Legal Definitions - cestui

Cestui refers to an individual who is designated to receive a benefit from a trust or an estate. It is an older legal term, often used interchangeably with "beneficiary," particularly when describing the person for whose benefit a trustee holds property or manages assets.

Here are some examples to illustrate this concept:

• Example 1: Educational Trust

  A wealthy aunt establishes a trust fund to cover her niece's future university tuition and living expenses. The aunt appoints a professional financial institution as the trustee to manage the investments and disburse funds according to the trust's terms.

  In this scenario, the niece, who is the person intended to receive the financial benefits for her education, is the cestui. The financial institution, as the trustee, holds and manages the trust assets for the niece's ultimate benefit.

• Example 2: Property for Dependent Care

  A parent creates a will that leaves their vacation home to their eldest child, but with the specific instruction that the child must allow their younger, disabled sibling to live in the home rent-free for the rest of their life. The eldest child holds the legal title to the property.

  Here, the younger, disabled sibling, who is entitled to the benefit of residing in the home, is the cestui. The eldest child, while holding legal ownership, is obligated to manage the property for the sibling's use and enjoyment.

• Example 3: Business Income for Retirement

  A business owner, planning for retirement, transfers ownership of their company's shares to a trust. The trust agreement stipulates that the income generated from these shares should be paid out to the owner's spouse monthly to support their living expenses after the owner retires.

  The spouse, who is the individual receiving the regular income payments from the trust, is the cestui. The trustee manages the company shares and ensures the income is distributed to the spouse as specified.