Definition - What does Beneficial Interest mean?
A person who holds a beneficial interest in property is granted the interests, advantages and benefits in that property without actually owning the property.
A beneficial interest is established by contract or trust. Typically, with a beneficial trust, a beneficiary merely holds beneficial interest while a trustee maintains the legal title.
Justipedia explains Beneficial Interest
A beneficial interest commonly arises out of the terms of a trust agreement. When a trust is established for a minor, for example, a trustee holds legal title to the trust and administers the benefits to the minor. The minor is granted interests, advantages and benefits springing from the trust without holding legal title to the trust.
In some cases, holding only a beneficial interest shields the holder from the risks associated with full, legal title.