Introduction To Trusts - Understanding Beneficial Interests - Vested and contingent interests
3 important questions on Introduction To Trusts - Understanding Beneficial Interests - Vested and contingent interests
Under a vested interest, does the beneficiary need to satisfy any conditions imposed by the terms of the trust?
The beneficiary does not need to satisfy any conditions imposed by the terms of the trust. If the beneficiary is 18, they can give a 'good receipt' to the trustees but if they are under 18 they cannot.
When the beneficiary has a contingent interest, do any conditions need to be satisfied before the beneficiary's interest then becomes vested?
The beneficiary's interest is conditional on the occurrence of a specified event. Once the condition is satisfied, the beneficiary's interest becomes vested.
What happens to the beneficiary's interest when the condition is not satisfied? What can the settlor (the person creating the trust) provide in this event and what happens if the settlor does not so provide?
The beneficiary's interest fails and is not entitled to the trust property. In this event, the settlor can make a substitutional gift, and if not, the trust property will be returned to the settlor which is known as a resulting trust. If the settlor dies, the trust will be held for his estate.
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