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Forms & Links

Land trust forms, important information regarding procedures for opening a new account.

To help the government fight the funding of terrorism and money laundering activities, federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

What this means for our customers: when you open an account, we will ask you for your legal name, address, date of birth, and other information that will allow us to identify you. We will also ask for a copy of your driver’s license or other identifying information.

We are taking this action to further protect your property from fraud and identity theft.

We will be able to notarize land trust forms signed in our presence in one of our 6 land trust offices: Chicago, Lisle, Oak Park, Orland Park, Rolling Meadows, and Skokie.

Additionally, we can offer mobile notary services to you for an additional separate fee.

Below are forms in PDF format regarding land trusts that do not necessarily require the assistance of an attorney. These forms are now interactive and can be saved with the information that you entered.

If you have any questions about our forms, please call Debra White at 312-223-4131 . For other land trust questions, please contact your attorney or our Customer Service Unit toll-free at 888-878-7856 .

These forms are provided for your convenience. As with any legal document, you may wish to consult with an attorney to be certain that your objectives are being met.

Acceptance of Transfer of Beneficial Interest and Ratification (W-9)

When the primary beneficiary dies, changes beneficial interest in the trust from the deceased to the contingent beneficiary(s).

Amendment of the Contingent Beneficial Interest

Changes contingent beneficiary(s). The contingent beneficiary is the person(s) designated to inherit the beneficial interest upon the death of the primary beneficiary. 

Amendment of the Power of Direction (W-9)

Used to change the party(s) who has power of direction.

Assignment of the Beneficial Interest (W-9)

Used by current beneficiary to make changes to the beneficial interest by assigning all or part of the beneficial interest in the trust to another party(s).

Corporate Resolutions

Required when the beneficiary is a corporation.

Deed in Trust - Quit Claim

Transfers property into the land trust. Typically used when property has already been purchased.

Deed in Trust - Warranty

Transfers property into the land trust. Typically used when purchasing the property directly into the trust.

Direction to Convey

Used to request issuance of a deed when property is being transferred out of the trust.

Facsimile Assignment of Beneficial Interest

Must be provided to trustee prior to trustee acknowledging the Assignment of Beneficial Interest or Collateral Assignment of Beneficial Interest. Cook County is the only county that requires the Facsimile Assignment of Beneficial Interest to be recorded for all outright and collateral assignments. Transactions with consideration of $100 or more require recording in all counties.

Grantor/Grantee Statement

The grantor-grantee statement is used in connection with the recording of a deed or facsimile in Cook County.  This form is only used when the recording is exempt from the payment of transfer taxes. The grantor/beneficiary should execute this document as both Grantor and as Grantee.  Chicago Title Land Trust Company does not sign as either. 

Letter of Direction

Authorization by the party(s) having power of direction to execute documents. This form is not used to request a deed (Direction to Convey).

Limited Liability Company Certificate

Required when the beneficiary is an LLC.

Notary Addendum

Used to notarize documents where there is no notary block.

Partnership Certificate

Required when the beneficiary is a partnership.

Release of Collateral Assignment/Irrevocable Right to Approve/Agreement to Notify

Removes requirements for additional signatures or notifications.

Tax Bill Change Form

Used to notify us to change how county tax bills should be addressed.

Tenancy by the Entirety Affidavit

Required when the beneficial interest is held as tenants by the entirety.

Trust Agreement (W-9)

Used to create the trust and it terms with the trustee.

Patriot Act information disclosure. Prior to opening an account and any addition of a beneficiary/power of direction holder, Chicago Title Land Trust Company is required to obtain proper identification of each customer.

Additional Information

Suggested beneficial interest designations.

Sample phrasing for establishing the beneficial interest and the contingent beneficial interest in the trust.

The following links are provided for your use to learn about Land Trust and other Title Information. These links open in a new browser window to an external website. The information contained on these websites is not published or managed by Chicago Title Land Trust Company.

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Indiana Land Trust Company is Indiana’s leading land trustee. For over 50 years, Indiana Land Trust Company has helped clients throughout the State of Indiana benefit from the establishment of land trusts for their real estate holdings.

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Beneficial Interest: Different Types and Examples

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.

assignment of beneficial interest

What Is Beneficial Interest?

A beneficial interest is the right to receive benefits on assets held by another party and is often evident in matters concerning trusts.

Most beneficial interest arrangements are in the form of trust accounts, where an individual, the beneficiary receives income from the trust's holdings but does not own the account.

Key Takeaways

  • A beneficial interest is the right to receive benefits from assets held by another party.
  • A Crummey trust is often set up by parents for their children where the beneficiary has an immediate interest.
  • A beneficiary receives income from a trust's holdings but does not own the account.

How Beneficial Interest Works

A beneficiary interest will change depending on the type of trust account and the rules of the trust agreement. 

A beneficiary typically has a future interest in the trust's assets meaning they might access funds at a determined time, such as when the recipient reaches a certain age.

Trusts for Children

For example, a parent may set up a testamentary trust to benefit their three children upon the parent's death. The trust creator can stipulate the distribution of the account's assets to the children during the parent's lifetime.

Additionally, a beneficial interest can be a house owned by a trust, where a child is a trust beneficiary and can use the house, both income tax and rent-free.

Beneficial interest will alter depending on the rules of a trust's arrangement and the type of trust account.

