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The essay discussed the principles of trust and equity in relation to gifts mentioned in the given scenario.
The £1,000,000 gift
Nelson’s will provides that he leaves £1,000,000 to his trusted companions, Laz Carr and Matt Lowe, absolutely. The issue is whether Horatia can claim the execution of the trust in her favour.
This involves a secret trust, where the testator wishes to benefit someone who cannot be named in the will. A secret trust can be created by the testator by taking a into confidence a trusted confidant who is asked to act as a secret trustee. The confidant can receive a gift under the will and this can be done for the benefit of an unnamed beneficiary under a secret trust. The question is whether the trust is enforceable by the unnamed beneficiary. As the gift is held on trust in equity for the benefit of the unnamed beneficiary, such a trust can be enforced under equity. In such a case, equity will also not let the use of statute for fraud and for that purpose the trustee is not permitted to claim beneficial or absolute entitlement to the gift. A secret trust creates an equitable obligation, when communicated to an intended trustee during the lifetime of the testator.
This is a case of a fully concealed trust. A fully secret trust is an obligation which is fully concealed on the face of the will. According to Ottaway v Norman, three conditions are to be satisfied in a fully secret trust; these are intention, communication, and acceptance. Intention should be communicated to the trustee in the lifetime of the testator and the intention should be clear in setting out a legal and not a moral obligation. The trustee should accept the trust obligation during the testator’s lifetime. This last point is relevant to Matt Lowe, who claims that he was not told of Nelson’s wishes until after Nelson’s death. If the terms of the secret trust are not communicated to the trustee during the lifetime of the testator, the secret trust would fail. However, in case of two or more legatees, information to one would suffice as information to all if two conditions are met with: (a) communication made before or at the time of the execution of the will, and (b) property is taken as joint tenants. If the property is left to two legatees as in this case as £1,000,000 to both absolutely, this would be the case of joint tenancy. In relation to this gift, Carr and Lowe were to hold the £1,000,000. If both conditions are met in the case, as it is here, then the trust will be valid. The information was given to Carr prior to execution and the gift was left to Carr and Lowe as joint tenants.
Therefore, to conclude this part, Horatia can claim the execution of the trust in her favour as a fully secret trust.
Nelson’s will provides that he leaves his home, Merton House in London to Jack Tar, on trust for purposes that have already been communicated to him in the certain knowledge that he will carry out these instructions. In relation to this gift, Nelson met with Tar and told him that Merton House was to be held in trust by him for the benefit of Horatia. The issue is whether this creates a valid trust and whether Jack Tar is bound to follow the instructions of the trust.
This situation involves the existence of an half-secret trust, which refers to a trust existence of which is revealed, but the terms are kept secret. Thus, in this case where Nelson’s will provides that he leaves Merton House to Jack Tar, on trust for purposes that have already been communicated to him which is that Merton House was to be held in trust by him for the benefit of Horatia, this is a half-secret trust. The conditions for the validity of the half secret trust are as follows: intention of the testator, communication to the legatee or the devisee, and acceptance by the latter to the terms of the trust. It is also important that the trust does not merely seek to create a moral obligation on the devisee, but a legal obligation to follow the terms of the trust. In this case, there is a legal obligation because the terms of the trust clearly note that the trust is for a purpose already communicated to Jack Tar, in the certain knowledge that he will carry out these instructions. If the devisee has been informed of the purpose for which the trust is being created, and he accepts the place of devisee knowing this, then the trust is binding.
It is on the issue of time of communication of the trust terms to Jack Tar that some problem may arise for the trust to be binding because as per the authorities, the testator must communicate the terms of the trust before or at the time of the execution of the will and the devisee or trustee should accept (expressly or by acquiescence) the obligation to hold on trust before or at the time of the execution of the will. Clearly then, the requirement of the communication is before or at the time of execution, but in this case, Nelson first executed the will and then met with Tar and told him that Merton House was to be held in trust by him for the benefit of Horatia. Therefore, the requirement of communication is not met with in this case. The principle behind this requirement is that the testator is not permitted to reserve the power to himself for making unwitnessed dispositions for the future. Another important point is that agreements related to land cannot be made orally and the testator and intended trustee cannot be enforced. Therefore, this trust is not valid and consequently, Tar can hold the property on resulting trust for the testator’s estate.
Nelson’s will provides that he leaves a large sapphire to his good friend, Emma, absolutely. In relation to this gift, a week after executing his will, Nelson told Emma
that she was to hold the sapphire on trust for the benefit of Horatia’s fiancée, Captain Salt. Before Nelson’s death, Salt is killed in a boating accident. Horatia is the sole beneficiary of Salt’s estate. The issue is whether a valid gift has been created.
As Salt is killed in a boating accident in the lifetime of the testator, the question arises as to whether the trust was perfected. In the event of the intended beneficiary dying during the lifetime of the testator, the trust fails because the trust is only perfected at the moment to the testator dies, this is the settled position that in the event that the beneficiary dies in the lifetime of the testator, the gift reverts to the residuary Estate of the testator to be redistributed, which may be done as per any provision in the Will for the gift to be redirected to alternative beneficiaries. In this case, will also contained a provision whereby the subject matter of any specific gift that failed, would pass to the National Museum of the Royal Navy.
The gift may also fail on the question of certainty as to subject matter. Certainty of subject matter means that the trust property should be sufficiently segregated from other property so that the trust fund is certain and is not left to any doubt, confusion or ambiguity. Therefore, unless the sapphire is clearly identified and earmarked by Nelson, there could be uncertainty of subject matter and the gift may fail on that account, in which case there is no claim by Salt estate on the sapphire. When a trust is created for chattels, trust can be valid only when the specific property is individually identifiable.
To conclude this point, Horatia will most likely not be entitled to claim this gift because the death of Salt prior to the testator means that the gift has lapsed.
Witnessing the will
The final issue is whether the advice to Horatia would differ if she had been one of the witnesses to Nelson’s will. Although Wills Act 1837, s.15 does preclude a witness from being a beneficiary in relation to a gift in a will that has been witnessed by them, this principle does not apply to secret trusts. This was the position taken by the court in Re Young, where the court held that secret trust operates outside the will, so that it becomes irrelevant to the validity of the trust if the intended beneficiary under the secret trust, as distinct from the will, has witnessed the will. In Re Young, the court allowed the gift in the will to be upheld even though the beneficiary witnessed it because the beneficiary was not benefitting directly under the will. The principle is that the secret trust works separately from the will and therefore is allowed to stand even if witnessed.
Blackwell v Blackwell  AC 318. McCormick v Grogan (1869) LR 4 HL 82. Ottaway v Norman  Ch 698. Re Baillie (1886) 2 TLR 660. Re Boyes (1884) LR 26 Ch D 531. Re Gardiner (No.2)  2 Ch 230. Re London Wine Co (Shippers) Ltd  PCC 121. Re Rees  Ch 204. Re Swonden  2 All ER 172. Re Young  Ch 344. Legislations Law of Property Act 1925 Wills Act 1837 Books Hudson A, Equity and Trusts (9th edn, Routledge 2016). Hudson A, Equity and Trusts (Routledge 2017).
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