TRUST ELEMENTS – BENEFICIARY
Trust Elements – Beneficiary
A trust has five main elements. First, a settlor transfers some or all of his or her property. Second, the property transferred by the settlor is designated trust property. Third, the trust property designated by the settlor is transferred with the settlor’s intent that it be managed by another. Fourth, the trust property designated by the settlor is transferred for management by a trustee. Fifth, the trust property designated by the settlor is managed by a trustee for the benefit of a beneficiary. This article discusses some aspects of the element of a beneficiary.
At Least One
A trust must always have at least one beneficiary. Originally known as the cestui que use or the cestui que trust, the person or legal entity benefiting from a trust is known as the beneficiary. Whereas the trust holds legal title to the trust property, the beneficiary holds equitable to the trust property. Exactly what a beneficiary’s benefits are depends on the terms of the trust, the discretion given to the trustee, and the actions of the trustee.
No Notice Required
The beneficiary of a trust need not be notified of the existence of the trust. After a beneficiary becomes aware of the existence of a trust, the beneficiary may decline or disclaim any benefits of the trust.
Definite Beneficiary or Not
A trust may have one beneficiary. A trust may have several beneficiaries. If a trust is not created to benefit a charity, it must have definite human beneficiaries, because trust are usually enforced by the beneficiaries. If a trust is created to benefit a charity, it does not have to have definite human beneficiaries, because a charitable trust is usually enforced by the state attorney general.
If a trust does not have definite beneficiaries and is not created for the benefit of a charity, it is deemed to be an unenforceable trust. An unenforceable trust is an honorary trust. The trustee may carry the trust out if the trustee so desires, out of sentiment or moral duty, but there is no one who can force the trustee to carry out the trust.
The beneficiaries of a trust may be a group or class of persons. The group or class of persons must be ascertainable. Who the beneficiaries of a trust will be cannot be totally left at the discretion of the trustee.