Role Played by Beneficial Interest in a Trust Transaction
A beneficial interest is a right given to a third person in a contract between two persons. For example, suppose a contract is made between A & B wherein A agrees to pay a certain amount to C on or within a stipulated time. B has a legal interest in the contract & C retains the beneficial interest.
Assignment of beneficial interest form, in trust:
To put it in a simpler or generic form, beneficial interest is any interest of value or a property right entrusted to someone who does not own it. Specific criteria associated with the role played by beneficial interest in a trust transaction contains
- A property interest that ensures solely to the benefit of the owner
- Property that remains of an estate after payments of debts & administrative expenses
- Right of a person having a power of appointment to appoint himself
How assignment of beneficial interest, in trust works:
Earlier, heirless owner of huge real estates used to draw up contracts assigning beneficial interest form, in trust specifying terms & conditions in no uncertain words that a certain part of the property remains after clearing off debts & other expenses would be entrusted to a charitable organization or few members forming a trustee, who would be at liberty to use the property for some greater social cause.
In this case, the church or the board of trustees is not the legal owner of the property, however, retains the beneficial interest in the contract drafted by the erstwhile owner & the then government or banks & financial institutions. The role played by a beneficial interest in a trust transaction is thus of significant value.
As per the Black’s law dictionary, beneficial interest is the ‘profit, benefit or advantage resulting from a contract or the ownership of an estate as distinct from the legal ownership or control.’