Secret Trust Law and Legal Definition

Secret trust is a trust in which property is left to a person under a will on the understanding that they will hold the property as trustee for the benefit of beneficiaries who are not named in the will. It appears as an absolute gift to another although the donee has orally agreed with the grantor that he or she is to use the property for the benefit of some third party. There are two types of secret trusts: fully secret trusts and half secret trusts. In fully secret trusts, the will is totally silent as to the existence of a trust and in half secret trusts the will provides that the legatee is to hold the property on trust, but does not specify the terms of the trust or the beneficiary.

Courts admit evidence of the promise made by the donee to prevent unjust enrichment and enforce it by imposing the remedy of a constructive trust upon the reneging trustee.