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Cestui Que Trust: What Is This Archaic Term?

cestui que trust: what is this archaic term?

A cestui que trust is a trust beneficiary. Although it is still used in some contexts, this obsolete legal term has been largely supplanted by “beneficiary” in most legal documents. “Cestui que,” which means “that person,” is also used in various contexts, such as “cestui que vie,” which refers to someone whose life is utilized as a milestone or landmark for anything, such as the insured person on a life insurance policy. This phrase comes from the French language.

The cestui que trust is a trust with a designated equity but no legal title. A trust may have several beneficiaries, such as a family trust in which all of the children from a marriage enjoy an equitable part of the trust. A trustee manages the trust. Trustees are in the position of handling the trust, making choices on how to spend the trust’s assets, and safeguarding the trust’s contents for the beneficiaries.

cestui que trust: what is this archaic term?

How does Cestui Que Trust Work?

Trusts can be formed in a variety of ways. The cestui que trust can receive monthly payments or other advantages from the trust, or the trust can hold a property for someone else. For example, if children are orphaned, a trustee may retain their family home in trust for them until they become adults, allowing them to remain at home under the custody of a guardian without losing ownership of the home.

It is difficult to cancel a trust after it has been formed; thus, trusts must be properly structured. In dealings with the trustee, the cestui que trust must use caution. Suspicions are naturally raised when trustees and beneficiaries do business, and the trustee is required to document any dealings to prove their authenticity and demonstrate that no coercion or other pressures were utilized. Similarly, the trustee must record all trust actions to explain them; for example, if assets are sold, the trustee must indicate when, how, and why, and must prove that the profits of the sale were reinvested in the trust or used to fund trust-related expenditures.

Regular Trust and Cestui Que Trust: What is the Difference?

A cestui que trust‘s beneficiary has equitable title to the assets, whereas the trustee of a regular trust has legal title to the assets on behalf of the beneficiaries. This means that the beneficiary of a cestui que trust has no official control or ownership over the trust’s assets and can utilize them. The trustee of a regular trust is the person responsible for managing the trust’s assets and distributing those assets to the beneficiaries in line with the parameters of the trust.

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