Post by fireopal on Jul 5, 2021 1:03:43 GMT 4
Setting up a trust fund is one of many options for transferring money, property, and other assets to family members or charity causes. It's difficult to know whether or not to set up a trust fund and how to do so. To make the best decisions, you'll need the advice of an estate planning lawyer.
It's an estate planning tool, similar to a will, that lays down how you want your affairs to be handled when you die away. A trust fund, on the other hand, gives you more flexibility, privacy, and specificity.
It can save your beneficiaries time, money, and heaps of paperwork while minimizing estate taxes and avoiding probate. What you need to know about establishing a trust fund is outlined here.
In this article, we are going to explore what a trust fund is, who the parties to a trust fund are, reasons why you need a trust fund, and finally how to set up a trust fund.
What is a Trust Fund
Trust fund has been described as the relationship which arises whenever a person called the trustee is compelled in equity and law to hold property received from the grantor's legal or equitable title which could be real estate or personal property, for the benefit of some other persons or for some authorised object called the beneficiary.
A trust fund is set up in such a way that the real benefit of the property accrues, not to the trustee, but to the beneficiaries or other objects of the trust fund.
A trust fund can be further defined as an arrangement where a person gives another party the legal right to manage his/her funds for the benefit of another person.
The object of a trust fund property can be real estate, a bond, mutual funds or even stock.
Why Set Up a Trust Fund
Individuals and Legal entities set up trust funds to control who receives their assets. A trust fund may be used for different purposes. For a trust fund inter vivos (i.e trust fund made during the lifetime of the grantor), it may be applied by a person who desires for his asset to be managed proficiently.
A trust fund can also be created by a person or group of persons for the support, maintenance and education of their spouse, children, dependents and family members during the lifetime of the grantor(s) and in the event of their demise.
In addition, it can be used to transfer property or make grants to a person(s) of interest. It can also be used as a means of financial support and life insurance for a grantor who is incapacitated or having some disabilities or as a security during old age.
How Do I Set Up a Trust Fund
To set up a trust fund the following steps are to be undertaken:
Appointment of a trustee: A trustee can be a company, an individual or group of individuals or a firm.
Identify the type of trust fund you are interested in: There are two major types of trust funds such as private trust fund, and public trust fund. Public trust funds (which are in some cases charitable trusts) are trust funds for certain selected purposes; which are created for the purpose or use of the community. The Attorney General undertakes responsibility for their enforcement. Private trusts funds, on the other hand, are trust funds created for the benefit of specific persons, such as family members, who are known as 'beneficiaries'. Private trust funds can be divided into express and implied Trust Funds. Trust Funds that are created by the act of the parties are referred to as express trust funds while those that evolve by operation of law are called implied trust funds.
Transfer of the assets to the trustee. This is an important aspect and it can either be a revocable or an irrevocable trust funds.
How to Setup an Express Private Trust Fund
There is no specific statute governing private trust funds in Nigeria. Therefore, reliance is placed on cases decided under English law.
A private trust fund may be created during one's lifetime (inter vivos) or by Will. An inter vivos or living trust fund is expressly created where an individual called the grantor, during his lifetime, makes a declaration of trust fund directing a person(s) called the trustee(s) to hold property or assets in accordance with the terms and conditions contained in the trust fund instrument for the benefit of the grantor's beneficiaries.
In which case, the beneficiaries become the equitable owners of the subject of the trust fund (i.e. the property or assets), while the legal interest is vested in the trustee.
It has been established that to create a valid private trust, there must be;
Certainty of intention - The grantor must manifest an intention to create a trust fund, either expressly or by conduct. An expression of hope or desire is not sufficient.
Certainty of subject matter - The trust fund property must be clearly identified. The subject of the trust fund may take different forms, an interest in land, a car, money, a debt or even a promise. Whatever form the subject of the trust fund takes, it must be specified with reasonable certainty.
Certainty of objects - This means that the intended beneficiaries of the trust fund must be known or ascertainable. If the beneficiaries cannot be identified, the trust fund will fail and the subject of the trust fund will revert to the settlor/donor or his estate, as the case may be, except it is a charitable trust.
Where the trust fund is in respect of personal property such as money, shares, vehicle, etc. no formalities are required for its creation. But where the trust fund is in respect of a real property (i.e. land), it must be done in compliance with the statutes regulating transfer of title to land such as the land use act, registration of title law of the applicable state. For example, it must be in writing and executed as a deed by the parties thereto.
Capacity/ Criteria for appointment of a trustee and Duties of a Trustee
The legal capacity to create a trust fund is determined by the ability of an individual or group of individuals to hold interest in a land therefore such individuals have the capacity to create a trust fund. Whereas, where a person cannot hold interest in land, his capacity to create a trust fund will be affected.
An adult who is of sound mind, a body corporate and institution having the requisite power to hold a property can be appointed as a trustee.
The duties of the trustee are as follows:
Duty to collect and safeguard the trust fund property.
Duty to invest the trust fund money in his hand.
Duty to distribute the trust fund property and maintain equality between the beneficiaries, except where there is a contrary intention expressed by the grantor or testator (a deceased grantor) in the trust fund deed.
Duty to render account and provide information on the trust fund property as may be required by the beneficiaries.
