Define: Beneficiary Principle

Beneficiary Principle
Beneficiary Principle
Quick Summary of Beneficiary Principle

The beneficiary principle is a legal doctrine that governs the creation and enforcement of trusts. According to this principle, for a trust to be valid, there must be identifiable beneficiaries who will benefit from the trust property. In other words, the trust must have a definite beneficiary or class of beneficiaries who have enforceable rights to the trust assets. The beneficiary principle ensures that there is a clear and ascertainable purpose for the trust and that there are individuals or entities with a legal interest in enforcing the trust’s terms. Without identifiable beneficiaries, a trust may be deemed invalid or unenforceable. Therefore, the beneficiary principle plays a crucial role in determining the validity and enforceability of trusts in legal proceedings.

Full Definition Of Beneficiary Principle

The principle that, for a trust to be valid, there must be some person or persons with standing to enforce the trust in the courts. The beneficiary principle is often invoked to explain why English law does not, on the whole, allow the creation of a private purpose trust.

A trust of imperfect obligation is one that is expressed in such a way that it imposes an obligation on the trustee to carry out a purpose, but which can also be construed as a trust to benefit one or more individuals. Such a trust is not an exception to the beneficiary principle.

However, trusts that are valid under the principle of Re Denley (1969) are exceptions to the beneficiary principle. The courts enforce such trusts because there are indirect beneficiaries who possess a sufficient interest to have standing to enforce the trust.

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This glossary post was last updated: 28th March, 2024.

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