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What is a Cestui Que Trust?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 30 October 2016
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    Conjecture Corporation
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A cestui que trust or cestui que use is a beneficiary of a trust. This archaic legal term has been largely replaced by “beneficiary” in most legal documents, although it is still encountered in some settings. “Cestui que” meaning “that person” is also used in some other senses, like “cestui que vie” to refer to a person whose life is used as a milestone or landmark for something, like the insured party on a life insurance policy. This term originates from the French language.

The cestui que trust has a named equity in a trust, but does not have legal title. A trust may include several individuals named as beneficiaries, as for example in a family trust where all the children in a marriage have an equitable share in the trust. The trust is managed by a trustee. Trustees are responsible for handling the trust, making decisions about how to use the assets in the trust, and preserving the contents of the trust for the beneficiaries.

Trusts are structured in a number of different ways. The cestui que trust can receive regular payments or other benefits from the trust, or the trust may be used to hold property for someone. As an example, if young children are orphaned by their parents, a trustee might hold their family home in trust until they come of age, allowing them to stay at home under the care of a guardian without losing the rights to the home.

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Once a trust is established, it is difficult to revoke, making it important to structure trusts carefully. The cestui que trust must also use care in dealings with the trustee. Suspicions are naturally aroused when business dealings between trustees and beneficiaries occur, and the trustee is obligated to document any dealings to confirm their validity and make it clear that no coercion or other pressures were involved. Likewise, the trustee must also document all decisions made about the trust to justify them; if assets are sold, for example, the trustee must show when, how, and why, and must document that the proceeds of the sale were 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 conservation purposes, and cannot legally be sold or transferred.

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