Lecture 7

Disposition of Property
upon Death
BY : UZA. HAWWA SHAZNA AHMED
2023 / FSL / VILLA COLLEGE
 Secret Trusts, Mutual Wills and
Donatio Mortis Causa
◦ There are three areas concerning the law of succession, which seem to
blur the distinction between express trusts and implied trusts.
◦ These are secret trusts (and by extension half secret trusts), mutual wills
and donatio mortis causa.
◦ On the one hand these may be regarded as express trusts in that they are
intentionally and voluntarily created.
◦ On the other hand, their relationship with express trusts is created
because they do not follow the formalities of the Wills Act 1837
concerning the need for trusts that arise on death to be made in writing.
 Secret Trusts, Mutual Wills
and Donatio Mortis Causa
◦ Accordingly, it may be argued that their existence is justified because
the trustee has placed him- or herself in a situation where it would be
inequitable to deny that a trust exists, as is the case with constructive
trusts. Whatever one’s view may be on this issue, the law nevertheless
upholds these types of trusts as being valid, but only in certain
prescribed circumstances.
SECRET TRUSTS
 Secret Trusts
◦ A secret and a half-secret trust are both trusts that arise behind a will.
◦ In relation to a fully secret trust, a testator will write a will naming certain
beneficiaries. However, he or she will inform one (or more) of those
beneficiaries that the legacy they will receive is to be held on a trust for
another person.
◦ The will itself does not reveal this trust, and therefore it enables the
testator to benefit people he or she might not wish to openly acknowledge.
◦ A half-secret trust is a similar concept.
◦ Here the will identifies that property is to be held on a trust, but the
beneficiaries are not identified on the face of the will. Why therefore are
secret and half-secret trusts employed?
 Secret Trusts
◦ Historically, their significance was to enable people to provide for family
members, who were not openly acknowledged, for example mistresses and
illegitimate children.
◦ Nowadays, this may still be a concern for people in the public eye, such as
politicians who may wish to be seen to uphold family values.
◦ It may also be useful for people to be able to donate to a particular cause,
which they may not wish to be seen to associate with, or with which their
family may disapprove.
 Why are Secret Trusts and Half-
Secret Trusts enforced?
◦ On the face of it, secret and half-secret trusts conflict with the
provisions of s.9 Wills Act 1837, which requires the will to be in
writing, signed by the testator and witnessed.
◦ This will not occur with secret and half-secret trusts. They are therefore
upheld because equity will not allow a statute to be an instrument of
fraud.
◦ A strict interpretation of the Wills Act would enable the secret trustee
to take the property absolutely, and deny the secret trust beneficiary
what is rightfully his or hers as was shown in McCormick v Grogan
(1869) LR 4 HL 82.
 Why are Secret Trusts and Half-
Secret Trusts enforced?
◦ This argument is not valid in relation to half-secret trusts, as it is then
obvious that the property is held on trust. Accordingly the other
reason given for enforcing secret and half-secret trusts is to ensure that
the interests of the beneficiaries are not extinguished, as with Re
Fleetwood (1880) 15 Ch D 594.
◦ Here Hall VC, the settlor, writes his will in a particular manner, or does
not revoke because he is relying on the trustee’s promise.
◦ Another justification is that a secret trust is not a will trust, it operates
outside the will, and is in effect an inter vivos trust rather than a trust
that arises on death.
 Why are Secret Trusts and Half-
Secret Trusts enforced?
◦ Accordingly, a beneficiary under a secret trust may even witness a will
that ultimately will benefi t him – as was seen in Re Young [1951] Ch
344 in relation to half-secret trusts.
◦ A beneficiary under a will cannot do this, as is provided in s.15 Wills
Act 1837.
◦ A different situation might arise if a fully secret trustee attests the will.
◦ A fully secret trustee would be caught by the provisions of s.15,
because on the face of the will he or she is the beneficiary and
therefore the purported legacy to him or her would be invalid.
 Why are Secret Trusts and Half-
Secret Trusts enforced?
