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TRUSTS - Creation of true secret trust

Tuesday, July 28, 2020 @ 9:23 AM  

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Appeal by the defendant from trial judgment finding that a secret trust was created and that he accepted the obligations of the trust to ensure that the estate of his deceased common law wife would go to the respondent, the deceased’s niece. The trial judge found that the appellant accepted the obligation shortly before his wife died in hospital. She did not have a will. There was evidence that the deceased told the appellant that she wanted her estate to go to the respondent, who did not have a career or a home and was hoping to go back to school. Following her death, the appellant received her entire estate as her heir on intestacy. He did not keep the estate assets separate from his own. The appellant argued that the trial judge erred in law in failing to analyze the question of whether he accepted the obligation which the deceased purported to impose on him. He argued his acceptance of a binding and enforceable obligation to carry out the deceased’s wishes could not have been reasonably inferred from the evidence.

HELD: Appeal dismissed. The trial judge was aware of the two elements necessary for a secret trust and analyzed the evidence before her in considering both. There was positive evidence from the appellant himself that he agreed to do what the deceased asked of him, including his acknowledgement that he knew she was relying on the trust that existed between the two of them. Although the appellant expressed some unhappiness at the deceased’s request, he admitted he told her he would abide by her wishes. The creation of the secret trust would have severed the joint tenancy in the property the spouses held in joint tenancy. Once the secret trust containing all the deceased’s assets came into existence, nothing was left to pass by the intestacy to the appellant.

Bergler v. Odenthal, [2020] B.C.J. No. 1012, British Columbia Court of Appeal, M.V. Newbury, D.F. Tysoe and D.C. Harris JJ.A., June 23, 2020. Digest No. TLD-July272020003