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Secret Trust
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A trust where, to a stated beneficiary, the donor secretly communicates that he/she holds title in trust for another.
The 4th Edition of Halsbury's Laws of England defined a secret trust as follows:
"A secret trust is created where property is in law given to a person either absolutely or upon an indefinite trust, but there has been an undertaking by him or an understanding between him and the donor (settlor), not clothed with the requisite formalities for the creation of a legal trust, that it is to be applied for the benefit of some other person or object."
Secret trusts have great potential to be used for fraudulent purposes so the law seems to be tentative and in a state of subtle but constant evolution thereto.
In a recent case, Champoise, the British Columbia Court of Appeal stated the law:
"A secret trust arises where a person gives property to another, communicating to that person an intention that the property be dealt with in a specific way upon the happening of an event, and the donee accepts the obligation. The essential elements are the intention of the donor, a communication of the intention to the donee and acceptance of the obligation by the donee.
"In addition to these requirements for an enforceable secret trust, the three certainties necessary for any express trust must be exhibited; the words making the trust must be imperative, the subject of the trust must be certain, and the object or person intended to take the benefit of the trust must be certain. Further, those certainties must be exhibited at the time the trust is created."
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This term applies to the following areas of law and categories;