Parents may set up  Crummey trusts , funded through annual gifts, to take advantage of gift tax exclusions. With Crummey trusts, the beneficiary has an immediate interest and access to the trust's assets for a specified timeframe. For example, the beneficiary may be able to access the trust's funds within the first 30 or 60 days after the transfer of a gift. Those assets fall under the distribution rules governing the trust.

Other Examples of Beneficial Interest

Another example of beneficial interest is in real estate. A tenant renting a property is enjoying the benefits of having a roof over their head. However, the renter does not own the asset.

Beneficiary interests can also be applied to employer-sponsored retirement plans such as 401(k)s and Roth 401(k)s, as well as in individual retirement accounts (IRA) and Roth IRAs. 

With these employer-sponsored accounts, the account holder may designate a named beneficiary who can benefit from the account funds in the event of the account holder's death. The rules governing beneficiary interest in these cases vary widely depending on the type of retirement account and the identity of the beneficiary.

A spouse beneficiary to an IRA has more freedom over the assets than anyone else. The surviving spouse can treat the account as their own, rollover assets into another plan—if the IRS allows— or designate themselves as the beneficiary. 

A non-spouse beneficiary to an IRA, for example, can't treat the account as their own. Thus, the beneficiary can't make contributions to the account or roll over any assets in or out of the IRA.

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Beneficial interest refers to a right to income or use of assets in a trust . People with a beneficial interest do not own title to the property, but they have some right to benefit from the property. This is to be contrasted with trustees and other agents of the trust who only have managing duties. 

[Last updated in June of 2021 by the Wex Definitions Team ]

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Beneficial Interest in Property

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Table of Contents

Andrew Watson, a London-based divorce lawyer in our family department and Resolution accredited cohabitation lawyer , summarises the law in relation to joint owners’ interests in property and comments on the recent Court of Appeal decision of Kernott v Jones.

What does beneficial interest in property mean?

A beneficial interest in property gives someone the right to share the benefits of a property, even if they are not a legal owner. Specifically, it gives someone the right to:

  • Live in the property
  • A share of the rental income
  • A share of the proceeds when the property is sold

The person with a beneficial interest is called a beneficial owner.

Beneficial interests are usually defined as a percentage, such as 40%. This means the beneficial owner is entitled to receive 40% of any sale proceeds or rent.

How can I get beneficial interest in property?

The law presumes that legal ownership and beneficial ownership are the same thing unless something happens to split the ownership. This can occur in three ways:

  • Express trust

The most common way to create a beneficial interest is through an express trust. This is where the legal owner signs a trust deed or written agreement declaring that the legal owner holds the property ‘on trust’ for someone else, the beneficial owner.

For example, a mother could declare that she holds the property on trust for her son, or a cohabiting couple could declare that they hold the property on trust for themselves in 70/30 percent shares to reflect their individual contributions toward the purchase price, rather than holding the property equally.

  • Resulting trust

Sometimes, the law will presume that a beneficial interest has been created if there has been a financial contribution. For example, if Person A pays part of the purchase price for a property that is registered in Person B’s name, the law will impose a ‘resulting trust’ where B holds the property on trust for the benefit of A relative to A’s contribution.

  • Constructive trust

A constructive trust arises when there is a common intention that someone has a beneficial interest in the property, even if they did not contribute to the purchase price. For example, if Person A moves in with Person B and pays the mortgage, or pays for a new kitchen, the court may decide that they behaved this way because there was a common intention to share the property. After all, it would be very unusual to pay someone else’s mortgage for no financial gain.

Is beneficial interest the same as legal ownership?

Beneficial ownership is not the same as legal ownership. Broadly:

  • The legal owner is the ‘official’ owner of the land, whose name appears on the title deeds at HM Land Registry. The legal owner has a right of control over the property, which means they can decide to sell or lease it.
  • The beneficial owner owns the ‘fruits’ of the property, including income and the right to occupy. Their name does not appear at HM Land Registry and a member of the public cannot find out who the beneficial owners are..

It is very common for a person to be both the legal and beneficial owner at the same time – but it is not always the case.

Why does there need to be a difference between legal and beneficial interest?

No more than four persons can be the legal owners of property in England and Wales. By law, those persons have equal ownership.

However, this may not reflect the reality of the situation, especially if one person has contributed more to a deposit (for example) and therefore wants more ‘interest’ in the property. By creating beneficial interests, you can achieve a fair result.

How do I change the beneficial interest of a property?

Assuming a deed of trust already exists, you can transfer the beneficial interest in property to another person with a deed of assignment. This changes the beneficial ownership of the property without changing the legal title, which is helpful if there is a mortgage since changing the legal title would require the mortgage lender’s consent.

Special rules apply to joint tenancies. Joint tenants have equal rights to the whole property and co-own it together. To change the beneficial interest, you would first need to sever the joint tenancy and change the legal title to tenants in common. Multiple steps are required and there may be tax and other implications to consider. Specialist legal advice is a must.

The Court of Appeal provides further clarification on interests in property

Jones v Kernott

The Court of Appeal has handed down a detailed judgement in the case of Kernott v Jones that has gone some way to clarifying how the Court should deal with property disputes between non-married owners of property. This article summarises the complexities of the law and what needs to be shown to demonstrate an interest in a property before considering what changes Kernott v Jones brings and what needs to be done for further clarity.

