Corporate trusteeship has been on the rise, says Max-Gbinije
Stanbic IBTC Trustees Limited (SITL) recently launched a campaign to promote its Wills and Estate Planning offerings, tagged: Stanbic IBTC Legacee, a reference to intergenerational wealth transfer. The Chief Executive, SITL, Binta Max-Gbinije shared with BANKOLE ORIMISAN some fundamental issues on Wills and Estate Planning in Nigeria. Excerpts:
How is the Trusteeship business in Nigeria; and how is it fairing among the financial services industry?
The Trusteeship sector in Nigeria is one of the emerging giant sectors of the economy. Over the years, we have seen the emergence of several Trustee companies springing up across the country. The need for Corporate Trustees has been on the rise in many commercial ways, which may not be popular to those who aren’t players in the capital market. Trustees are there where corporate or government bonds are to be issued, where there are public investment funds and schemes to be managed, just to mention but a few. Thus, I dare to say that the Trusteeship industry is a fast growing sector in Nigeria.
Informally, Trusteeship is an old practice among various ethnic groups in Nigeria. For instance, it is not unusual for a man with young children to put his property in the care of a trusted friend or family member for onward transfer to his children when they come of age. That may be a form of verbal will or estate planning.
Can you briefly describe Will writing/estate planning, in relation to some prevailing cultural practices or any other inheritance practice?
As Africans, we have had several customs and traditions regarding inheritance of a deceased person’s assets. For example, the primogeniture customary practice, which leaves the whole of the deceased assets to the eldest son as inheritance, or those that disenfranchise female offspring of a deceased from any inheritance; these have over the years resulted in family squabbles and some discord. One easy way to resolve such would be to engage in a proper estate planning exercise, which would require a person to do any of or a combination of the following – write a Will, which clearly states his or her decision and intention regarding the management of the assets left behind. Under the laws of Nigeria, a Will written by a person, supersedes whatever customary or religious practice that such person is subject to.
Similarly, an individual can set up a Trust where all or some of his assets are transferred to a Trustees to hold and manage in line with pre-agreed terms contained in a Trust Deed or any other document. Here, the assets would no longer be in the name or possession of the deceased person but rather with the Trustees, and as such, the property is given the required shield from meddlesome interlopers.
There is also inter vivos gift, where a person can transfer his assets to any desired beneficiary in his life time to avoid doubt or arguments in his absence.
Is Wills writing and estate planning really a death wish? Why the morbidity around Will writing in this part of the world?
Writing a Will is definitely not a death wish but could rather be seen as an acknowledgement of the fact of its inevitability and making adequate preparation for it. In an ironic twist, a survey conducted in the United Kingdom showed that people who wrote their wills actually lived longer lives! So if you ask me, there is a very good reason to even write one – write a will, live longer!
Estate planning is essentially a way to protect wealth and eventually pass it on. However, there is a general lack of information regarding this, as many believe a Will is not sufficient to address their estate planning needs. Is a Will always sufficient to plan one’s estate?
A will on its own can be sufficient for estate planning. However, beyond the need for succession, there is also the imperative of it being a smooth succession, and for same to be done in a timely manner devoid of chaos or friction. A Trust, when properly constituted and assets transferred into it, can be the smoothest form of estate planning due to the fact that the whole probate process may be avoided and a lot of time and cost would be saved. However, I must mention that a Trust on its own may not be sufficient, as there are some classes of assets which cannot be moved to the Trust without a Will or Letter of Administration in the absence of a Will, an example of which is a Retirement Savings Account.
Will and estate planning are generally perceived as the transfer of property from one person to another. What other elements constitute “estate”?
Apart from transfer of assets, estate planning also covers issues like debts, guardianship of minors expression of wishes (which can either be positive or negative) funeral instructions, supporting a cause and so on.
From a legal point of view, how binding are Wills?
Legally, a Will that has been proven at the probate unchallenged or challenged, and turned out successful is the highest and most binding document regarding the estate of a deceased person.
What exactly is the difference between next of kin and benefactor?
A next of Kin simply put is “a person’s closest or nearest blood/affinity relative”, an emergency contact person, while a benefactor or beneficiary is a person expressly intended to inherit your assets. However, it is important to note that some organisations have used both terms interchangeably, thus we advise that you always seek clarification from an organisation whenever you are completing a next of kin form.
Wills writing and estate planning involves preparation for transitions, including death. But culturally, it is almost a taboo in a society like Nigeria that is still steeped in superstitious beliefs to make such plans when you are alive; it is seen as wishing bad for oneself. With this in mind, how can people be convinced to write wills or plan their estates?
Here I think information is the key. People have to be told of the need, advantage and importance of writing a will as well as the corresponding consequences of not doing same. When people see the value that a Will offers, and weigh it against the patent disadvantages, they should then be persuaded to do the needful. In this area, Stanbic IBTC Trustees Limited will continually educate the public and every audience of the need to do the responsible and prudent thing to put in place a Will or a suitable estate plan. Eventually, our earnest expectation is that the bias will fade away as more people become more informed. What is the clichéd saying? Be informed so that you are not deformed!
Another challenge of Will writing or estate planning is that many consider it as elitist, expensive, and for elderly people. A survey showed that 50% of estate planning clients are between 50 and 70 years of age. One reason for this, experts believe, is the dearth of information on the industry. Is this a correct assessment?
