Secret and Semi-Secret Trusts

Secret trusts occur when a will leaves a gift to a beneficiary who has promised to use it for another person's benefit, allowing the court to enforce this promise through a constructive trust. Semi-secret trusts arise when a will indicates a trust exists but does not name a beneficiary, typically resulting in the gift reverting to the estate instead of being enforced.

A testator leaves $10,000 to their friend, with the understanding that the friend will use it to benefit the testator's child, although the will does not mention the child. Upon the testator's death, the court imposes a constructive trust on the $10,000, requiring the friend to use it for the child's benefit. In contrast, if the will simply states that the friend is to hold the money in trust without naming a beneficiary, the $10,000 would revert to the estate.

Trusts in disguise: secret trusts enforce promises, while semi-secret trusts leave gifts hanging!

Exams may present fact patterns where the intent of the testator is ambiguous, leading students to misidentify whether a trust is secret or semi-secret. Students often overlook the implications of naming a beneficiary or the lack thereof.

Questions typically involve a will with ambiguous language regarding a trust, testing the candidate's ability to distinguish between secret and semi-secret trusts and their respective outcomes.