A cestui que trust is a beneficiary of a trust with no legal title. Trustees manage the trust and make decisions for the beneficiaries. Trusts can be structured in various ways and are difficult to revoke. Trustees must document all decisions and relationships with beneficiaries. Ownership of assets in a trust may revert to the cestui que trust or be held permanently by the trustee.
A cestui que trust or cestui que use is a beneficiary of a trust. This archaic legal term has largely been replaced by “beneficiary” in most legal documents, although it still occurs in some contexts. “Cestui que” meaning “that person” is also used in other senses, such as “cestui que vie” to refer to a person whose life is used as a milestone or point of reference for something, such as the insured on a policy of life insurance. This term comes from the French language.
The cestui que trust has nominative equity in a trust, but has no legal title. A trust may include several individuals named as beneficiaries, such as in a family trust where all children of a marriage have an equal share of the trust. The trust is managed by a trustee. Trustees are responsible for managing the trust, making decisions about how to use the assets in the trust, and maintaining the contents of the trust for the beneficiaries.
Trusts are structured in different ways. The cestui que trust may receive regular payments or other benefits from the trust, or the trust may be used to hold property for someone. For example, if young children are orphaned by their parents, a trustee could keep trust in their family home until they come of age, allowing them to remain at home in the care of a guardian without losing rights to the home.
Once a trust is established, it is difficult to revoke, which makes it important to structure trusts carefully. The cestui que trust must also exercise care in dealing with the trustee. Suspicions naturally arise when business relationships occur between trustees and beneficiaries, and the trustee is obligated to document any relationships to confirm their validity and clarify that no coercion or other pressure was involved. Similarly, the trustee must also document all decisions made on the trust to justify them; in the case of a sale of assets, for example, the trustee must demonstrate when, how and why and must document that the proceeds of the sale have been put back into the trust or used to cover expenses directly related to the trust.
Ownership of assets in a trust may revert to the cestui que trust when a triggering event occurs, while in other cases it may be held permanently by the trustee or appointed agents. Some historic homes, for example, are held in trust for preservation and cannot be legally sold or transferred.
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