◦ On the other hand, in the case of a half-secret trust it is clear that the
person named in the will is a trustee, and therefore it is probable there
can be no objection to him or her witnessing the will.
◦ Another problem is what happens if the secret trustee predeceases the
testator.
◦ According to Re Maddock [1902] 2 Ch 220, if a fully secret trustee
predeceases the testator, then the gift will lapse and the secret trust will
fail because there is no subject matter for the trust, as the subject
matter is the purported legacy to the secret trustee.
 Why are Secret Trusts and Half-
Secret Trusts enforced?
◦ However, because a half-secret trust, in the same way as any other
trust, will not be allowed to fail for want of a trustee, the predecease
of the half-secret trustee should not affect the trust.
◦ One problem however might relate to certainty – how are we to
identify the beneficiary if the trustee has died and the testator,
although still alive, is unable to communicate this?
◦ What happens if the beneficiary dies before the testator?
◦ One authority is the case of Re Gardner (No 2) [1923] 2 Ch 230.
◦ Here the court was of the opinion that the beneficiary acquires an
interest when the trust is created as an inter vivos trust.
 Why are Secret Trusts and Half-
Secret Trusts enforced?
◦ The property will pass to anyone who is entitled to it under the
beneficiary’s will or intestacy.
◦ However, this case is generally accepted to have been wrongly decided,
because although the trust has been created, the trust property is not
transferred to the trustee until the testator’s death.
◦ In other words the trust is not fully constituted until the testator’s
death, and therefore the beneficiary cannot benefit until the trust
property has been transferred to the trustee.
◦ The three certainties are also relevant to the institution of the secret
and half-secret trust.
 Why are Secret Trusts and Half-
Secret Trusts enforced?
◦ Again there needs to be certainty of intention (Kasperbauer v Griffi th
[2000] WTLR 333), certainty of subject matter (Ottaway v Norman
[1972] Ch 698) and certainty of beneficiaries.
◦ Certainty of intention is fairly straightforward, but Ottaway suggests
that subject matter could be more problematic as a residue of what the
trustee did not herself use could validly be the subject of the trusts.
◦ This turned on the facts of the case, but in practical terms, it is rare for
a secret trust to operate on this basis.
◦ No cases have addressed beneficiaries, and therefore it is presumed that
the same rules apply as with all other trusts.
COMMUNICATION
OF TRUSTS
 Communication of Trust –
Secret Trusts
◦ The testator must, before his or her death ask the legatee to hold the
property on trust for a third party, as was shown in Wallgrave v Tebbs
(1855) 2 K & J 313.
◦ This can take place before or after the execution of the will however.
Nevertheless communication by letter received after the death of the
testator is not sufficient, as this does not give the legatee the
opportunity to refuse to act.
◦ However, although the existence of the trust must be communicated
before the testator’s death, its precise terms (e.g. the identity of the
beneficiaries) can remain a secret.
 Communication of Trust –
Secret Trusts
◦ However, it seems that the communication needs to be in the
possession of the trustee before the settlor’s death, or that he or she
knows where to find it (e.g. in the form of a sealed envelope that has
been given to the trustee or one that he or she has been told where to
find, as with Re Keen [1937] Ch 236).
◦ In the case of Re Boyes (1884) 26 Ch D 531 however, the letter
communicating the precise terms of the trust were not found until
after the testator’s death.
◦ Communication of the intended beneficiaries’ identity was not held to
have been validly made and the trust failed for uncertainty of objects.
 Communication of Trust –
Secret Trusts
◦ The question of who receives the communication is also important
where there are multiple trustees, and communication is only made to
some of them.
◦ If the property is transferred to the trustees as tenants in common,
then those who have not been told about the trust will not be bound
by it, as is shown in Tee v Ferris (1856) 2 K & J 357.
◦ This is also true in relation to property that is to be held by the trustees
as a joint tenancy, if communication occurs after the will has been
written – the authority here is Moss v Cooper (1861) 1 John & H 352.
