A beneficiary is a person (or other legal entity) for whose benefit trust property is held. A beneficiary is usually a natural person, however it is plausible that they may also be a corporate or other legal entity. The beneficiary under a trust has a beneficial (equitable interest) in the trust property which is subject to the administration of the trust in their best interests.
In order for a trust to be valid, the trust instrument must clearly satisfy “three certainties”. These are:
- Certainty of intention;
- Certainty of subject matter; and
- Certainty of object.
Therefore, for a trust instrument (and the trust) to be valid it must be clear who the beneficiaries are to the trust, thus satisfying the “certainty of object”. The degree of certainty is broadened in scope due to the rule that named beneficiaries under a trust instrument may fall within a “class of beneficiaries”. For example, the beneficiaries may be named as the children of the person who creates the trust and may also include children yet to be born.
It is possible for a trustee to also be a beneficiary under a trust arrangement. However, a trustee can not be a sole beneficiary under the trust, unless there is more than one trustee. If there is more than one beneficiary, for example in a discretionary (family) trust scenario, it is valid for a trustee to also be a beneficiary.