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Trusts • Express Private Trusts
TRUSTS#006
Legal Definition
In a semi-secret trust, the will makes a gift that is explicitly in trust, but fails to name the actual beneficiary of the trust. Even if the testator communicated the terms to the trustee, courts will not enforce the trust due to the Statute of Wills, and will not allow parol evidence.
Unlike a secret trust, there is no concern regarding unjust enrichment, because it is clear the "trustee" is not to take the property. As such, the gift fails, the named trustee holds the property in favor of the testator's heirs, and the property falls to a residuary, if any, or otherwise to intestacy.
Unlike a secret trust, there is no concern regarding unjust enrichment, because it is clear the "trustee" is not to take the property. As such, the gift fails, the named trustee holds the property in favor of the testator's heirs, and the property falls to a residuary, if any, or otherwise to intestacy.
Plain English Explanation
First, let's remind ourselves of what a secret trust is: A secret trust exists when a dead person gifts property to someone they've made a secret agreement with to pass that property along to someone not named in the will (like a mistress or secret child). In contrast, a semi-secret trust is one where the dead person explicitly states their intent to create a trust, but fails to identify a beneficiary, which is a necessary element of a valid trust.
Even though there may be evidence available of who they intended to be the beneficiary, the courts will view this as a failed gift, which means the property that would have been handed over to the trustee is, instead, absorbed back into the dead person's estate.
Even though there may be evidence available of who they intended to be the beneficiary, the courts will view this as a failed gift, which means the property that would have been handed over to the trustee is, instead, absorbed back into the dead person's estate.
Hypothetical
Hypo 1: Bob writes a will leaving $50,000 to his brother Sam "in trust for my favorite niece" but does not specify which of his many nieces is the favorite. Result: The gift to Sam in trust for the unspecified favorite niece would fail and the $50,000 would instead go wherever the rest of Bob's estate goes, whether by will or by intestacy laws.
Hypo 2: Dan's will leaves $100,000 "in trust" for his son's education but does not specify which of his three sons is meant to be the beneficiary. Result: This semi-secret trust fails due to lack of certainty over who the beneficiary should be. The $100,000 gift will instead be distributed wherever the rest of Dan's estate goes per his will or by intestacy.
Hypo 2: Dan's will leaves $100,000 "in trust" for his son's education but does not specify which of his three sons is meant to be the beneficiary. Result: This semi-secret trust fails due to lack of certainty over who the beneficiary should be. The $100,000 gift will instead be distributed wherever the rest of Dan's estate goes per his will or by intestacy.
