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Seminar two- beneficiaries
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The second seminar for equity and trusts.
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1. Explain the difference between ‘legal’ and ‘beneficial’ ownership. Why does Mostyn JinRothschild v De Souza [2018] EWHC 1855 refer to the beneficiary as the person who “really”
owns the property?
A legal owner is a person who holds the legal title under his name. They are the “ official” or
“formal” owner of the property, this is the party registered on the Land Registry. They have
physical possession and control. The beneficial owner is a person who enjoys the benefits of
ownership even though the title is in another name, this can include the right to occupy or enjoy
any income from the property, regardless of the title on the Land Registry. A person can be both
the legal and the beneficial owner of a property. Mostyn refers to the beneficiary as the person
who really owns the property because he states a property may be held in someone’s name but
be really owned by someone else. He states that just because they may have the legal title it
may be presumed that the property may be theirs however, he follows by saying “it will be in
virtually every case the actual facts, as proved by the evidence, which will determine the real
ownership of piece of property.” He also uses the work Really rather than Beneficiary because it
is a concept easily understood by lay people.
2. Identify who in the following examples of modern trusts would be the settlor, trustee and
beneficiary.
A trust is when a relationship arises when property is vested in a person called the trustees,
which those trustees are obliges to hold for the benefit of other persons called the cestuis
que trust or beneficiaries. A creator of the trust which is created by the settlor transferring
property to the trustees to hold on trust or alternatively declaring that he/she is the trustee.
If the trust is created by will then the trust is created by the testator. The beneficiaries are
those whom the property is held on trust and who therefore have an equitable interest in
the property. In equity the beneficiaries own the trust property, and if it is wrongly taken
from the trust the beneficiaries are in a better position than creditors who have to claim the
return of money owed to them as a debt.
a. Amy is a teacher working in a primary school. She contributes 9% of her annual salary to
a Teachers’ Pension Fund. Amy is the Settlor; the teachers’ pension fund is the trustee
and Amy is the beneficiary.
b. Bianca has purchased a £100,000 life insurance policy with Lincoln Bank. For the last 10
years she has paid a monthly premium of £10. She has nominated her daughter
Christine to receive the insurance pay-out on her death. Bianca is the settlor, Lincoln
bank is the trustee and Christine is the Beneficiary.
c. Dion and Erin pay £200 per month into a Building Society account. They decide that the
money is to be used only for the benefit of their three grandchildren. Dion and Erin are
the settlors, Dion and Erin are the trustee, the beneficiary is their grandchildren.
d. Fatimah has died intestate, leaving a husband and two children who are still minors; it is
estimated that her estate is worth £350,000.Fatimah is the settlor and the trustee, who
the money goes to would depend who Fatimah has left the estate to. If its her children
her husband would be the trustee and would be the beneficiary for the two children
until they become adults. However if it was left to her husband then he is the trustee
and the beneficiary. If she has left no instructions as to who it goes to then they can split
it between the three where the husband becomes the trustee and the beneficiary and
he also becomes the trustee for benefit of the children when they turn 18.
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