Summary of the current law

Oxley v. Hiscock

The cases of Oxley v Hiscock (sole owner) and Stack v Dowden (joint owners) are the leading recent cases in this area of law. These cases both consider what gives rise to a beneficial interest in a property. Beneficial ownership is a legal concept that relates to who has an interest in a property. The concept of beneficial ownership was set out in the case of Lloyds Bank v Rosset. It is a different concept to legal ownership which is simply whose name property is in. Beneficial ownership relates to what the intentions of ownership were. For instance, a property may be purchased in one person’s name but it might have been clear that the property was for both people. On the other hand, a property may be purchased in the name of two people but it might be just for the benefit of one person. It is the beneficial owners who are entitled to occupy the property and who are entitled to receive the proceeds of sale.

The current law is far from simple, mired as it is in the concepts of trusts law and principles of ownership of land. In brief and basic summary:-

Express Trusts

  • It is a basic and long-standing principle of law (see for instance Goodman v Gallant) that if there is a formal written declaration of trust (ie of the existence of and extent of beneficial interests in a property) then this is conclusive unless fraud or misrepresentation can be shown. If there is a clear and complete declaration of trust then that should be the end of the matter. Property purchasers should take note that perhaps it would be a good idea when purchasing properties together that your respective beneficial interests are clearly defined and declared.

Equity follows the law

Stack v Dowden

  • Stack v Dowden confirms that equity follows the law – in other words, it is assumed that the legal ownership of the property reflects the beneficial ownership. It also confirms that this presumption is rebuttable (but see below for how difficult this can become).

Resulting Trusts

  • Stack v Dowden confirmed that the old principle of resulting trusts (where it was presumed that a financial contribution towards a property resulted in a beneficial interest proportionate to that financial contribution) should not apply in quasi matrimonial cases. Interestingly a distinction is made between these quasi matrimonial type arrangements and non quasi matrimonial cases. In Laskar v Laskar, which was a case about a property beneficially owned by a mother and daughter and importantly was used primarily as an investment property, resulting trust presumptions did apply. The primary focus of this article is on quasi matrimonial property interests and hence I do not intend to consider resulting trusts in any more detail here.

Constructive Trusts

  • Lloyds Bank v Rosset sets out the principle of a constructive trust (where a beneficial interest in a property can be found on the basis of a common intention construed either by evidence of direct discussions or from conduct together with a detrimental reliance on this intention). Unlike resulting trusts, constructive trusts remain an applicable concept in quasi matrimonial cases post Stack v Dowden.
  • Evidence of direct discussions is usually a matter of factual dispute and ultimately the Court would have to make a determination on such issues. The knotty problems come with finding a common intention on the basis of conduct and with then quantifying the respective interests upon finding that there is a trust.
  • Direct financial contributions towards the purchase of a property can be used to construe a common intention of joint beneficial ownership (this sounds very similar to the resulting trust discussed above, the difference being that there is more to the question than just whether or not a contribution has been made, the contribution is evidence of a common intention rather than of an interest. Furthermore, the construction of intention on this basis does not mean that the quantification of the interests would be in proportion). This can include regular and direct payments towards a mortgage but, significantly, not necessarily payments to an account from which the mortgage is paid.
  • Indirect financial contributions were not approved as evidence of common intention in Lloyds Bank v Rosset and nor were non financial contributions. Whilst the recent cases do not deal specifically with this issue the case law suggests that the Courts find the position restrictive and that there are moves towards indirect contributions and non financial contributions being considered as evidence of common intention.
  • Once a common intention is proven one still needs to show the second half of the equation before establishing a beneficial interest on the basis of a constructive trust, detrimental reliance. Detrimental reliance is what it says it is, a reliance on something to your detriment. Usually if you have shown a common intention on the basis of conduct then this will also show detriment. If an express agreement has been construed from evidence of discussions then the detrimental reliance may not be so immediately obvious and may need proving.

Existence of interest established – what now?

  • So you have demonstrated that you have a beneficial interest in a property, that’s it then? No, there may then follow a dispute as to the extent of your beneficial interest.
  • In Oxley v Hiscock an attempt was made to introduce the concept of fairness into these proceedings, with the proposed test for what should be the share of beneficial interests being what was fair.
  • In Stack v Dowden Baroness Hale defined the Court’s task as  “to ascertain the parties’ shared intentions, actual, inferred, or imputed, with respect to the property in the light of their whole course of conduct in relation to it”.    And that the Court should not   “abandon that search in favour of the result which the court itself considers fair”

This has the consequence not only of moving away from resulting trusts (as discussed above) but also of appearing to disapprove the Court’s approach in Oxley v Hiscock (a sole legal owner case) in relation to quantification.

  • The issue of quantification of beneficial interests remains open to considerable judicial discretion, Baroness Hale confirms that “Each case will turn on its own facts”. The real impact of Stack v Dowden is that common intention constructive trusts are now much more likely to be found by the Courts and that quantification may then be considered on the whole course of conduct. More than just direct financial contributions can be considered in relation to quantification (see for instance Abbott v Abbott)

There are other principles that can be argued in relation to establishing an interest in a property, notably proprietary estoppel where someone has encouraged an expectation of an interest in property and the other parties has relied on this to their detriment. Applications can also be made in relation to rights over property on a number of different basis and acts of parliament.

