10 May Secret Trusts and Disappointed Beneficiary Claims
Recently, the Courts have considered an area of law which is growing in popularity in respect of disappointed beneficiaries who do not receive what they believe they should from a deceased’s estate. The case in question highlighted several areas where special care needs to be taken by both a Testator and any beneficiary who believes someone is agreeing to leave something to them.
Disappointed Beneficiary Claim
A lady died leaving a valid Will made the year before she died. Her estate was substantial and included jewellery which had been valued in 2017 between £150,000-£200,000. The Will left the whole estate to her close friend who had cared for her during her terminal illness. The deceased’s niece made a claim that the jewellery had always been intended to be left to her and that it was either held on a secret trust for her or that the friend was unable to deny the jewellery was held by him for her benefit. She claimed a Skype conversation took place between her, the deceased and the friend where the wish for the niece to receive the jewellery was communicated to the friend by the deceased.
The important points for the niece to prove were that there was an intention by the deceased to create a trust, that the trust had been communicated and that she had accepted the trust. The Court was potentially faced with the difficult choice as to whether the deceased intended to create a trust or was it a moral or family obligation. Was the sanction for non-compliance with her wishes to be the power and authority of the Court or simply the conscience of the beneficiary? If the authority of the Court was the deceased’s intended sanction then a trust was created, but if it was a matter of conscience then there was no trust but a moral obligation.
The niece’s claim failed as, on the facts before them, the Court decided it was highly improbable that the purported conversation about the jewellery had ever taken place and therefore no secret trust could have been created. However, how different would the outcome have been if they had evidence before them that the jewellery had been discussed? What would their decision have been? What did the Testator mean to do? How should they or should they be involved in enforcing the Testator’s wishes?
Secret trusts can be created if the relevant conditions are met and can be created outside of the actual Will document. Both testators and beneficiaries need to be careful to ensure what they say and what they mean are not two different things. Conversations can be construed very differently by various parties and leave room for doubt.
Talk to us about ensuring your Will is up to date and correctly includes your intended beneficiaries. You may wish to include gifts or legacies within your Will to ensure your intended beneficiaries receive them. If you have had a conversation which you believe could leave room for doubt about whether a secret trust has been created, then it is better to clarify this now, rather than potentially leaving problems behind when you have gone.