Most will disputes follow either one or other (or sometimes both) of two paths.  Either someone argues:

(1) that a will is not valid – that for some reason it is not a reflection of the deceased’s actual wishes.  This is often because it’s argued that they lacked mental capacity at the time that the will was made, and/or

(2) that an estate of someone who has died does not make “reasonable financial provision” for them.  This is a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

But, occasionally there are other arguments that can arise over an inheritance.

One of the more unusual examples is a case that has been reported in the media recently involving an alleged “secret trust”, which led to a battle in the High Court over the £6.4 million estate of Alan Lorenz.

Mr Lorenz died in 2021 at the age of 78. After his death a claim was brought by his brother, Robert, supported by his siblings Anthony and Vanessa. The claim was against the sole beneficiary of their brother’s estate, Alan’s civil partner Sheila Caruana.

Robert argued that in previous wills his brother had made provision for him and his siblings.  All 3 agreed that the only reason that the deceased’s final will excluded them, and why he entered into a civil partnership shortly before his death with Sheila, was to save inheritance tax being payable on his estate.

Robert’s barrister argued that Alan Lorenz had “a history of aggressive tax avoidance and indeed an abhorrence of paying tax”.

Robert said that his brother had assured him verbally that a share of the estate would come to him and that although the will was silent about it, his brother had created a legally binding ‘secret trust’.

• What is a secret trust?
• How do you prove a secret trust exists?
• What happened in the case?

So, what is a secret trust?

They are an historic anomaly.  In Victorian times “respectable” men who had a mistress and illegitimate children wanted to be able to provide for them secretly after their death.  A secret trust is a legal mechanism that provided an opportunity for them to maintain their respectability after death whilst still providing for those that they felt a moral responsibility towards.  In a fully secret trust, the deceased’s will does not reveal that any trust exists at all.

In fact, it conceals the fact that there has been an earlier agreement between the maker of the will and one or more individuals (a ‘trustee’) made during the deceased’s lifetime.  The will maker effectively directs their trustee to hold specified money or property subject to certain duties to use and protect it for the benefit of others (for example a mistress and illegitimate children).  Obviously, there was a huge element of trust involved between the deceased and their trustee.

How do you prove a secret trust exists?

In order to prove that a secret trust has arisen there must be evidence of: –

1. The intention of the deceased to impose an obligation on the trustee in respect of someone else.
2. Communication of that intention to the trustee.
3. An acceptance of that obligation by the trustee.
4. On the basis of that acceptance proof that the deceased made the disposition.

There must be certainty as to the language used, the subject matter of the secret trust and the trustee and the identity of ultimate beneficiaries of the secret trust.

If these elements cannot be proved, then the claim that a secret trust has arisen will fail.

What happened in the case?

In the case involving Alan Lorenz’s will, his civil partner Sheila Caruana told the court that Alan had indicated his wishes to her, but that he had left the matter entirely to her to decide – any obligation was purely moral rather than legal.  The judge agreed with Sheila and discussed Robert’s claim.

The moral of this story is that a relying on verbal assurances is a very risky (and costly) way to proceed. It seems unlikely that Sheila will feel any generous impulses now towards Robert or his siblings.

Sarah Young – Solicitor & Director