Beneficial ownership

The Jolly Contrarian’s Glossary The snippy guide to financial services lingo.™ Go Premium Index — Click the ᐅ to expand: Glossary Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

Under English law there is a distinction between legal ownership and beneficial ownership. The legal owner is the person in whose name title to the asset is formally registered. The beneficial owner is the person (and in most cases, it’s the same person) who has the effective benefit of the asset: not just its economic risks and rewards, but the effective right to deal with it absolutely.

This might seem an artificial, somewhat fatuous distinction — certainly, continental lawyers think so: there’s no concept of that separation at all in the civil law tradition — but it is this very distinction on which the idea of a trust is founded. The Trustee legally owns the trust property, but it does not form part of the trustee’s insolvency estate.

Trusts are excellent things if you are a finance lawyer, and get you out of all kinds of jams.

See also

• Constructive trust
• Custody