Tuesday, 12 August 2014

Lucien Freud and secret trusts

You are a rich man who has lived a life that's been lots of fun but not necessarily neat and tidy. You're not a mean person and so you want to provide for various mistresses, illegitimate children and so on. But you want to be discreet. That's easy enough when you're alive - just give them money. But what about when you are dead? One obvious answer is: leave them money in your will. But a will is a public document: all the mistresses and children will be able to find out about each other - and to find out how much you loved each of them in cash terms. Let's say you want to avoid embarrassing people in that way. How do you do it?

Obviously this is not just a problem for people with less than straightforward personal lives. Perhaps you want to leave money to an unpopular cause without embarrassing your relatives. Or perhaps you just want a bit of privacy at that particular moment in your, erm, death.

English law provides a solution: the secret trust. This comes in two flavours, the fully secret trust and the semi-secret or half-secret trust. In short, your will says 'I leave money to Mr X' but you have previously made Mr X sign a deed saying that when he gets the money, he will hold it on trust for whoever it is you really want to have the money. (In a semi-secret trust, the will says 'I leave money to Mr X on trust' but without saying who the trust is for.)

The late Lucien Freud has just provided the world with a case about secret trusts. The case provides a good example of a half secret trust (his 2004 will) and a fully secret one (the 2006 will, which was his last one): for whatever reason (perhaps not unapropos, the judgment records that he lived a 'full' life and his children numbered "at least 14") Freud felt that a secret trust of some sort was a good idea.

Of perhaps more general interest is the fact that Freud's "net United Kingdom estate was sworn for probate at just under £96m, and his residuary estate after payment of legacies and inheritance tax but before administration expenses has been estimated by the Claimants to be worth about £42m" (his residuary estate is subject to the secret trust). So there is really quite a lot of money which Lucien Freud has left to secret beneficiaries. We may never know who they are.

The bit I found most surprising in this whole story was the statement that Freud spoke to his solicitor almost daily for 20 years. It's not the most rock 'n' roll way to spend your money. You can find a portrait of the solicitor in question here. (The portrait is by Catherine Goodman, not by Lucien Freud, but Goodman is very good too.)

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