The Case for Estate Planning and Trusteeship
In this article, Binta Max-Gbinije examines the trusteeship landscape in Nigeria and makes a case for deepening of the estate planning culture among Nigerians
Nigerians are renowned for their resilience; a can-do spirit that has been instrumental in overcoming the herculean challenges. The ultimate goal is to be successful and happy. Success comes in various forms, but the ultimate indicator is the fulfilment that comes from achieving the goal you have set for yourself. At the Rio 2016 Paralympics Games, Nigerians set world records in various fields as they marched towards an impressive haul of medals. Last year alone, despite the daunting global environment, about $21 billion was remitted home by Nigerians in Diaspora, according to the Migration of Remittance Fact book 2016. Such is the Nigerian drive for success.
Almost everyone desires to be wealthy and to live comfortably. There is nothing wrong with being rich, aspirational or ambitious. Wealth is among several factors that endow comfort, which is a condition that everyone should aspire to have. However, money-making is not the easiest of tasks. This is a reality check that everyone understands. While hard work is an essential ingredient for wealth creation, more important is the value you bring and its appreciation in the marketplace. The starting point is to make an effort, employing your own skills as well as proven strategies and approaches that others have used to succeed. In doing so, you may even become the originator of an uncharted pathway to success. We must keep trying. No two persons are the same; each one of us is imbued with our own uniqueness. What is paramount for everyone is to discern our peculiar talents or capabilities and utilize it to actualize our individual dreams or potential.
When people hear the nomenclature ‘corporate trustee,’ it seems like some highfalutin, foreign or elitist expression reserved for certain classes of people. But, that is not exactly correct; it is an arrangement that is open to everyone. We may just describe the term as a company that helps people to build, manage and protect wealth when their assets are put in a trust. A trust is an arrangement whereby assets are transferred by an individual/corporate (known as the ‘settlor’) to a trustee to be held by the trustee for the benefit of certain beneficiaries. So, corporate trustees are licensed by law to offer trust services to individuals as well as organizations.
Trusteeship is not alien to Nigeria or Africa. Among the various ethnic groups in Nigeria, trusteeship is well-embedded, and operates according to customary conventions. It is common, for instance, for a father to put his property in the care of a trusted friend or family member for onward transfer to his young children when they come of age. In some places, a man’s assets are inherited automatically by the eldest son or shared among his wives and children when he passes on.
Though corporate trusteeship has similar characteristics, the traditional practice however has a number of drawbacks that fail to address certain situations adequately. Family dynamics and personal interest, for instance, may be quite complicated, thus creating gaps that often lead to acrimony. Such instances include collusion and breach of trust, diversion of funds and termination of function due to death of the trustee, usually an individual, and family squabbles.
A good corporate trustee, on the other hand, offers numerous advantages for which the practice is steadily gaining acceptance in Nigeria. Among its benefits are continuity of role and function (since as an ongoing concern the firm will remain in business and continue to adhere to client’s instructions), objectivity, prudence and professionalism. In addition, a corporate trustee ensures quick and prompt attention to affairs and elimination of diversion. The trustee has in-house investment expertise, experience and systems that ensure that full attention is given to managing trust assets and keeping track of investments, disbursements, and fees, among others. Because they operate in a sector that is highly regulated, a corporate trustee conforms to global best practices, which ensure quality service delivery and better results. People establish trusts for different reasons which may include confidentiality, estate planning, asset protection and tax reduction. It is therefore logical to seek the services of an entity with the resources and expertise to deliver the desired outcomes. The end result of having a trustee with experience and integrity to manage your financial affairs is peace of mind.
It is heart-warming to know that our people are increasingly becoming aware of the benefits of estate planning. You have worked so hard to build a comfortable savings cushion with the intention of living comfortably at retirement and to make sure your children and family are well taken care of. It is only logical to have your ‘sweat’ well preserved by applying processes and procedures that ensure orderly management while alive and a seamless transfer at passage.
Death is often a sensitive or charged topic for most people to discuss. But, it is an issue we cannot run away from; life will end at a certain point in time. Yes, we will all depart this earth someday, with the question being the when, the where and the how. However, we can make our time on earth a happy memory for our loved ones if we have neatly tidied up and made the intergenerational wealth transfer a ‘painless’ process for them. That is the whole essence of estate planning.
There are different options available to the individual when planning his estate. These include writing a will, establishing a trust and making an inter vivous gift. While the will outlines how assets are shared at death, under a trust, assets are held by the trustee for the benefit of specified beneficiaries. Inter vivous entails giving out assets as gifts while the giver is still alive.
We often hear of little things that matter in life. Nothing can be truer. That small step today can set the stage for an amazing achievement tomorrow. Starting an estate plan today, even with the smallest of assets, may become your wisest decision tomorrow. A corporate trustee to assist you kick-start the process may just be around the corner. All you need to do is to conduct thorough due diligence as you seek to engage one.