Private trusts serve as effective tools for wealth succession, involving a fiduciary relationship among the trust creator (settlor), trustee, and beneficiaries. In addition, a protector is often appointed to oversee the trustee’s activities in the interest of the beneficiaries. Understanding the responsibilities of each party is crucial for the success of the trust arrangement, aligning with the settlor’s goals. While there is no specific regulation on private trusts in Nigeria, the English Trustees Act of 1893, Trustee Investment Act 1957, and English common law principles govern trusts in the country.
Responsibilities of Parties in a Private Trust Arrangement:
- Trust Creator (Settlor):
- Setting up the trust and transferring assets to it.
- Selecting reputable trustee(s).
- Determining the manner of distribution of trust assets/income to beneficiaries.
- Providing guidelines and regulations documented in the trust deed.
- Trustee:
- Managing trust assets.
- Implementing terms in the trust deed.
- Distributing trust assets in line with the trust deed.
- Complying with tax obligations related to trust income.
- Beneficiary:
- Adhering to instructions in the trust deed regarding conduct, education, health, etc.
Key Notes for Parties in a Trust Arrangement:
Trust Creator (Settlor):
- Seek Professional Advice: Consult legal and tax practitioners to understand trust structures, types, and implications, empowering the settlor with knowledge to protect their interests.
- Ensure a Detailed Trust Deed: Whether living or testamentary, the trust deed or Will should be detailed and unambiguous. It should explicitly state the nature and objectives of the trust, beneficiaries, trust properties, duties of each party, powers of the settlor, trustees, and beneficiaries, remuneration of trustees, grounds for termination of trusteeship, and winding up of the trust.
These key considerations ensure clarity, prevent misinterpretation, and safeguard the interests of all parties involved in the private trust arrangement. A well-structured private trust can be a powerful tool for wealth succession and the attainment of the settlor’s objectives.
For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.