Business, Legal & Accounting Glossary
n. the right of a party to some profit, distribution, or benefit from a contract or trust. A beneficial interest is distinguished from the rights of someone like a trustee or official who has responsibility to perform and/or title to the assets but does not share in the benefits.
In the law of trusts, a ‘beneficial interest’ in some property (of any type) implies a right to use and enjoy that property (typically) as the possessor of the interest sees fit. Where one person holds the property on trust for another, the latter is ascribed a beneficial interest in that property even though its legal title remains vested in the former.
The term ‘beneficial interest’ is nearly (but not completely) synonymous with ‘equitable interest’. Some writers — particularly those who discuss other areas of the law — will sometimes use this term to signify both legal and equitable rights, which may lead to confusion. In the law of contracts, for example, a beneficial interest might well be described as ‘that right which a person has, by means of mutual agreement and proper exchange of valuable consideration, effectively created in concert with another’. Be that as it may, in the relatively narrow context of trust law, an individual is said to possess a beneficial interest in some property or other when he has a right to its use and enjoyment; possession of the legal title is another matter entirely.
In sum, a beneficial interest is any interest of value, worth, or use in a property that one does not have a legal title to, for instance, the interest that a beneficiary has in a trust.
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This glossary post was last updated: 26th April, 2020 | 2 Views.