Secret Trusts Case Study: To Advise Executors As To Distribution Of Estate

Planning your life ahead is always a good decision, especially when it comes about your belongings and what is going to happen with them after your death. In this problem-solving question my task is to advise Jemma’s executors as to distribute her estate making sure her last will is fulfilled and everything is in accordance with the law.

Jemma Bond, Secret Service agent before passing away, left her will full of trusts, gifts and instructions how her estate should be distributed. According to the Section 9 of the Wills Act 1837 , there are specified conditions which must be met to make the will valid. After analysing her testament for the disposition of property, each of the criteria has been met and will is made in accordance with the law. The will was made in writing, the original version is stored with Maitland and Ashburner LLP, and her signature, in the presence of two witnesses, who also signed the will at the same time, gave the effect to the will.

Before her executors will be able to move to the part where Jemma’s estate will be distributed between beneficiaries and discuss all issues related to it, essentials steps have to be undertaken. Personal representatives have a duty to act in good faith with the same intentions, skills care and honesty as they would like to be treated . First, it is very important to get all information related to debts, fees, overpayments what Jemma owned, bills, regulate all taxes for Her Majesty’s Revenue and Customs, and value all assets, what is going to be useful during the distribution of the residue. It is very essential to do the whole paper work on the same beginning, this way they will avoid additional issues which could occur during the later stage of distribution of the estate. To avoid any liabilities and protect themselves as the executors, it is a good idea that deceased estates notice will be placed. This underline and shows that they did everything what they could to do to locate all creditors. According to Section 27 of the Trustee Act 1925 deceased estates notice unable beneficiaries or any other creditors to make a claim against personal representatives regardless to the lack of notice delivered to them before distribution of the estate. After at least two months from posting such a notice, they can proceed to next step which is distribution.

In the will, Jemma decided that particular gifts and trusts that she made are free of tax, it is worth mentioning that in this situation executors during the distribution should hand to the beneficiaries form R185 (trust income) what inform them about amount paid from trust.

Secret trust is the first trust we can spot in this solving-problem question, it is a trust which is not included in the will, but it will still be distributed as it has been defined in the testament for the disposition of property. According to the Section 9 of the Wills Act 1837 , secret trust is an exception because all of the dispositions distributed by the will must be given a signature by the testator or testatrix in presence of two or more witnesses. There are requirements which have to be met to make secret trusts valid, which has been set out in Blackwell v Blackwell . Lord Chancellor Viscount Sumner has specified that these essential elements are intention, communication and acceptance. Before Jemma passed away, she communicated her intention to create the trust with Mary, asking to follow the instructions saved on the tablet where all details were stored. Mary replied that she has received the message and accepted the instructions, meeting all of the elements required for secret trust to be valid . In addition, each trust has to comply with three certainties . One of them has been already mentioned above, which is certainty of intention. It might be argued that the word ‘trust’ used in this context is not certain enough as in Re Adams & Kensington Vestry , but principle established in Parkin v Thorold , which is ‘Equity looks to the intent rather than the form’ and decision in Harrison And Another v Gibson And Others should make it less complex for judge to decide whether or no Jemma intended to make a trust in benefit of her family and friend rather than gift for Mary. As mentioned before the beneficiaries of this trust are Jemma’s parents and her flatmate what was outlined in the instructions given to Mary, thus there is enough evidence for certainty of object. Last requirement which has to be met is certainty of subject matter, in the will Jemma clarified that the property which is being hold on trust by Mary is property what she will receive in the will. Point 5.1 in Jemma’s will says that she gives her all the residue of her estate out of which shall be paid funeral and testamentary expenses and debts. It may be arguable that in this case the half of residue is not certain enough as it is unknown what is included in the residue, if it contains properties which were not mentioned in the will, real estates or lands, it is going to be difficult to differentiate between two halves. In case Palmer v Simmonds Sir Richard Torin Kindersley held that bulk of the residue is not enough certain to make the trust valid. From the other hand if residue will be considered as net balance of the estate and only include to funds, then it is going to be possible for the trustee to distribute the money between beneficiaries. I believe this fully secret trust met all criteria required to be enough certain and Jemma’s executors should feel legally binded to distribute the residue.

Another trust to consider in the will, is half secret trust. The difference between fully secret trust and half secret trust is mainly in communication and half secret trust is partly mentioned in the will but the terms does not need to be known for everyone. Terms of half secret trust must be communicated before or at the time of the execution of the will, and in this situation they were. I know this because the letter with the date before of the execution of the will, which contained information that it was already discussed between settlor and Major A Keswick, was attached to the will . Charlie Robinson is the beneficiary of this trust and at the same time he is also a witness to this will. According to the Section 15 Wills Act 1837 , witness of the will cannot be beneficiaries and any gift form them will fail. In Re Young court held that the secret and half secret trusts operates outside the will and Section 1 Wills Act 1968 enabled witnesses to be beneficiaries of the will at the same time. It might be argued that testatrix used precatory word ‘wish’ in the enclosed letter, what could not satisfy certainty of intention, but it has already been satisfied on the first letter where she clearly stated to give the property that she will leave him as a gift in the will. Another issue which can arise in this trust is uncertain subject matter. Jemma did not leave enough details about the car and unfortunately only the brand of the car might be not certain enough. It is unknown how many Aston Martins she had, if she had only one, it will be the subject to decide by court whether or not the trust is valid, but it is worth mentioning the equitable maxim which states that ‘Equity will not complete an imperfect gift’.

Third trust in this will is discretionary trust, where Jemma decided to leave her watch, mobile phone and diamond jewellery for her friends on trust to both executors. It might be mistaken with the power of appointment but in this case the settlor directed the trustees about her distribution preferences and gave enough details to verify beneficiaries. Issue which might arise in this trust is the fact that certainty of subject matter is not enough certain. Settlor did not specify exactly which watch and mobile phone has to be held on trust. If Jemma was in possession of more than only one watch and mobile phone, then there is no clear separation and trust will fail as it was in Re Goldcorp Exchange Ltd

Last distribution in the will is an absolute gift where testatrix intended to transfer the legal title of personal chattels defined by Section 55 Administration of Estates Act 1925 , excluding specific gifts, to her parents and nobody else but her parents jointly. Wording used in this distribution played an important role, if Jemma did not use word ‘jointly’, it could be hard to separate properties for each beneficiary.

To conclude, all efforts has been put to make sure that Jemma’s executors are advised with accordance to the law and concerned about any issue which might arise during the will distribution.