Existence of ‘secret trust’ rejected by High Court in contested estate case

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A recent case involving a contested estate heard by the High Court centred on the alleged existence of a ‘secret trust’. The inheritance of a £600,000 property left by the mother of the claimant would be determined on whether the trust had actually been established.

What is a secret trust?

A secret trust is one where a person makes a gift in their Will to another, but that person is intended to be a trustee and not a beneficiary, based on an agreement made outside of the Will. In other words, the Will does not refer to the existence of a trust at all. This is often done to keep the identity of the real beneficiaries private, even when the Will becomes a public document when a Grant of Probate is obtained.

What happened in the case?

Kim Mattingley, who died in 2020, had lived in the property with her mother, Joan White, who had moved in with Kim having helped to pay off the mortgage for her. Kim later signed over a 25-year lease allowing Joan to live there and prepared a Will in 2016 which left a 29% share of the property’s value to her sister, Karen Bugeja.

Kim’s daughter, Anabel Mattingley, inherited Kim’s residuary estate under the Will, including assets in Switzerland and Spain.

Anabel claimed that Karen had been verbally instructed by Kim prior to the making of her Will, in the form of a secret trust, to pass a 26.63% share of the house to her at a later date. Anabel argued that despite agreeing to this arrangement with Kim, Karen had subsequently failed to honour it. She therefore issued Court proceedings, demanding that Karen provide the specified share to which she believed she was legally entitled.

However, Karen denied that any such agreement had been made. Her legal representatives rejected the existence of a secret trust highlighting that the only instructions contained in the Will were to the effect that the property would go to Karen and be held for the benefit of Joan. Karen maintained that she intended to retain the share in order to protect Joan’s tenure in the property as the lease drew to an end.

The property was not directly left to Anabel in the 2016 Will due to her mother’s concerns that her ex-husband (Anabel’s father) would lay claim to it.

Anabel, a university student, told the Court that she had that “trusted” her aunt would support after her mother died and that the “secret trust” ensured that Karen knew a share of the property was to be passed on to her.

Karen told the Court that once Joan’s move to a care home has been completed and her care costs covered, she would consider passing some of the value on to Anabel, but on a discretionary basis. Karen also understood that in the event of Joan’s death, the property or any proceeds of sale would be split will be between her and Anabel but without any legal obligation for this to be done.

What was the result?

Having weighed the evidence, the Judge ruled that no secret trust existed and that Kim merely trusted Karen to ensure that Anabel was provided for from the property in the event of Joan’s death. The Judge stated that there appeared to be no clear reason why such a trust would have been made and that communications between Kim and her solicitors provided the most reliable evidence that her intention was for Karen to decide when and to what extent provision from the property be made to Anabel.

It was also decided by the Judge that Karen had not at any point made a promise to provide an interest for Anabel in the property or its proceeds in a specified way in the event of Joan’s death. Further, the uncertainties surrounding any conversations that had taken place between Kim and Karen on the matter also made the existence of a secret trust unlikely.

On this basis, the claim was dismissed.

This case demonstrates the difficulties that can arise with secret trusts.  To avoid expensive litigation as far as possible, professional advice should always be sought to explore how wishes can best be honoured in a Will. There are alternatives to secret trusts!