The statistics is definitely a true reflection of the industry, and yes, the reason for this is not far from my last response, which is simply – “lack of information”. What everyone needs to know is the fact that while we have many other personal assets like cars, jewellery, clothing and furniture that can easily be inherited without much regulation; there are also assets class which cut across all classes of people, and can be owned by the rich, the middle class or even the lower class. Examples are bank accounts, stock portfolios, retirement savings accounts, and other forms of investments which cannot be transferred in an informal manner. All these need to be handled under a Will or Letters of Administration, otherwise, dependants of a deceased would not be able to access such asset.
What can be done to dispel these notions and get millennials, for instance, to buy into estate planning and Will writing?
Millennials need to understand the importance of the general class of assets – bank accounts, stock portfolios, retirement savings account and other forms of investments. Perhaps something that will interest millennials is that there is something called ‘Social Will’, where their social media accounts and other virtual footprints can outlive them and be willed to someone to manage long after they are gone! Interesting right? Have them contact us for more information!
The probate process, which a Will must pass through, is believed to be very cumbersome and costly. It is claimed that probate could deplete an estate by as much as 40%. Are these concerns addressed by Trust and Estate planning?
In Nigeria, at least in most states of the Federation, the probate tax is 10 per cent. However, regarding the process, it is simple – it entails reading of the Will after due process, payment of estate fee, marking of the Will by witnesses, and the signing of the final grant, especially where the Will is not in contest. It is usually the volume of transactions in the court as well as the diligence or otherwise of the executors and officers at the probate office that impacts more on making the process seamless or unwieldy. That is why it is important you choose your Executors properly, preferably of course, Stanbic IBTC Trustees!
Inter-generational wealth transfer is an important part of family and societal growth. But wealth transfer, when poorly done, often leads to inheritance-induced crises within and between families in communities in the country. In what ways will estate planning/will writing help to address this?
As much as possible, a will or trust that makes reasonable provision for all dependants of the deceased would seldom be challenged or lead to family crisis. The need to ensure the engagement of professionals to draft the estate planning document in a manner that avoids ambiguity with as much certainty as possible and also make reasonable provision to cater for all dependants in the most equitable manner can therefore not be over-emphasised.
Will writing/estate planning take into consideration the cultural practices of Nigerians, which could impinge on enforceability. For instance, the Igbo or Bini inheritance culture is largely patrilineal primogeniture (where the eldest son inherits), the Yoruba and Hausa practice partible (Ori-ojori) inheritance (division among all) and in polygamy it is by stripe (division by number of wives not children (idi-igi system), while some tribes (Ohafia, Abiriba) are matrilineal (female line of inheritance)?
As much as possible there are settled case laws which have upheld many traditions as well as declared others to be discriminatory or repugnant to the rule of natural justice and good conscience. Thus, as much as possible when lawyers draft the Will or Trust Deeds, consideration is given to cultural, customary practice to the extent as is upheld under our laws. Otherwise, a person’s intention or decision under a will would legally supersede all customary practices.
Effective estate planning requires an expert knowledge of property, probate, inheritance laws, among other laws, and also involves several issues, particularly what tool(s) to deploy. Too often, these issues are never addressed until complications arise. At that point, it is almost always too late. How can these issues be managed?
With regards to this, the engagement of experts in such fields during the drafting process is most important, as whatever can be envisaged would be addressed during the drafting stage of the Will to cater for as many foreseeable or unforeseeable circumstances as may arise in the estate administration.
Why then are authentic Wills challenged, and how can one ensure his/her Will is not open to litigation?
A Will can be challenged for a plethora of reasons, notwithstanding that the document was validly drafted and executed by the testator/testatrix. What is most important here is to have a Will that is able to stand the validity test that could be thrown at it.
Nigerian businesses often do not outlive their promoters; many good businesses fold up when the promoter(s) move or pass on. The incidence is rampant in Nigeria for various reasons. Could this be tied to a lack of proper estate planning?
Succession planning if not properly considered usually is a challenge in all spheres of life. Estate planning, which speaks to intergenerational wealth transfer, can also have an impact on successful businesses if the promoter failed to put in structures in the business, which would ensure that the business outlives him or her. A Trust is one of the ways to ensure there is business continuity as the Trustees would be required to ensure that all the terms as earlier provided in the trust deed as it relates to the business are carried out.
An important concern in estate planning/Wills writing is the issue of integrity. There are cases where lawyers and others entrusted with such matters have colluded with a wife or sibling or relative to manipulate a written Will, and other inheritance documents. How then do we ensure that safety is guaranteed and integrity is protected in estate planning?
The answer here is simple, it’s a case of conflict of interest, the conflict arises when the lawyer either gets greedy by trying to divert assets owned by his deceased client or when there is connivance with a favoured member of the family. This situation can be resolved by engaging the service of an independent and objective third party for example a corporate executor/trustee who will be professional all the way.
What documents are essential for estate planning?
Basically, an inventory of assets, and the evidence of title as well as ownership of such assets.
What did Stanbic IBTC Trustees Limited to reposition its Wills offerings, and how did you arrive at the decision of Legacee?
The notion that the word Will connotes fear and typically engenders an immediate rejection was one of the reasons. The new name “Legacee” more aptly conveys what this action truly means, and that is essentially, leaving behind something good to be remembered by after you are gone. It is something to be embraced, and/or at least acknowledged, not something to be afraid of.
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