Conclusion:
Setting up a trust fund is crucial for individuals, especially high net worth individuals that want to be in control of their assets during and after their lifetime. A trust fund gives you the assurance that resources at your disposal are being used for the purpose you desire.
It's an estate planning tool, similar to a will, that lays down how you want your affairs to be handled when you die away. A trust fund, on the other hand, gives you more flexibility, privacy, and specificity.
It can save your beneficiaries time, money, and heaps of paperwork while minimizing estate taxes and avoiding probate. What you need to know about establishing a trust fund is outlined here.
In this article, we are going to explore what a trust fund is, who the parties to a trust fund are, reasons why you need a trust fund, and finally how to set up a trust fund.
What is a Trust Fund
Trust fund has been described as the relationship which arises whenever a person called the trustee is compelled in equity and law to hold property received from the grantor's legal or equitable title which could be real estate or personal property, for the benefit of some other persons or for some authorised object called the beneficiary.
A trust fund is set up in such a way that the real benefit of the property accrues, not to the trustee, but to the beneficiaries or other objects of the trust fund.
A trust fund can be further defined as an arrangement where a person gives another party the legal right to manage his/her funds for the benefit of another person.
The object of a trust fund property can be real estate, a bond, mutual funds or even stock.
Why Set Up a Trust Fund
Individuals and Legal entities set up trust funds to control who receives their assets. A trust fund may be used for different purposes. For a trust fund inter vivos (i.e trust fund made during the lifetime of the grantor), it may be applied by a person who desires for his asset to be managed proficiently.
A trust fund can also be created by a person or group of persons for the support, maintenance and education of their spouse, children, dependents and family members during the lifetime of the grantor(s) and in the event of their demise.
In addition, it can be used to transfer property or make grants to a person(s) of interest. It can also be used as a means of financial support and life insurance for a grantor who is incapacitated or having some disabilities or as a security during old age.
How Do I Set Up a Trust Fund
To set up a trust fund the following steps are to be undertaken:
Appointment of a trustee: A trustee can be a company, an individual or group of individuals or a firm.
Identify the type of trust fund you are interested in: There are two major types of trust funds such as private trust fund, and public trust fund. Public trust funds (which are in some cases charitable trusts) are trust funds for certain selected purposes; which are created for the purpose or use of the community. The Attorney General undertakes responsibility for their enforcement. Private trusts funds, on the other hand, are trust funds created for the benefit of specific persons, such as family members, who are known as 'beneficiaries'. Private trust funds can be divided into express and implied Trust Funds. Trust Funds that are created by the act of the parties are referred to as express trust funds while those that evolve by operation of law are called implied trust funds.
Transfer of the assets to the trustee. This is an important aspect and it can either be a revocable or an irrevocable trust funds.
How to Setup an Express Private Trust Fund
There is no specific statute governing private trust funds in Nigeria. Therefore, reliance is placed on cases decided under English law.
A private trust fund may be created during one's lifetime (inter vivos) or by Will. An inter vivos or living trust fund is expressly created where an individual called the grantor, during his lifetime, makes a declaration of trust fund directing a person(s) called the trustee(s) to hold property or assets in accordance with the terms and conditions contained in the trust fund instrument for the benefit of the grantor's beneficiaries.
In which case, the beneficiaries become the equitable owners of the subject of the trust fund (i.e. the property or assets), while the legal interest is vested in the trustee.
It has been established that to create a valid private trust, there must be;
Certainty of intention - The grantor must manifest an intention to create a trust fund, either expressly or by conduct. An expression of hope or desire is not sufficient.
Certainty of subject matter - The trust fund property must be clearly identified. The subject of the trust fund may take different forms, an interest in land, a car, money, a debt or even a promise. Whatever form the subject of the trust fund takes, it must be specified with reasonable certainty.
Certainty of objects - This means that the intended beneficiaries of the trust fund must be known or ascertainable. If the beneficiaries cannot be identified, the trust fund will fail and the subject of the trust fund will revert to the settlor/donor or his estate, as the case may be, except it is a charitable trust.
Where the trust fund is in respect of personal property such as money, shares, vehicle, etc. no formalities are required for its creation. But where the trust fund is in respect of a real property (i.e. land), it must be done in compliance with the statutes regulating transfer of title to land such as the land use act, registration of title law of the applicable state. For example, it must be in writing and executed as a deed by the parties thereto.
Capacity/ Criteria for appointment of a trustee and Duties of a Trustee
The legal capacity to create a trust fund is determined by the ability of an individual or group of individuals to hold interest in a land therefore such individuals have the capacity to create a trust fund. Whereas, where a person cannot hold interest in land, his capacity to create a trust fund will be affected.
An adult who is of sound mind, a body corporate and institution having the requisite power to hold a property can be appointed as a trustee.
The duties of the trustee are as follows:
Duty to collect and safeguard the trust fund property.
Duty to invest the trust fund money in his hand.
Duty to distribute the trust fund property and maintain equality between the beneficiaries, except where there is a contrary intention expressed by the grantor or testator (a deceased grantor) in the trust fund deed.
Duty to render account and provide information on the trust fund property as may be required by the beneficiaries.
Conclusion:
Setting up a trust fund is crucial for individuals, especially high net worth individuals that want to be in control of their assets during and after their lifetime. A trust fund gives you the assurance that resources at your disposal are being used for the purpose you desire.