Kernott v Jones – Clarification?

This case, heard at the Appeal Court level, considered the meaning of the search for “the parties’ shared intentions, actual, inferred or imputed” and the imposition of the Court’s views. Kernott v Jones provides some clarification as to the interpretation of inferring and imputing intention and imposing the Court’s views and as to what should be considered when doing this.

The facts of the case were that the parties jointly owned a property, purchased in 1985 using Jones’ deposit and a joint mortgage. Kernott then primarily paid for a small further loan used to build an extension. The parties shared household costs and mortgage repayments. In 1993 the parties separated and Jones, with the two children, remained at the property and paid for the property outgoings. A separate property was purchased by Kernott using the proceeds of the sale of a jointly owned policy. The parties agreed (eventually) that at the point of separation, their beneficial interests were equal. The issue was whether they subsequently changed. Importantly, it was common ground that there had been no discussion as to any change in beneficial interests.

The Court of Appeal considered whether or not and in what circumstances the Court could “impute” or “infer” a common intention to vary equal beneficial interest in a property and how to quantify such imputed or inferred interests. The Court of Appeal found that there was no evidence to infer a common intention to vary the beneficial interests since separation and that consequently, the beneficial interests remained equal, as they had been in 1993.

It is important to look at the definitions of impute and infer. Although the words were used by Baroness Hale, it was Lord Neuberger in Stack v Dowden who proposed a definition:-

“An inferred intention is one which is objectively deduced to be the subjective actual intentions of the parties in the light of their actions and statements”

“An imputed intention is one which is attributed to the parties, even though no such actual intention can be deduced from their actions and statements, and even though they had not such intention”

This suggests that the difference is that where inferred, there was an intention that becomes clear on considering the facts whereas with imputing, there was no intention but the Court is attributing one to the parties. Confusingly, the Court also confirmed in Stack v Dowden that its views must not be imposed.

In the High Court in Kernott v Jones, the Judge felt that an intention to vary the beneficial interests could be inferred or imputed on the basis of the parties’ conduct. He then considered the quantification of the beneficial interests and imputed a share on the basis of what was fair and just, considering that imputing shares can only be on this basis if there is no way of deducing this from conduct.

The Court of Appeal (with one Judge dissenting) did not agree with the High Court Judge and instead found that there was no evidence to infer a common intention to vary the beneficial interests. Consequently, the Court of Appeal did not need to make a decision on the imputation of the shares but the Judges did comment on this issue, expressing different views.

Lord Justice Wall indicated that if the common intention to vary could be found then the imputation of the new shares of beneficial interest was one of judicial discretion and that the Court could use the Oxley v Hiscock test of what it considers fair when there is no evidence of discussions.

Lord Justice Rimer considered the meaning of impute and impose, he said that:-

“the Court could and would presumably only consider so imputing an intention to them if they had drawn a blank in its search for an express or an inferred intention but wanted to impose upon the parties its own assessment of what would be a fair resolution”

This seems to be the rationale that was used in the High Court but it is specifically rejected by Lord Justice Rimer who found that this approach was rejected in Stack v Dowden. Lord Justice Rimer concludes that the Court in Stack v Dowden did not intend to enable the Courts to impute an intention when there was no express or inferred intention. He also felt, in contrast to Lord Justice Wall, that the fair and just test of Oxley and Hiscock had been rejected in Stack v Dowden.

Lord Justice Jacob agreed with the High Court Judge and felt that the parties intentions could be found to have altered over the years, on the basis of their conduct. He indicated that the fair and just test was a part of the test but not the whole test as to quantification.

What can we draw from the decisions and judgments in Kernott v Jones?

  • Whilst the leading judgment in Stack v Dowden did not define “impute” and “infer” the definitions proposed by Lord Neuberger have been approved.
  • The principle of equity following the law espoused in Stack v Dowden is a very difficulty principle to rebut, particularly in joint ownership cases.
  • Moving out of a property and providing little financial contribution towards a jointly owned property for a number of years is not sufficient evidence to infer a change in intention (although, given that it was enough for the District Judge, the High Court Judge and one Appeal Court Judge, perhaps one can “infer” that it is close to the boundary).
  • The indications from the judgments are that imputation cannot be used to decide whether there was a common intention (presumably as this would be imposing).
  • The issue of imputing shares remains unanswered, with the three Appeal Court Judges reaching different conclusions (one should note that the views expressed by the Judges are just that, as the Court found by majority that there was no common intention to vary the beneficial interests it did not have to make a binding legal decision on quantification).
  • The circumstances in which the Courts can take into account what it feels is fair and just in these proceedings also remains something of significant judicial dispute. The High Court Judge felt that this test could be used to quantify shares when there was no other evidence, Lord Justice Wall seems to agree with this, Lord Justice Rimer concluded that there was no such test and that it was rejected in Stack v Dowden and Lord Justice Jacob the fair and just test formed just part of the Court’s consideration.

How can you protect your beneficial interest in property?

Under the Land Registration Act 2002, a restriction can be entered in the register of any property or land by anybody who has a sufficient interest in it. As well as safeguarding the interest of the beneficiaries of the land, a restriction may also control or limit the way the property or land is dealt with.

