Would you like to leave a gift to someone in your will but not name them?

Would you like to leave a gift to someone in your will, but do not wish to name them?

Secret Trusts vs Discretionary Trusts

Once a will has been submitted to the Probate Registry, the will becomes a public document and can be viewed by anyone.  If there is someone you would like to leave a gift to, but you do not want anyone to know you have left a gift to them, you can do this by way of a trust. The individual who makes a will is known as a testator or testatrix and the individual who looks after the gift is known as the trustee.  There are three types of trust you could use:

• Fully Secret Trust
• Half Secret Trust
• Discretionary Trust

However, each trust has its own advantages and disadvantages.     

Fully Secret Trust

A Fully Secret Trust arises when a testator makes an absolute gift in their will to a beneficiary, but they have asked the beneficiary to hold the money on trust for someone else.  The named beneficiary in the will becomes the trustee of the gift to the intended beneficiary. 

For the Fully Secret Trust to be valid the testator must have communicated, whether verbally or in writing, to the trustee that they intend to leave the gift to someone else and the trustee must agree to the terms of the trust.  The testator can communicate the terms of the trust at any point in their lifetime to the trustee. 

An issue which can arise with a Fully Secret Trust, is that the beneficiary named in the will could decide to not follow the wishes of the testator and keep the gift for themselves. If the testator only appointed one trustee, they could deny any discussions took place.  

Half Secret Trusts

A Half Secret Trust arises when the testator makes a gift in their will which indicates a trust has been created but does not confirm where the money is to be directed.  For example, “I give the sum of £100,000 to A" to hold on trust and to be distributed as discussed”.   

For a Half Secret Trust to be valid the terms of the trust must have been communicated to the trustee before the testator executes the will and again, the trustee must agree to the terms of the trust.

As the will indicates the gift is not intended for ‘A’ there is less chance of the wishes not being carried out.  However, if the trustee is not aware of the trust or it comes to light that the communication of the trust came after the execution of the will the trust will not be valid and will fail. 

Discretionary Trusts

A gift can be left on Discretionary Trust for a beneficiary.  The trustees would hold the gift on trust and would be guided by a letter of wishes provided by the testator with guidance as to when payments should and should not be made.  The letter of wishes would confirm who the testator would like to benefit from the gift and can state the trustees should wait to pay the money to the beneficiary until such time they believe they are ready to receive the gift.   

As the gift is discretionary and the letter of wishes is not legally binding the trustees do not have to give the gift to the beneficiary.  However, the trustees should not deviate from the letter of wishes unless they strongly believe there is a good reason not to follow the guidance provided by the testator.  

If you have any queries in relation to anything discussed above, please contact one of our will specialists. 

I am based in our Colchester office and can be contacted on 01206 217350 or chloe.hammond@birkettlong.co.uk