Legal Definitions - cestui que use

Cestui que use is an archaic legal term that refers to the person for whose benefit property is held by another. In simpler terms, it describes someone who has the right to enjoy or receive the income from property, even though the legal ownership (the title) of that property is formally held by a different person or entity. Today, this role is almost universally referred to as the beneficiary of a trust. The concept highlights a historical separation between legal ownership and beneficial enjoyment.

Here are a few examples to illustrate this concept:

• Imagine a wealthy merchant in 15th-century England who wanted to ensure his estate would provide for his children even if he faced political upheaval or went on a long voyage. He might transfer the legal title of his lands and assets to a trusted group of friends or relatives. These friends would legally own the property, but they were bound by an understanding to manage it and pass all its rents, profits, and usage rights to the merchant's children.

  Explanation: In this scenario, the merchant's children would be the cestui que use. They did not hold the legal deeds or titles to the property, but they were the ones who received all the practical benefits and income generated by it. The trusted friends held the legal title but were obligated to act solely for the children's benefit.

• Consider a modern-day scenario where an elderly individual, concerned about managing their financial affairs, places their investment portfolio into a revocable living trust. They appoint their adult daughter as the trustee to manage these investments. The daughter, as trustee, holds the legal title to the stocks and bonds in the portfolio and makes investment decisions. However, the income generated by these investments is used to pay for the elderly individual's living expenses and care.

  Explanation: Here, the elderly individual is the equivalent of the cestui que use. While their daughter holds the legal title to the investment assets and manages them, the elderly individual is the ultimate recipient of the financial benefits and enjoyment derived from that portfolio.

• A philanthropic organization receives a large donation of a commercial building. The donor stipulates that the building's legal title should be held by the organization, but all rental income generated from the building must be exclusively used to fund scholarships for underprivileged students at a local university. The organization manages the property, collects rent, and then disburses those funds for the scholarships.

  Explanation: In this case, the underprivileged students receiving the scholarships are the cestui que use. The philanthropic organization holds the legal title to the building, but the students are the beneficiaries who ultimately receive the financial advantage and benefit from the property's income.