Hallman v Harkins

In the case of Hallman v Harkins [2019] UKUT 245 an application was made by Tracy Harkins to the Land Registry to enter a restriction against the registered title to a property in Bootle (“the Property”) to protect her beneficial interest which she claimed to have. She had shared the Property with her partner of 13 years, Laurence Hallman. They had separated in 2016 and Mr Hallman was the sole registered proprietor of the Property. Mr Hallman objected to the application.

First-Tier Tribunal Conclusions on beneficial interest

The dispute was referred to the First Tier Tribunal (“FTT”) under section 73(7) of the Land Registration Act 2002. They concluded that parties had has a common intention from January 2013 that Mr Harkin should have a beneficial interest in the Property. As a result, it directed the Chief Land Registrar to give effect to her application for a restriction to be entered on the register.

The FTT also went a step further and quantified Mr Harkin’s share on the basis that they had been invited to do so by the parties. By an arithmetical calculation based on the duration of the couple’s engagement relative to the length of their relationship, it then concluded that her beneficial interest in the Property was 35% of the whole.

Appeal Findings

Permission to appeal was granted by the Upper Tribunal on two grounds:

  • The FTT’s conclusion that the couple had pooled their resources (which Mr Hallman argued was reached without regard to the relevant parts of the evidence); and
  • The FTT’s approach to the quantification of Ms Harkin’s beneficial interest (which Mr Hallman argued was arithmetically incorrect, but which is also open to the more fundamental objections that it is contrary to principle and beyond the FTT’s jurisdiction)

On appeal, Martin Rodger QC made the following findings:

  • The FTT was entitled to find that Mr Harkin has a beneficial interest which should be protected by a restriction;
  • The FTT had no jurisdiction to determine the extent of that beneficial interest and its conclusion is not binding on the parties; and
  • In any event, the FTT’s view that Ms Harkin’s interest was 35% was based on an incomplete assessment of the evidence and was wrong in principle.

Often where such disputes arise at the FTT stage, it is common for parties to issue proceedings in Court and for the FTT proceedings to be stayed pending the resolution of the Court proceedings. The Court can determine the extent of a party’s beneficial interest and therefore in the interest of costs, parties tend to pursue such claims through the Court route. Naturally, if a determination is made in Court and a party is found to have a beneficial interest, it follows that a restriction should be registered.

This case is, however, an interesting reminder of the FTT’s jurisdiction when it comes to beneficial interest claims as often these cases can arise from disputes relating to the registration of restrictions.

The law in relation to beneficial ownership of property remains complex, confusing and capable of interpretation in many different ways. Stack v Dowden and Kernott v Jones have provided some welcome clarification but there remain numerous questions.

Kernott v Jones has amplified the equity follows the law principle and confirmed that the bar is set high for anyone wanting to rebut this presumption in joint ownership cases. The case has also perhaps undermined arguments about the imputation of a common intention and possibly also about the imputing of the respective shares.

Contact our Camden or Hampstead Solicitors for more information about our other services including advice on property in the event of divorce .

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Beneficial interest

Practical law uk glossary 3-202-2697  (approx. 9 pages).

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Michigan Law Review

Home > Journals > Michigan Law Review > MLR > Volume 52 > Issue 4 (1954)

Trusts - Validity and Effect of Assignment of Beneficial Interest in Trust for Support - Claims of Beneficiary's Divorced Wife and Children

William E. Parmenter Jr. , University of Michigan Law School

A testamentary trust required the trustee to apply income in such amounts as might be necessary for the education, support and maintenance of H until he attained the age of 35 years; then to hand over the corpus and accrued interest. Contingent interests were created for children of H who might survive his death before the age of 35. After the death of testatrix, H married W and had two children. In an agreement subsequently incorporated in a California decree of divorce obtained by W, H promised to make monthly payments to W for her own support and for the support of his children until distribution of the trust, and purported to assign to her his interest in the trust income to secure this obligation. Upon W 's request for payment, plaintiff trustee sought a judgment declaratory of the effect of the assignment and the claims of H 's wife and children. On appeal, held : (1) Trustee had no right or duty to comply with the purported assignment of income to W . The trust was one for support from income and H could not alienate his income interest. (2) The will of testatrix evidenced her expectation that H might marry and her intent that reasonable support be provided not only for H individually, but for his family as well. Accordingly, trustee was instructed to pay from surplus income, after providing support for H , amounts which it should consider reasonably necessary for the education, support and maintenance of his children. (3) Trustee had no right to honor W' s claim for support from the trust. Under the terms of the divorce decree she became a mere creditor unconnected with H 's family and her needs for support were not to be considered in determining the amount necessary for H 's support. Seattle First Nat. Bank v. Crosby , (Wash. 1953) 254 P. (2d) 732.

Recommended Citation

William E. Parmenter Jr., Trusts - Validity and Effect of Assignment of Beneficial Interest in Trust for Support - Claims of Beneficiary's Divorced Wife and Children , 52 M ich. L. R ev. 622 (1954). Available at: https://repository.law.umich.edu/mlr/vol52/iss4/20

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2 Beneficial Interests: Protection, Forfeiture, and Trust Termination

  • Published: March 2017
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The various measures discussed in this chapter enable a settlor to retain control over the trust property by weakening the corresponding prerogatives of the beneficiaries. ‘Protective’ and ‘spendthrift’ trusts are a form of asset protection for those beneficiaries who, at least in the settlor’s view, are incapable of adequately managing their financial affairs. ‘Forfeiture’, ‘no-contest’, or ‘ in terrorem ’ provisions are meant to discourage the beneficiaries from challenging the trust or more generally the programme that the settlor has conceived for their benefit. To this effect, an important difference exists between the law and practice of England and that the United States.

