‘Trustees can put a stop to estate disputes’
What is a Trust?Let me start by describing trust as a triangular relationship where you have the person setting up a trust as a settlor/grantor or a trustor. Then you have trustee, the institution to whom the settlor transfers the assets for the benefit of a certain people called the beneficiary. The trustees being a […]
What is a Trust?
Let me start by describing trust as a triangular relationship where you have the person setting up a trust as a settlor/grantor or a trustor. Then you have trustee, the institution to whom the settlor transfers the assets for the benefit of a certain people called the beneficiary.
The trustees being a legal owner of the assets merely holds same in trust for the benefit of the beneficiary. The beneficiary in question may be a single, individual or multiple individuals or even a corporate institution.
At Meristem Trustees, our sole business is trusteeship and we play a major role in financing transactions. We’re responsible for the protection of the interests of lenders and investors, keeping custody of assets, documents, rights, shares, funds etc.
Why did Meristem venture into trusteeship business?
Meristem Trustees Limited is a subsidiary of Meristem Wealth Management Ltd. If you look at the market lately, there’s a gap in estate planning and that is one of the reasons we’ve come to establish Meristem Trustees using trust as a vehicle for wealth transfer.
When you look at Wills lately, hardly can you find one that is not challenged. So Wills are no longer even secured way of wealth transfer. Rather than do Will, you could engage a trustee to manage your estate. That’s why we started Meristem Trustees.
How would you access trustees business in Nigeria since you opened shop?
We started operations in 2012. So we’ve been in business about two years now. The business has been challenging. It’s still a relatively young market. We’ve some bigger players already in the market. However, because we’re part of the Meristem family, we’ve been able to leverage on the group structure to grow our business. We no doubt have a bright future.
If I opt for a trustee to manage my estate after my demise rather than do a Will, what is the guarantee that the integrity of my estate would be secured?
For Meristem Trustees, we lay emphasis on value proposition. At Meristem, we also pride ourselves with integrity which is core to trusteeship. Regulators are also there keeping a close watch on our activities.
The security of your asset is guaranteed particularly with a strong brand like Meristem Trustees. Since we’re capital market operators, we’re regulated by Securities and Exchange Commission [SEC]. We also have extant laws that govern our operations like the Investments and Security Act, the Laws of Contract etc. SEC ensures we comply with all the laws and regulations governing our business. Some of our laws are due for review particularly laws that regulate private trust.
Broadly speaking, what would you say are the benefits of trustee business to an economy?
The benefit is huge. Look at succession planning for instance; we have several estates that have gone under because of lack of succession planning. That retards an economy. But with trusteeship, succession isn’t a problem because wealth will be preserved and transferred and the economy benefits.
Trustees help safeguard assets or estates. This preserves wealth in an economy. Looking at the corporate aspect of the business example, bonds transactions, the law says for every bond transaction (corporate or government), there must be a trustee involved to hold the assets in trust and protect the interest of the investors.
If you give money to fund managers to invest in a mutual fund for instance and the fund manager misallocates the assets and the money goes bad, it’s a problem.
So the trustees also act as a police to be sure the funds are appropriately invested and secured. Same for the state government bonds. On a monthly basis, government remits money to trustees to pay investors. Without trustees, the economy can even collapse because of the billions of naira bonds investments.
Also trusts are normally set up to protect and enhance assets of a person. Some of the benefits will include avoidance of probate formalities such as having to prove the validity of a Will. As at the creation of the trust, the settlor transfers the legal ownership of the assets to the trustees. Such assets will no longer form part of the setttlor’s estate on his death.
Trusts also offer protection from creditors as creditors will not generally have access to the assets transferred into a trust, provided the settlor is not insolvent when establishing the trust or provided the settlor does not transfer the assets into the trust with the specific intention to defraud existing creditors or potential creditors. Trusts are flexible and can be used in tax planning.
Since a trust effectively transfers the ownership of the assets to the trustees, it may help mitigate certain taxes. Professional advice is recommended in this regard.
How does trusteeship come in when you’re handling a family estate?
There’re three processes of wealth management. You have the accumulation stage, the management stage and the transfer stage. Trustees come in at the transfer stage to ensure the estate goes to the right person. We ensure this by setting up a trust for you.
We have a product called Meristem Living Trust. The product allows you to set up a trust while you’re still alive, set up a trust over your assets. With this you transfer legal interests to a trustee while you are alive. You see how your estate is being run while you’re still living.
The advantage is that even when you are dead, no one will be able to take over the assets from the trustee thus, your assets are protected and run just the way you would have wanted.
This also eliminates all the troubles that come with a Will. Will is testamentary and when it’s contested, the writer wouldn’t be there to clarify his or her positions. But with a Meristem Living Trust, the person is still living and sees how his or her estate is being run.
Another problem that is eliminated by the Living Trust is the probate aspect that comes with Wills. When a person dies, the Will cannot be read until when it is admitted into probacy. To get a probate takes a very tedious process sometimes lasting over a year or more. Within the period the probate is awaited, no one can have access to the assets thus depreciation could even set in. If there’s an objection on the integrity of the Will, no one even reads it until the objection is cleared. But with a trust, all these huddles are not there.
We also have such other products as Education Trust for your children. You can even set up a trust for your grandchildren if you want. Our business is about trust, trust and trust!
Are you saying this trust can’t be abused?
We sell nothing but trust but our regulators are also there keeping watch. Just recently, trustees business capital base was increased from N40 million to N300 million. This shows that the regulators are on top of their game.
What can government do to support trust business?
In the area of regulation, some of the laws are obsolete and need overhauling. The area of visibility is a major challenge – most Nigerians don’t know the importance of trusteeship. Though publicity could be an operator’s thing, government can also support since trustees help sustain wealth in a nation. There’s scarcity of manpower in the areas of documentation and other technical areas.
Do we have statistics as to how much trusteeship business is contributing to the economy?
For now, we don’t have. We have Association of Corporate Trustees which I’m the secretary but we don’t have those statistics. If you look at the 36 states of the federation, more than 2/3rd have government bond and indebted to the market by over a trillion naira. Obviously trustees are involved in these transactions so they can look after the businesses.
What is the future of trust in Nigeria?
As it is today, the future looks good. More and more people are becoming aware of trust and the benefits it offers both in commercial transactions and in their private lives especially as a tool in estate planning. As the Nigerian economy continues to grow, the need for trusts will increase.
The growing cases of dispute over claim to estate will also give people the need to go the way of private/living trust to ensure their loved ones are adequately taken care of when they are gone.