What is a Secret Trust? A Comprehensive Guide to Its Legal Definition

Definition & Meaning

A secret trust is a type of trust established through a will, where property is given to a person with the understanding that they will manage it for the benefit of others who are not named in the will. This arrangement may seem like a straightforward gift, but it is based on an agreement between the giver (grantor) and the recipient (donee) to use the property for the benefit of a third party. There are two main types of secret trusts:

Fully secret trusts: The will does not mention the existence of a trust at all.
Half secret trusts: The will states that the recipient is to hold the property in trust but does not detail the terms or beneficiaries.

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Legal Use & context

Secret trusts are primarily used in estate planning and probate law. They allow individuals to provide for beneficiaries discreetly, which can be crucial in situations where the grantor wishes to keep their intentions private. Legal professionals often draft wills that include secret trusts to ensure that the grantor's wishes are honored while preventing potential disputes among heirs. Users can manage some aspects of creating secret trusts using legal forms from US Legal Forms, which are prepared by qualified attorneys.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A person writes a will leaving their estate to a close friend, with the understanding that the friend will use the assets to support a charity the person cared about. This is a fully secret trust, as the will does not mention the charity.

Example 2: A will states that a sibling is to inherit a property but does not specify the terms of how the property is to be used for the benefit of their children. This constitutes a half secret trust.

State-by-state differences

Examples of state differences (not exhaustive):

State	Key Differences
California	Recognizes both fully secret and half secret trusts, with specific requirements for evidence.
New York	Allows secret trusts but requires clear evidence of the intent to create a trust.
Texas	Has specific statutes governing the enforcement of secret trusts, emphasizing written evidence.

This is not a complete list. State laws vary, and users should consult local rules for specific guidance.

Comparison with related terms

Term	Description	Key Differences
Express Trust	A trust explicitly created by the grantor, usually documented in writing.	Unlike secret trusts, express trusts are clearly stated in legal documents.
Constructive Trust	A trust imposed by a court to prevent unjust enrichment.	Constructive trusts arise from legal disputes, while secret trusts are based on mutual agreements.

Common misunderstandings

What to do if this term applies to you

If you believe a secret trust may apply to your situation, consider the following steps:

Consult with a legal professional to understand your rights and responsibilities.
Gather any evidence or documentation that supports the existence of the trust.
Explore US Legal Forms for templates that can help you create or manage a trust effectively.

If the situation is complex, seeking professional legal assistance is advisable.

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Quick facts

Typical Fees: Varies by attorney and complexity of the trust.
Jurisdiction: Applicable in all states, but laws vary.
Possible Penalties: Enforcement issues may arise if the trust is not honored.