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Secrets and Trusts

closed door They sound like something that would feature in the plot of Downton Abbey, and yet it seems that secret trusts are alive and well in the 21st century.It was revealed recently that the artist Lucien Freud, who died in 2011 leaving an estate worth £96 million,left his residuary estate in a secret trust so that he could keep the beneficiaries anonymous.

A Will becomes a public document once the Grant of Probate has been obtained. For most of us this does not matter since to whom we leave our assets is of no interest except to the recipients.

Secret trusts were popular in the 19th century as a way to leave money to an illegitimate child or a mistress, without a wife finding out. Now it seems they offer a solution for those whose lives are gossip column fodder, with secret trusts offering a way to keep their posthumous affairs out of the public eye.

There are two sorts of secret trust – a fully secret trust, where no mention of the trust is made and the gift appears on the face of it to be to the person named in the Will, for example “£20,000 to my brother Daniel.” The other sort of secret trust is a half secret trust. The existence of this type of trust is flagged up in the Will, with typical wording along the lines of “£20,000 to my brother Daniel for purposes that I have made clear to him.”

A half secret trust is only valid if the trustee or trustees are told at the time the Will is executed, or beforehand that they are holding the assets on trust. With a fully secret trust however the trustee can be informed of his role at any time.

Freud’s Will appeared to leave the residue of his Estate to his solicitor and one of his daughters. However it was revealed that the Estate was actually being held by them under a secret trust. They have refused to disclose the beneficiaries.

One of Freud’s illegitimate sons, who had not been provided for, challenged the Will, claiming that the trust was a half secret trust and not a secret trust. He had hoped to show that this half secret trust was invalid and that the estate was partially intestate so that he could claim a share of the estate under the intestacy rules.

The challenge fell at the first hurdle however as the wording of the relevant clause made it clear that the trust imposed was fully secret, meaning that Freud’s secrets really have gone to the grave with him.

By Angharad Lynn, 19th November 2014.