What Are Secret Trusts

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The Answer is Secret trusts are a legal concept in the context of wills and estate planning, where a testator (the person making the will) leaves assets to a trustee on the understanding that the trustee will hold and administer those assets for the benefit of a third party, who is not named in the will. These arrangements are typically not disclosed in the text of the will itself, hence the term "secret."

There are two main types of secret trusts: fully secret trusts and half-secret trusts.

1. Fully Secret Trusts:
In a fully secret trust, the will appears to leave the assets outright to the trustee, with no mention of the trust or the ultimate beneficiary. The existence of the trust and the identity of the beneficiary are communicated to the trustee outside of the will, often through a separate private conversation or a written document that is not disclosed to the public. The trustee agrees to this arrangement before the testator's death. Upon the testator's death, the trustee is legally obligated to hold the assets for the benefit of the secret beneficiary, despite the lack of any formal documentation in the will.

2. Half-Secret Trusts:
A half-secret trust arises when the will indicates that the assets are to be held in trust, but the details of the trust's terms and the identity of the beneficiary are not included in the will. Instead, these details are communicated to the trustee separately. Unlike fully secret trusts, half-secret trusts at least acknowledge the existence of a trust in the will, although the full terms remain 'secret' and are not disclosed within the will itself.

The rationale behind secret trusts is to allow the testator to make provisions for someone without making it public knowledge, which could be for various reasons, such as privacy concerns, to avoid family disputes, or to provide for an individual who might be controversial or unacceptable to other beneficiaries or the public.

Secret trusts are subject to certain legal requirements to be valid. For example, in many jurisdictions, the agreement between the testator and the trustee must be made before or at the time of the execution of the will, and there must be clear evidence that the trustee agreed to the arrangement. Additionally, the terms of the trust must be reasonably certain.

The enforcement of secret trusts is based on the principle that it would be fraudulent for the trustee to keep the assets for themselves, given that they have agreed to hold them for someone else. Courts can enforce these trusts even though they are not explicitly detailed in the will, based on evidence that the testator intended to create a trust and that the trustee agreed to the arrangement.

Secret trusts are a complex area of law and can vary significantly between different legal systems. It is always advisable to seek professional legal advice when considering the creation of a secret trust as part of estate planning.

What Are Secret Trusts

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