Maria Mammarella died on 18 October 2014; leaving a will dated 4 April 2014 appointing her daughter Marilena and Marilena’s husband, Donald, as joint executors and trustees. Maria left a one-fifth share in her estate to each of four other daughters Sylvia, Lucia, Lynette and Marilena; the remaining fifth share was left to her granddaughter Stephanie. (the share).
Probate of Maria’s will was granted to the executors on 15 January 2015. The total net value of the estate was over one million dollars.
At the time Maria made her will Stephanie’s mother Rita was bankrupt; to be discharged on 24 December 2016.
When a person is declared bankrupt, divisible property – including the bankrupt’s house, shares, vehicles (worth more than the threshold amount), vest in the bankrupt estate for the benefit of creditors.
Additionally, after-acquired property – including an interest in a deceased estate vests as soon as it is acquired by the bankrupt.
Rita (the plaintiff) claims that her daughter Stephanie (the defendant), received by the funds from the estate on trust for her. The alleged trust is said to have been a ‘secret trust’.
A secret trust arises when a testator tells a person (the donee) that they are to be given property on the testator’s death to hold on trust for a third party, to which the donee agrees. Despite its informality if the following elements are present a secret trust can be established and will be enforced by the court:
• the intention of the testator to subject the donee to an obligation in favour of the beneficiary.
• communication of that intention to the donee.
• the acceptance of the obligation either expressly or by acquiescence.
It is, therefore, a trust which the testator intends to create, that the court will enforce by requiring the donee to hold the property for the other’s benefit.
Rita submitted that she asked Maria to put her share into a trust with Stephanie until the period of bankruptcy was over as she was worried, she would lose her inheritance to creditors.
Following the establishment of the alleged secret trust, the relationship between Rita and Stephanie deteriorated; with Stephanie obtaining a restraining order against her mother.
Stephanie submitted that at no time did Maria indicate to her that a bequest had been made to her in the will and that it was to be held on trust for Rita and
“that the funds were to be given to my Mother once she had been discharged from bankruptcy.”
Stephanie submitted that she assumed her mother was endeavouring to manipulate her into agreeing to her request
“I may have said to her, okay, but only to stop her pestering me.”
The court found that Rita failed to establish that Maria had an intention to impose any obligation on Stephanie at all; and was satisfied that there was no secret trust and that the bequest as made in the will was intended to be absolute.