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Assignments, Disclaimers and Powers of Appointment

          Assignments, Disclaimers and Powers of Appointment can alter the distribution of a decedent’s estate.    

          First what is and who can make an assignment? A person who has a vested — legally enforceable — interest in a decedent’s estate can “assign” – i.e., transfer – part or all of their interest to another. Generally, an inheritance vests upon the decedent’s death.  An assignment is a gift by the assignor making the assignment to the assignee receiving the assigned interest.    Assignments create tax issues for both the assignor and assignee.   

          For example, consider an unmarried father who dies intestate — without a will or trust – and is survived by a son and a daughter — his heirs.  Prior to settling dad’s estate, the son decides to give his one-half share to his sister and signs and notarizes an assignment of inheritance rights.  The assignment is then filed with the Court.  Dad’s estate, less expenses and debts, is distributed entirely to the daughter. 

          If an interest in real property inherited from a parent is assigned then the parent child exclusion from reassessment — for local real property taxes — only applies to the interest(s) belonging to the child(ren) who do not assign their interest(s).  There is no reassessment exclusion for any transfers between siblings.

          Assignments, however, almost never apply to a beneficiary’s interests in a trust.  Usually, a trust prohibits beneficiaries from assigning their interest in the trust before distribution.  The anti-assignment provision protects undistributed trust assets from claims by a beneficiary’s creditors. 

          Next, disclaimers are used when a beneficiary, or heir, refuses to accept a gift or inheritance.  You cannot force someone to receive a gift or an inheritance.  To be valid disclaimers must satisfy the following requirements: be unconditional, be in writing, and be timely (i.e., generally, within nine months of the transfer), and, when real property is involved, also be filed with the county recorder where the real property lies.  Unlike assignments, the person disclaiming their interest cannot say who receives the disclaimed interest.  A disclaimer is not a gift by the person disclaiming.  Lastly, one cannot have accepted any benefits from the property being disclaimed, such as the income from an income producing asset. 

          The person disclaiming their gift or inheritance is treated as if they had predeceased the person who made the gift.  We see who is then entitled to inherit. 

          For example, a decedent’s trust leaves a share of the decedent’s trust estate to a named beneficiary and otherwise, if he does not survive to inherit, to the beneficiary’s descendants by right of representation.  The beneficiary survives and timely disclaims.  The beneficiary’s living descendants would then inherit by right of representation. 

          Unlike assignments and disclaimers, powers of appointment are created within a person’s estate planning, e.g., a trust or will, for future use.  A power of appointment allows the power holder to say who receives a gift/distribution from a trust or an estate.  The power of appointment is either a limited power that allows gifting to certain persons or is a general power that allows gifting to anyone at all, including the power holder, the power holder’s estate and the power holder’s creditors.  Powers of appointment are used for a variety of estate planning reasons. 

          For example, a husband’s and wife’s joint estate planning may give the spouse who survives a limited power of appointment over the deceased spouse’s separate trust estate.  The limited power of appointment might allow the deceased spouse’s estate to be divided equally or unequally amongst the deceased spouse’s children as the surviving spouse sees fit after the deceased spouse’s death.

          Anyone who wants to proceed with making an assignment, a disclaimer or exercise of a power of appointment should consult a qualified attorney.  There are tax and other issues to discuss and drafting requirements to these legal instruments that benefit from the expertise of a qualified attorney. 

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Assignment of Interest In LLC: Everything You Need to Know

Assignment of interest in LLCs happens when a member communicates to other members his/her intention to transfer part or all of his ownership rights in the LLC to another entity. 3 min read updated on February 01, 2023

Updated October 28, 2020:

Assignment of interest in LLCs happens when a member communicates to other members his/her intention to transfer part or all of his ownership rights in the LLC to another entity. The assignment is usually done as a means for members to provide collateral for personal loans, settle debts, or leave the LLC. The member (assignor) and the person assigned (assignee) sign a document called the Membership Assignment of Interest.

Why a Member May Want to Assign Interest

A member may choose to assign interest for a number of reasons.

  • The assignment of interest may happen as collateral to a loan to one of the members.
  • Some members can assign interest to settle debts. The assignment will be effective until the debt is cleared.
  • An assignment of interest can also' be done  to a member's legal heirs , going into effect upon the death of a member. 

The Rights and Limitations of the Assignee

The laws governing LLC membership interest assignments vary considerably from one state to another. 

  • Most states prohibit the assignee from participating in the LLC's operations or decisions unless the Articles of Organization have this provision.
  • An assignee is protected from liability from the assignor until the assignee becomes a member in most states. However, the law in a few states, including California and Florida, states that the assignee does get the assignor's liability.
  • Should the assignee become a member after the assignment, he is only entitled to the rights and restrictions the assignor had.
  • The assignment usually gives the assignee the right to receive the assignor's share of the profits — but not necessarily the other rights.

