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Though less common than before, secret trusts can still be upheld in the court of law.

A trust is simply a relationship that exists when someone transfers property to another individual, who holds the property “in trust” for the beneficiary of that trust.

A common example of this is when a deceased individual, through their will, transfers their property to an adult to hold “in trust” until the beneficiary, usually the deceased’s child, comes of age. A secret trust occurs when this is done not in a will, but through statements and/or conversations between all the parties.

In the recent case of Bergler v Odenthal, released by the B.C. Court of Appeal the deceased passed away without a will, but had conversations with her common-law spouse, the niece and other family members which indicated that she wanted to leave her entire estate to her niece to support the niece’s return to school.

The spouse agreed that the deceased wanted the estate to go to the niece to support her education but argued that the niece would only become entitled to the estate after the spouse’s death.

The court held that, based on those conversations, the spouse had accepted the terms of the trust and that he was therefore required to transfer the estate to the deceased’s niece either upon his death or when he began a new relationship, whichever happened first.

The court also held that silence can be taken as acceptance.

Even if the spouse said nothing, as he claimed, if he did not reject the proposition outright, then he was deemed to have accepted the terms of the trust.

Since the spouse had remarried, the court ordered that he transfer the assets of the estate to the niece.

Given the secret nature of these trusts, disputes are common. The lack of written terms opens the trust up to the risk that a trustee will violate the secret terms of the trust, or that the distribution of the trust will be difficult or impossible to affect.

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