 Communication of Trust –
Secret Trusts
◦ If communication of the trust to the trustees occurs before the will is
written, all the trustees will be bound even if communication of the
trust was only made to some trustees – Re Stead [1900] 1 Ch 237.
◦ The reason for this is that where the trustees do not accept the
obligation until after the will is made, their promise has not induced
the will to be written.
◦ Where the promise is made before the will is made, then it may be
argued that it was the trustee’s promise (on behalf of themselves and
others) that induced the testator to draw up his or her will in the way
that he or she did.
 Communication of Trust –
Half-Secret Trusts
◦ In relation to half-secret trusts on the other hand, the testator must ask
the intended trustee to hold the legacy on trust for a third party before
or contemporaneously with the making of the will.
◦ This is based on the view of the courts in Blackwell v Blackwell [1929]
AC 318, Re Keen [1937] Ch 236 and Re Bateman’s Will Trusts [1970] 1
WLR 1463.
◦ A further requirement in relation to half-secret trusts is that the form
of communication made must not be contrary to the express
provisions of the will.
 The testator left £10,000 to two persons ‘to be held

Re Keen [1937] Ch 236

on trust and disposed of them to such person . . . as
may be notified by me to them or either of them
during my lifetime’. Before executing the will, the
testator handed a sealed envelope to the legatees,
which contained the name of the beneficiary, which
was not to be opened until after the testator’s death.
The Court of Appeal held that the will provided that
communication of the beneficiary’s identity should
occur in the future, i.e. after execution of the will,
whereas by his actions the testator had communicated
the identity of the beneficiary before executing the
will.
 Communication of Trust –
Half-Secret Trusts
◦ In this case (Re Keen) however, communication in accordance with the
will, i.e. after execution, would have been ineffective as communication
before execution of the will is required.
◦ It appears from Re Bateman that the terms of the trust must be
communicated before the date of the will, and not merely the fact of
its existence.
◦ A similar scenario can be seen in the case of Re Spence [1949] WN 237.
Re Spence [1949] WN 237 Here the will suggested that the testator would
have communicated his intention to all the
legatees, whereas in fact his intention had only
been communicated to some of them. Again,
the trust failed. As with secret trusts, if
communication of the trust is only made to
some of the trustees, then if they are tenants in
common, the ones who have not been
informed will not be bound. If they are joint
tenants, acceptance by one will bind them all.
 Communication of Trust –
Half-Secret Trusts
◦ Finally, it is necessary to consider what happens if the fully secret or
the half-secret trust fails.
◦ It is clear on the will that there was no intention for the half-secret
trustee to acquire the property beneficially.
◦ This means that it will revert back to the testator’s estate.
◦ In relation to a fully secret trust, it will depend on whether the legatee
knows that he or she is to hold the property on trust.
 Communication of Trust –
Half-Secret Trusts
◦ As has been shown, this does not need to be communicated before
executing the will, provided it is communicated before the testator’s
death.
◦ As in the case of Re Boyes therefore, the legatee knew that he was
supposed to hold the property on trust.
◦ When the trust failed, the legatee held the property on a resulting trust
for the testator’s estate.
◦ However if at the time of the testator’s death, the legatee has not been
informed that he is to hold the property on trust, then he will take the
property absolutely.
 Mutual Wills
◦ A particularly knotty problem in the context of wills is the law relating
to mutual wills.
◦ A mutual will arises where two people write wills leaving their joint
estate to an agreed third party, such as where a husband and wife agree
to leave their estate to their child.
◦ Each writes a will to this leaving their estate to the other, with a proviso
that after the spouse’s death, the joint estate of husband and wife will
be given to the child.
 Example:
◦ John writes a will leaving his estate to his wife Jane, and specifying that
should Jane predecease him, the estate will go to John and Jane’s
daughter Mary on John’s death. Jane writes an identical will. John dies,
and his entire estate passes to Jane. On Jane’s death, provided that Jane
does not revoke her will, Jane (and John’s) estate will pass to Mary. The
problem for the law to resolve therefore is whether Jane is permitted
to revoke her will after John’s death, and if so, what should happen to
her estate on her death – should it pass to Mary under the terms of
the original will, which Jane agreed not to revoke, or should it pass
under the terms of her new will?
