What Is Cestui Que Vie?
Cestui que vie is French for he who lives. It is a legal term for an individual who is the beneficiary of a trust or an insurance policy, with rights to property and the income and profits that the property provides. A cestui que trust is the person entitled to an equitable, rather than legal, trust in the estate assets. The concept is used in modern life and health insurance policies, where cestui que vie is an individual whose life measures the duration of the insurance contract. In these contracts, cestui que vie is known as the policyholder, insured, or policy owner.
- In French, Cestui que vie means "he who lives."
- The legal term describes the person who is the beneficiary and has rights to property in an estate.
- Cestui que vie is often used today in life and health insurance policies.
How Cestui Que Vie Works
Cestui que vie as a legal concept dates to the medieval period, specifically England. During this time, the owners of farms and other properties could be absent for extended periods of time as they traveled, whether for business or religious purposes. It became important to ensure that family members, business partners or tenants could use the property without fear of it being expropriated by feudal lords. While the individual was away, a trustee took care of the land but did not retain legal ownership over the property. The trust often relied on a good faith understanding between the parties.
In practice, it was often a way to avoid paying taxes by granting land and property to the Church, which was exempt from taxation, while still allowing descendants to reside in and enjoy the estates. Henry VIII, under his advisers Thomas Cromwell and Thomas More, attempted to invalidate cestui que vie trusts, a process continued under the English Reformation.
The year the British government enacted the Cestui Que Vie Act.
Cestui Que Vie Is Now a Part of Modern Law
Later, however, after the Great Plague of 1665 and the Great Fire of 1666 had destroyed London, the British government enacted the Cestui Que Vie Act in 1666, which reinstated the legal concept. After those twin catastrophes, hundreds of thousands of British citizens died or fled. In response, the government took all private property into the trust until the proper heirs or owners could be identified—the cestui que vie. Some parts of the 1666 Act are still law in the United Kingdom.
The legal concepts behind cestui que vie changed a bit over the centuries in order to reduce fraud and to ensure that property owners couldn’t shift their property into trusts in order to dodge creditors. More recently, laws against property held in perpetuity required that parties named as the beneficiaries in a trust should vest, and thus have an interest in the trust rather than passively receive benefits.
When a trust is created it is done for the benefit of a specific individual who is identified in the trust document. In a trust, the cestui que trust is the person who has an equitable interest in the trust. The legal title of the trust, however, is given to the trustee. Cestui qui use, or he who uses, is the person for whose benefit the trust is made. During the medieval period, cestui que use arrangements became so common that they were often assumed to be present even when they had not been arranged.