The Risks of Private Promises in Your Will

18 September, 2025 5 minutes reading time

A Cautionary Tale from Lorenz v Caruana

Secret trusts, a unique and longstanding feature of English law, continue to spark debate and present complex challenges in estate planning. These trusts allow a person to leave property to a secret trustee in their Will, with a private, unwritten understanding that the property will benefit another person, the beneficiary. The recent Court of Appeal decision in Lorenz v Caruana highlights the legal complexities and risks associated with these arrangements.

What are Secret Trusts?

A secret trust functions outside the formal requirements of the Wills Act 1837. This is its main feature and also its greatest weakness. There are two types:

1. ‘Fully Secret’ trusts do not mention a trust at all. The gift appears to be an outright bequest to the named individual, who has privately agreed to hold the property on trust for another.

2. ‘Half-Secret’ trusts stipulate that the property is to be held on trust, but the specific terms and the identity of the beneficiary are not disclosed. The Will might say, “I leave £X to Y for purposes I have communicated to them before my death.”

To be valid, a secret trust requires three elements:

1. The testator must have intended to impose a binding obligation on the trustee, rather than merely expressing a wish.

2. The testator must have communicated the trust’s existence, including the terms of the trust, during their lifetime.

3. The trustee must have accepted the obligation, either expressly or by implication (e.g., through silence). 

The Pros and Cons of Secret Trusts

The main benefit of a secret trust is the confidentiality it provides. A Will becomes a public document after a grant of probate is issued, so a testator may use a secret trust to discreetly provide for a person they do not wish to be publicly identified with, such as a partner from an extramarital relationship or an illegitimate child.

Despite this, the disadvantages are significant and should be carefully considered.

1. Difficulty of Proof: Due to their very nature, secret trusts are extremely difficult to prove, as the evidence often relies on conversations and recollections, which can be inconsistent or unreliable.

2. Risk of Failure: If a secret trust is not clearly communicated or proven, the trustee might keep the property for themselves, undermining the individual’s intentions. When a half-secret trust fails, the property generally reverts to a resulting trust for the estate’s residuary beneficiaries, not the trustee.

3. Potential for Litigation: Disputes over secret trusts often result in expensive and lengthy court conflicts, causing family divisions and diminishing the estate’s worth.

The Lorenz Case

Millionaire Alan Lorenz, who died in 2021, intended to provide for his siblings, leaving half of his estate to them and half to his partner, Sheila Caruana. He disliked paying tax and, to avoid inheritance tax, entered a civil partnership with Caruana. This created a spousal exemption. His final Will left his entire £18 million estate to her. However, his siblings sued, claiming he had created a secret trust, alleging he had a verbal agreement with Caruana to hold part of the estate for them, supported by solicitor notes mentioning instructions and plans for gifts.

The Initial Rulings

1. The Master of the High Court initially permitted the siblings’ claim to proceed to trial, determining that it had a “realistic prospect of success.”

2. A High Court judge overturned the Master’s decision, concluding there was no reasonable prospect of establishing a secret trust. The judge found that Lorenz’s intention to avoid inheritance tax, combined with the absence of clear, written instructions, undermined the siblings’ claim.

3. The Court of Appeal overturned the High Court judge’s ruling, concluding that the siblings’ case was strong enough to proceed to a full trial. The court emphasised that a ‘mini trial’ on limited evidence was improper and that a full hearing was necessary to properly assess the facts.

Lessons from the Lorenz Case

The Lorenz case illustrates the uncommon and risky nature of secret trusts. If a secret trust fails—for example, if the secret trustee dies—the intended beneficiary might never receive the gift. Disputes can also arise if the secret trustee denies the trust’s existence and claims the gift for themselves. Given the nature of these gifts, evidence may be limited or absent. This makes it difficult for the final beneficiary to prove the trust’s existence.

When confidentiality is essential, those preparing Wills might consider alternatives. These include establishing discretionary trusts with private letters of wishes to trustees. Unlike a Will, these do not become public records.

Ultimately, the Court of Appeal’s decision in Lorenz v Caruana offers some hope for claimants of secret trusts. However, it does not serve as a decisive endorsement. The case highlights the enduring principle that, in estate planning, clarity is generally better than secrecy.

Please do not hesitate to contact us if you have any questions about your Will or other estate planning matters. We are here to help. 

Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.

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