated out of assets to which they were
legitimately entitled. Sheridan, on the other hand, questions the applicability of
this extended fraud hypothesis by pointing out the complications that would
arise if the trust were invalidated for some other reason (such as a lack of
formalities), and the intended gift to the beneficiary failed. Sheridan's argument
is that these complications would arise in the event that the trust were
invalidated for some other reason (such as a lack of formalities). Sheridan gives
the response that this circumstance would be reason for concern due to the
fact that the person in issue has not yet been named as a beneficiary of the
trust. According to Critchley, the expansion of the fraud theory just takes into
account the possibility of wrongdoing, but it should have been centered on
wrongdoing that has already taken place.
When it comes to enforcing secret trusts, the courts will also employ the
Dehors the will hypothesis, which is often sometimes referred to as the outside
the wall argument. Both of these methodologies are utilized in the
administration of justice. The fraud hypothesis is frequently utilized in
circumstances when only partially lawful secret trusts are in play. This is
because the fraud hypothesis is most beneficial in such circumstances. Lord
Summer, who contended that the Wills Act of 1837 does not apply to secret
trusts, utilized this tactic in the case of Blackwell v. Blackwell. He stated that
the wills act of 1837 does not cover such arrangements. Cullen v. Minister for
Ireland was the case in which this concept was initially presented; Lord
Summer subsequently used it in the Blackwell case. Even though it was
abundantly clear that the court did not accept that the Wills Act of 1837
applies to concealed trusts, the court did uphold the secret trust in this case
even though there was no written notification of the trust. This was done
despite the fact that the court did not accept that the Wills Act of 1837 applies
to concealed trusts. This issue was reviewed in Cullen v. Attorney General for
Ireland, which found that secret trusts are controlled by the general law of
trust rather than the 1837 wills act. Cullen v. Attorney General for Ireland was
decided in 2014. In the most recent case, known as Re Snowden, Judge
Megarry came to the conclusion that a lesser burden of proof (namely, that of a
civil action) is adequate for the establishment of a trust. The reason for this is
because the Wills Act of 1837 does not control the process of establishing
secret trusts. Due to the fact that there is a chance of fraud, the first
conceivable criticism is that a higher standard of proof than the ordinary one
used in civil cases need to be employed. In light of the fact that dishonest
trustees would have an advantage in a case judged according to the typical civil
standard, critics believe that the burden of evidence should be raised in all
cases.
One of the primary objections that are raised by detractors is that, "Why is it
that a secret trust can't operate autonomously from the laws that regulate wills
and estates? If and when the time comes, the regular law of trust, as opposed
to the more cumbersome procedures of probate, can be used to administer
concealed trusts. This option is available if and when it becomes necessary.
This is owing to the fact that opponents say that a secret trust needs the Wills
Act in order to work effectively. Hence, this has caused this result. In order to
provide an answer to this question, both of the aforementioned rules need to be
broken at the same time, which can only occur in the following three instances:
first, when a beneficiary attests a will; second, when a beneficiary dies before
the testator; and third, when the chosen trustee does not carry out his duties
and refuses to do so.
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