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What are the differences between Trust and Beneficial Ownership?

This article describes 5 differences between Trust and Beneficial Ownership.

Trust Ownership

  1. Trustee is only a nominal owner. He is a mere agent. However, in legal theory, he is also deemed to be owner upon the property fictitiously attributed by the law.
  2. From the point of view of the trustee, the trust is an equitable obligation on the trustee to use his ownership for the benefit of another, viz. the beneficial.
  3. Trust ownership is also called as “bare ownership”. He is the full legal owner of the property.
  4. Example: A has certain property. He makes a declaration of trust in favor of a group of poor students-B. A appoints C as his trustee to maintain the trust property.
  5. Here A is the direct owner. Until the trust is formed. As soon as the trust is formed, his direct ownership disappears. C-the trustee is placed in position of direct ownership. B are the real owners.
  6. Purpose: a trust is an obligation annexed to ownership of property, and arising out of a confidence resposed in and accepted by him, for the benefit of another.
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Beneficial Ownership

  1. Beneficiary is the real owner.
  2. From the point of view of the beneficiary or the cestui que trust, it is the equitable beneficial ownership of property of which another viz. The trustee has the bare ownership.
  3. The beneficial owner has only equitable obligation attached to beneficial enjoyment of the property.
  4. Example: B is put in beneficial ownership. If A after some time leases and conveys the property in favor of B. then the beneficial ownership of B vanished, and the direct ownership exists in him.
  5. Purpose: as the beneficiaries are unable to maintain the properties, this peculiar fictitious arrangement is made by the law. Such beneficiaries are: (1) unborn persons; (2) incapacity persons, viz. infants, lunatics, diseased, etc; (3) when the number of co-owners is increased; (4) when any disputes regarding the property aeries between the owners due to their conflicting interests.
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