Legal Definitions - cestui que trust

The term cestui que trust is an older, somewhat archaic legal expression that refers to the beneficiary of a trust. In simpler terms, it identifies the person or entity for whose benefit a trust has been created.

When someone sets up a trust, they transfer assets (like money, property, or investments) to a trustee. The trustee then holds and manages these assets not for their own benefit, but strictly for the benefit of another person. This person, who is entitled to receive the income, assets, or other advantages from the trust, is the cestui que trust. They possess the "equitable" right to the property, meaning they have the right to enjoy its benefits, even though the legal ownership is held by the trustee.

Here are some examples to illustrate this concept:

• Example 1: A Grandparent's Education Fund

  Imagine a grandparent establishes a trust fund specifically to cover their grandchild's future college tuition and living expenses. The grandparent appoints a bank as the trustee to manage the investments and disburse funds when the grandchild enrolls in higher education.

  In this scenario, the grandchild is the cestui que trust. They are the designated individual for whom the trust was created and who will ultimately receive the financial benefits (tuition payments, living allowances) from the trust's assets.

• Example 2: A Special Needs Trust

  A couple sets up a special needs trust for their adult child who has a disability. The trust holds assets intended to pay for the child's supplemental needs, such as specialized therapy, adaptive equipment, or quality-of-life enhancements, without affecting their eligibility for government benefits. A professional trustee manages these funds throughout the child's life.

  Here, the adult child with the disability is the cestui que trust. They are the beneficiary who will receive ongoing support and benefits from the trust's assets, ensuring their well-being according to the parents' wishes.

• Example 3: Inheritance for Minor Children

  A young couple creates a will that directs their assets into a trust for their two minor children, should both parents pass away prematurely. The trust specifies that the children will receive portions of the inheritance when they reach ages 25 and 30. A trusted family friend is named as the trustee to manage the assets until then.

  The two minor children are the cestui que trust. They are the individuals for whom the trust was established and who will eventually receive the inheritance and other benefits held and managed by the family friend (the trustee) until they reach the specified ages.