 Mutual Wills
◦ The law’s solution to this problem has been to identify a trust as having
been created when the will is made.
◦ Accordingly, if a mutual will is revoked by one of the parties after the
death of the other, those who inherit under the later will, or the
survivor’s intestacy, will stand as trustees for the original beneficiary.
◦ However, clear evidence is needed of the intention to create a mutual
will, and it is rare that cases where a mutual will is alleged have been
upheld.
 Mutual Wills
◦ In the case of Ollins v Walters [2007] EWHC 3060 (Ch), Norris J
emphasises the need for there to be a contractual agreement between
the two testators that they will not revoke their wills in order for the
courts to construe that the will constitutes a lifetime inter vivos
constructive trust, as well as a trust that arises on death.
◦ The concept of the mutual wills is problematic in the law of trusts
because on the one hand it is a form of trust that deals with the
distribution of property on death.
◦ However, if that is the case, the survivor is entitled to revoke the will at
any point before their death.
 Mutual Wills
◦ On the other hand, if the mutual will is a form of inter vivos trust,
then it is an incomplete trust in that there is no intention for the
subject matter of the trust to be transferred until the testator dies.
◦ Furthermore, the concept of the mutual will is problematic because it
cannot easily be classified either as an express trust or as an implied
trust.
◦ On the one hand, there is a clear manifestation of an intention to
create a trust in the will document – it cannot therefore be said to be a
trust that arises because it would be inequitable to deny its existence.
 Mutual Wills

◦ On the other hand, necessity requires the trust to be constructive,

because once the will has been revoked, there is no intention to confer
a benefit on the original beneficiary, and therefore the law only
imposes a trust because otherwise it would be inequitable to allow the
surviving testator to revoke his or her will, when this opportunity was
not available to the deceased testator.
 Donatio Mortis Causa
◦ Another area of the law that fails to fit neatly into textbook
categorisations is the concept of donatio mortis causa.
◦ A donatio mortis causa is a lifetime gift made in contemplation of
death. However, the gift only takes effect in the event of the donor’s
death.
◦ In one sense therefore, a donatio mortis causa has the attributes of a
lifetime trust.
◦ However, the fact that is contingent upon the donor’s death means that
it also shares the attributes of a will.
 Donatio Mortis Causa
◦ However, the fact that is contingent upon the donor’s death means that
it also shares the attributes of a will.
◦ It is also necessary for the gift to be given to the donee – if there is no
transfer of the property, there can be no valid donatio mortis causa .
◦ Donatio mortis causa is often problematic for the law for a number of
reasons.
◦ Firstly, there is the problematic issue that the only evidence of the
donation is likely to come from the donee him or her.
◦ Much therefore depends on the donee’s credibility.
 Donatio Mortis Causa
◦ Secondly, the concept of donatio mortis causa interferes with the law’s
need for formality – the requirements of s.9 of the Wills Act 1837 for
example do not need to be complied with, with the result that
although the Wills Act was enacted as a means of preventing fraud,
the allowance of donatio mortis causa undermines this in a significant
way.
◦ What is also problematic is that donatio mortis causa undermines a lot
of the law’s other formalities.
◦ The transfer of land usually needs to be by deed, and the creation of a
trust over land must be in writing – Law of Property Act 1923, s.53 –
the only exception being the constructive trust.
 Donatio Mortis Causa
◦ However, given that there is a deliberate manifestation of an intention,
coupled by a deliberate transfer of the trust property to a specific
beneficiary, it is difficult to see how a donatio mortis causa might be
regarded as a constructive trust.
◦ It is therefore surprising that donationes mortis causa continue to be
upheld.
◦ Nevertheless, where there is clear evidence that a donation was made,
the courts cannot easily dismiss its existence.
Thank You! J
Any Questions?