Also known as: benefited entity · transfer beneficiary · beneficiary · cestui que trust
Written by attorneys · grounded in primary & secondary sources — see below
A person or entity that receives the ultimate economic advantage from a transfer of property even though the transfer is made directly to another party. The concept permits a bankruptcy trustee to recover the value of a fraudulent conveyance from the indirect beneficiary under section 550.
Firm transfers funds to Old Lender to pay off Shareholder's personal loan. Shareholder receives the economic benefit because the payment extinguishes his debt. The trustee recovers the amount from Shareholder as the entity for whose benefit the transfer was made.
Promisor completes construction work for Promisee that satisfies Promisee's separate obligation to Beneficiary. Beneficiary receives the economic benefit of the performance. The facts illustrate a third-party beneficiary relationship.
Owner conveys an easement across Blackacre to Neighbor in reliance on an oral promise. Neighbor changes position by building a road. Neighbor receives the economic benefit of the servitude.
Select any source to read its text and confirm it supports the definition.
Court converts an outright remainder into a special needs trust for Disabled Beneficiary. Disabled Beneficiary receives the economic benefit of preserved assets. The modification furthers the trust purposes under equitable deviation principles.
Trustee sells trust property below market after Beneficiary consents. Beneficiary receives the economic benefit of the transaction. Consent precludes liability of the trustee for the breach.
Promisor agrees to pay Promisee's debt directly to Creditor. Creditor receives the economic benefit of the payment. The facts show an intended beneficiary under the contract.
The person or entity that receives the ultimate economic advantage from the transfer even if the property goes directly to another party. In the classic example a company pays a shareholder's creditor to extinguish the shareholder's debt. The shareholder is the entity for whose benefit the transfer was made.
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Yes. Section 550 expressly permits recovery from either the initial transferee or the entity for whose benefit the transfer was made. The trustee may choose the most convenient or solvent target.
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No. Liability attaches because of the economic benefit received regardless of the entity's knowledge or participation in the transfer itself.
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