3 WAYS TO SECURE YOUR PROPERTY IN THE EVENT DEATH IN NIGERIA

“A good man leaves an inheritance to his children's children.”

    Book of  Proverbs 13:22

1.0           INTRODUCTION

1.1       Imagine a situation where your dependants (spouse and children) are not able to benefit from what you have spent years working for upon your death. To forestall such a situation, you have an obligation to protect and preserve what you have spent years working for by ensuring that, the assets you left behind do not fall into wrong hands and to ensure that your assets are distributed how you wanted it to be distributed in the event of death.

1.2          We have set out three reliable ways by which you can fashion out your asset devolution strategy and prevent your assets from falling into wrong hands in the event of your demise.

1.3          These  three ways are set out below with brief illumination:

a.           By making a will; or

b.          By creating a living Trust ; or

c.          By making your dependants shareholders and directors in   your company.

2.0        BY MAKING A WILL

2.1       A will is a legal document intended to take effect after death which states how a person wishes his or her assets and dependents should be dealt with upon his or her death. The person making a will, called the testator, must have testamentary capacity, that is, must be of full age and sound mind and must act without undue influence by others.

2.2        In the will, a still-living person is named as the executor of the estate, and that person is responsible for administering the estate and is usually supervised by the Probate Registry to ensure that what is specified in the will is carried out.

2.3          PROBATE PROCESS

2.3.1    A will must pass though the probate process at the Probate Registry. Probate is the court process by which a will or an official copy of a will is proved valid or invalid and given to the executors. The probate process entails the following  procedures  –

a.       Search: A search may be conducted at the probate registry to ascertain whether the testator’s Will was deposited at the Probate Registry in the first place.

b.            Application for the reading of the Will: This entails filing an application for the reading of the Will at the Probate Registry.

c.              Reading of the Will – The Probate Registrar is to appoint a date, time and place when the Will would be read to the interested persons.

d.         Application for probate – This is done by the executors to the Will by filling and completing the relevant forms and submitting certain documents to accompany the application to the Probate Registrar.

e.            Granting of probate – Upon the satisfaction of the above requirements, the Probate Registrar shall grant Probate to the applicants with the Will attached to the probate or he shall grant the letter of administration.

f.               Application  Duration: Between  6 -8 months 

g.     Cost Implication: 10% of the value of the property or fund and    administrative fees.

3.0          BY CREATING A LIVING TRUST:

3.1         A living trust is an agreement between the party who creates the trust known as the settlor and another party called the trustee (a person or institution to whom legal title and possession to the trust fund or property is entrusted to for the benefit of another called the beneficiary).Unlike a will which comes into play only after your demise, a living trust takes effect during your lifetime.

3.2              When you create a living trust and transfer all your assets to your spouse and children, when you die, the trust property automatically passes to your spouse and children. If the children are minors the trust deed will stipulate that the trustee will be responsible for managing the children’s assets until they are adult or a particular age.

3.3              Creating a living trust entails the following:

a.              No Consideration Requirement: No consideration is necessary to create a trust, and no writing or other formal document is required,   except that trusts of real estate are required by the Statute of Frauds to be in writing.

b.              No Probate Process: The advantage of establishing a living trust is that it allows easy transfer of assets without going through the process of probate which can be costly and take a lot of time. The successor trustee the person you appointed to handle the trust after your death simply transfers ownership to the beneficiaries you named in the trust.

c.              Duration: Unlike a will that comes into play only after your demise, a living trust takes effect during your lifetime. It puts in place a mechanism to hold and manage your property both before and after your death, and provides how those assets, as well as any trust income are distributed thereafter. In many cases, the whole process takes only a few weeks and there are no court fees to pay save solicitor’s fees. When the property has all been transferred to the beneficiaries, the living trust ceases to exist.

d.                  Cost: A living trust actually saves you money and time by avoiding the probate process. The solicitor’s fees for creating a living will are paid up front.

e.                   Taxes:  A properly drafted trust can help minimise taxes

f.                   Privacy: Unlike a will becomes a matter of public record when it is submitted to the probate court, the terms of a living trust need not be made public.

g.                  Testamentary Trust or Pour-Over Will: A living trust cannot assign a legal guardian for minor children; you would be required to add a pour-over will as a supplement to the trust where such a provision can be made.Assets that have not already been transferred to the trust at the time of death will be subject to probate unless such a supplementary will has been made at the time that the trust was established.

4.0              A WILL OR A TRUST: WHICH IS BETTER?

4.1          A will and a living trust can work in tandem to create a seamless estate plan. It is important to seek professional advice to determine which will be the most appropriate for you.

4.2     Whether you opt for a Will or a Living Trust depends on your personal circumstances, the type of assets you own and the size of your estate or asset. Whichever, you choose, you will have peace of mind knowing that all you have worked for will not fall into wrong hands.

4.3       Here are some of the issues to consider as you decide on which option to adopt  between a Will or  a Living Trust:

§             Probate is unavoidable with a will, and can take several months and in some instances, even years to administer. Since a living trust comes into effect as soon as it is funded, assets cannot be frozen which means that your family has immediate access to funds as needed and can avoid some of the challenges associated with probate.

§              When a will goes through probate it becomes a public document and anyone can read it. A living trust protects your privacy as it is not subject to probate and thus does not become a matter of public record which may reduce the likelihood of litigation.

§            Living trusts are sometimes favoured over wills because they are more difficult to contest especially where there are complicated family arrangements.

§          A trust is in a sense better equipped to deal with creditors and long lost relatives showing up to stake a claim to the assets.

§           By the time creditors find out about your death, your property may already be dispersed, and the creditors have no way of knowing exactly what you owned, except for real estate, which is always a matter of public record.

§          Trusts are more complex and require much greater detail to ensure that you are as precise as possible and leave no room for misinterpretation.

§           A simple probate-avoidance living trust has no effect on either income or estate taxes. More complicated living trusts, however, can greatly reduce your estate tax bill if you expect your estate to owe estate tax at your death.

§           After your death, however, property in a living trust can be quickly and quietly distributed to the beneficiaries, unlike property that must go through probate.

§           Probate can offer a kind of protection from creditors. During probate, known creditors must be notified of the death and given a chance to file claims.

5.0              SHAREHOLDERS AND DIRECTORS

5.1         You will not want your business to fall into the hand or hands of those who will not manage it well or use it to take care of the loved ones or dependants you left behind.

5.2       You can protect your interest and that of your family and dependents by restructuring your company to make them shareholders in your company. As shareholders they will have a share of the company’s dividends and as directors they will have a say in the running of the company.

ASE OLODUMARE CHAMBERS

§          Our team of property and corporate law solicitors are pragmatic and result-focused solicitors with strong technical legal skills and sound industry experience with innovative solutions to clients' needs. 

§        Our team of property and corporate law solicitors will work closely with you to understand your personal circumstances and needs and advise you on the most appropriate property devolution strategy.

            3 WAYS TO SECURE YOUR PROPERTY IN THE EVENT DEATH IN NIGERIA  is a legal illumination of AKINTUNDE ESAN known as The LEGAL ADVISER ONLINE. Akintunde Esan is the Managing Partner & Principal Consultant @ ASE OLODUMARE CHAMBERS (Legal Practitioners/Consultants & Chartered Mediators)