Definite beneficiaries are a requirement of a valid trust, along with settlor capacity and intent, trust property, a valid trust purpose, and duties that the trustee must perform. This means that the identities of the beneficiaries must be ascertainable. This is because a trust is generally enforced by the beneficiaries. The settlor can individually name the beneficiaries or can identify an ascertainable group or class of persons as beneficiaries. As long as there are objective standards on which to define the parameters of the group of beneficiaries, the trust will not fail for lack of definite trust beneficiaries.
- For example: “my children” would be an ascertainable class of persons because there are objective standards to identify who is included as the settlor’s children.
- However, “my friends” is not an ascertainable class because this is a subjective identification and it is difficult to ascertain who is included in the class of “friends”.
If a trust does not have definite beneficiaries and is not created for the benefit of a charity, it is deemed to be an unenforceable trust.
An exception to the definite beneficiary rule is when the trust is a charitable trust which is created to benefit a charity. A trust created to benefit a charity is not required to have definite human beneficiaries, because a charitable trust is usually enforced by the state attorney general.
- For example, it would be permissible to create a charitable trust that gives 1 million “to be used to feed the hungry in Essex County, Massachusetts.”
[Last updated in September of 2022 by the Wex Definitions Team]
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