The Rights and Limitations of the Assignor

  • In many states, all LLC members have the right to assign membership interest.
  • In most states, assigning interest does not necessarily lead to forfeiting of voting and management rights and can be temporary. Texas law, on the other hand, states that the assignor ceases to be a member of the LLC after the assignment.

The Rights and Limitations of Other Members

  • All members of the LLC have to be notified of any type of assignment.
  • Some states require the assignment of interest to be approved by all members.
  • The new person who has been assigned interest does not necessarily become a member even if the assigner has decided to leave the LLC. The other members can decide whether to admit the assignee as a member or not. Should a member assign interest without the input of other members, the interest is normally limited to financial benefits.
  • In a two-member LLC, one member can easily transfer the interest to the other. 

The Membership Interest Assignment Document

The LLC's operating agreement should explain the rights of members on issues of transfer of interest, and the agreement should be followed during the assignment process. The Membership Interest Assignment acts as a record of the agreement, and the LLC normally keeps a copy of the document. The law in most states does not provide a formal template of the Membership Interest Assignment document but lists what should be included in the document. The document should have the following details:

  • Percentage of interest that will go to the assignee 
  • Whether the assignee will have voting rights
  • The signatures of the assignor and the assignee

Assignment of Interest Versus Selling Ownership Stake

The assignment of interest is typically different from selling the ownership stake . Selling a member's ownership stake in the LLC requires unanimous approval by the other members. A departing member may also assign his membership to another member.

If a member is being paid to transfer interest, this is treated for tax purposes as a sale, and the selling member's gains might be liable to capital gains tax. Even if a departing member is not paid for his interest, if the departure results in the assignee getting the departing members' share of liability, the departure is seen as an exchange or sale.

Assignment of Interest Versus Abandoning an LLC

If a member wants to withdraw interest in an LLC, he/she can choose to simply legally abandon the LLC in most states. The abandoning member should give some kind of notice to the other members explaining that he is abandoning membership. Abandoning membership does not usually require the approval of other members.

Abandoning an LLC does not absolve the member of liability he/she may have incurred when still a member.

If you need help with the assignment of interest in LLCs, you can  post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Content Approved by UpCounsel

  • LLC Membership Interest Transfer Agreement
  • What Is the Definition of Assigns
  • Assignment of Interest
  • Assignment Law
  • Assignment of Interest Form
  • Assignment of Rights Example
  • Assignment of Rights and Obligations Under a Contract
  • Assignment Agreement Definition
  • Legal Assignment
  • Partial Assignment of Contract

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assignment of beneficial interest

  • Personal tax

Declare beneficial interests in joint property and income

If you jointly own property with your spouse or civil partner and want to change the split of income from it for tax purposes use Income Tax form 17.

Declare beneficial interests in joint property and income (form 17)

Ref: Form 17

https://public-online.hmrc.gov.uk/lc/content/xfaforms/profiles/forms.html?contentRoot=repository:///Applications/SpecPersTax_iForms/1.0/17&template=17.xdp

If you live with a spouse or civil partner and have income from property you jointly own, you’ll normally be taxed on an even split of the income between you.

Use this form if you want to change the split of income to your actual share of ownership.

You’ll also need to provide evidence that your beneficial interests in the property are unequal, for example a declaration or deed.

Before you start

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IMAGES

  1. Security assignment of beneficial interest in trust

    assignment of beneficial interest

  2. Assignment Of Llc Membership Interest

    assignment of beneficial interest

  3. Assignment Of Beneficial Interest Form

    assignment of beneficial interest

  4. Assignment Of Llc Membership Interest

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  5. Certificates Of Beneficial Interest (SAVE EDIT PRINT)

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  6. STANDARD ASSIGNMENT OF BENEFICIAL INTEREST

    assignment of beneficial interest

VIDEO

  1. 1 Ch3 Part 1 Interest Rate Examples Side 5

  2. Income from interest on securities class 1

  3. Principal of Finance

COMMENTS

  1. Chicago Title

    (Click form name to download) Acceptance of Transfer of Beneficial Interest and Ratification (W-9) TO COMPLETE THIS FORM: SAVE the blank form to your computer BEFORE entering your information and then SAVE AGAIN after completing the form.

  2. Beneficial Interest: Different Types and Examples

    A beneficial interest is the right to receive benefits on assets held by another party and is often evident in matters concerning trusts. Most beneficial interest arrangements are in the form...

  3. 14.1 Beneficial interests

    14.1 Beneficial interests. Many securitization transactions involve the transfer of financial assets to a limited-purpose entity through one or multiple steps. Beneficial interests are formed when a special purpose entity issues various interests in security form (hence the term "securitization") to third parties.

  4. beneficial interest

    LII Wex beneficial interest beneficial interest Beneficial interest refers to a right to income or use of assets in a trust. People with a beneficial interest do not own title to the property, but they have some right to benefit from the property. This is to be contrasted with trustees and other agents of the trust who only have managing duties.

  5. Assignment of Beneficial Interest Definition

    Assignment of Beneficial Interest means an assignment of beneficial interest pursuant to which the applicable Seller assigns, transfers and conveys to the Purchaser all of such Seller's beneficial right, title and interest in and to the Canadian Owned Real Property for which legal title is held by 6068057 Canada or 0827965 B.C., in such form as ...

  6. Beneficial Interest: Everything You Need to Know

    A beneficial interest can be described as a right, advantage, or benefit that an individual enjoys from properties or other forms of trusts that stem from agreements without controlling or owning a property. It can be separated from the rights of the trustee, the person holding the legal title.

  7. New standard document on deed of assignment of beneficial interest in

    This is a deed to assign a beneficial interest in residential property. The document is intended for the use where an individual wishes to make a transfer/assignment of their share in the equitable estate of a residential property. If you have any comments or queries on this new document, please let us know what you think by sending your ...

  8. Beneficial interest

    (October 2022) A beneficial interest is the right that a person has arising from a contract to which they are not a party, or a trust. [1] For example, if A makes a contract with B that A will pay C a certain sum of money, B has the legal interest in the contract, and C the beneficial interest.

  9. §3.73 5. Assignment of Beneficial Interest

    Assignment of Beneficial Interest. When A, as beneficiary of a trust owning real property, assigns A's beneficial interest to B, reappraisal of the property is triggered if the beneficial interest reverts back to A after a term exceeding 12 years. Rev & T C §60; 18 Cal Code Regs §462.001.

  10. Beneficial Interest in Property

    Assuming a deed of trust already exists, you can transfer the beneficial interest in property to another person with a deed of assignment. This changes the beneficial ownership of the property without changing the legal title, which is helpful if there is a mortgage since changing the legal title would require the mortgage lender's consent.

  11. Beneficial interest

    The legal owner is said to hold the beneficial interest in the property on trust for the beneficial owner. The beneficial owner of the land will have a right to the income from the property or a share in it, and a right to the proceeds of sale of the property or part of the proceeds. A beneficial interest in property is an equitable interest ...

  12. Trusts

    William E. Parmenter Jr., Trusts - Validity and Effect of Assignment of Beneficial Interest in Trust for Support - Claims of Beneficiary's Divorced Wife and Children , 52 M ich. L. R ev. 622 (1954). A testamentary trust required the trustee to apply income in such amounts as might be necessary for the education, support and maintenance of H ...

  13. Trusts: Validity and Effect of Assignment of Beneficial Interest in

    In Keeler's Estate4 it was held that an attempted assignment of the beneficial interest in a trust for support operated as a revocable order to the trustee to pay successively accruing installments of income to the assignee, and the trustee, although not obliged to do so, could make such payments until ...

  14. Legal interest and beneficial interest in property

    The beneficial interest is an interest in the economic benefit of a property. It belongs to the beneficial owner, who is entitled to the financial value of the land, regardless of the title entries at the Land Registry. In particular, beneficial interest gives the right to: live in the property. a share of the rental income.

  15. Giving up your inheritance: Assignments vs disclaimers

    You assign (transfer) all or part of your interest in the estate to someone else. This is not just an informal transfer. There are legal steps that need to be taken since the assignment contradicts what the decedent designated or what the law requires based on familial relationship.

  16. Beneficial Interests: Protection, Forfeiture, and Trust Termination

    Protection of the beneficial interests conferred under a trust from the improvidence of the beneficiaries themselves may take place effectively under a discretionary trust. In that case, no interest in the trust property vests in any object of the trustees' (or any other appointor's) discretionary powers until a distribution is actually made.

  17. Assignments, Disclaimers and Powers of Appointment

    A person who has a vested — legally enforceable — interest in a decedent's estate can "assign" - i.e., transfer - part or all of their interest to another. Generally, an inheritance vests upon the decedent's death. An assignment is a gift by the assignor making the assignment to the assignee receiving the assigned interest.

  18. ASSIGNMENT OF BENEFICIAL INTEREST

    ASSIGNMENT OF BENEFICIAL INTEREST ALBANY BANK AND TRUST COMPANY N.A., as Trustee under its Trust Number ________________________, hereby acknowledges receipt of the foregoing assignment this _________day of _________________________A.D. 20__________. ALBANY BANK AND TRUST COMPANY N.A., as trustee, as foresaid.

  19. Assignment of Interest In LLC: Everything You Need to Know

    Updated October 28, 2020: Assignment of interest in LLCs happens when a member communicates to other members his/her intention to transfer part or all of his ownership rights in the LLC to another entity. The assignment is usually done as a means for members to provide collateral for personal loans, settle debts, or leave the LLC.

  20. Declare beneficial interests in joint property and income

    Declare beneficial interests in joint property and income English Cymraeg If you jointly own property with your spouse or civil partner and want to change the split of income from it for tax...

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    ASSIGNMENT OF THE BENEFICIAL INTEREST . DATE: FOR VALUE RECEIVED, the undersigned assignor(s) hereby sell(s), assign(n), transfer(s) and set(s) over unto , 1. All. of the Assignor's rights, powers, privileges and beneficial interest, - OR - 2. Part. of the Assignor's rights, powers, privelges and beneficial interest, more specifically defined as:

  22. PDF STATEMENT BY GRANTOR AND GRANTEE

    STATEMENT BY GRANTOR AND GRANTEE. The grantor or his agent affirms that, to the best of his knowledge, the name of the grantee shown on the deed or assignment of beneficial interest in a land trust is either a natural person, an Illinois corporation or foreign corporation authorized to do business or acquire and hold title to real estate in ...