MONEY MATTERS: Making Huge Returns From Trustee Investments

Setting up a trust fund is crucial for individuals who want to be in control of their assets during and after their lifetime.

A trust fund gives ones the assurance that resources at their disposal are being used for the purpose they desire.

Trust funds are not just for the rich, it is an estate planning tool that anyone can use to ensure their assets are passed down as they wish, to friends, family or a charity.

Trust owes its origin to equity. It is a device whereby a person (the Trustee) is compelled in equity to hold property/asset, whether real or personal and whether by legal or equitable title, for the benefit of some persons of whom he may be one (the Beneficiaries) or for some objects permitted by law, in such a way that the real benefits accrue not to the Trustees but to the Beneficiaries or other objects of the trust.

A Trustee therefore has a mandatory obligation to deal with the asset which forms the subject matter of the trust for the benefit of the cestuis que trust, the Beneficiary. These duties are fiduciary in nature. In other to effectively carry out the duties imposed on the Trustee, equity has also conferred on the Trustee powers which are in some cases, extensive in nature to aid him in the discharge of the onerous obligations that are concomitant to his role.

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The Association of Corporate Trustees said, trustees play a relevant role in ensuring capital market investment protection in the country.

The association disclosed this during a presentation titled ‘Protection in the capital markets – The role of corporate trustees’, that was delivered during its 2022 business luncheon in Lagos.

The luncheon themed, ‘An appraisal of the Nigerian trust industry vis-avis global trends in trusteeship’ was attended by stakeholders in the financial sector. In the presentation, the Association described a trust as a legal arrangement where a person or entity (the trustee) holds property on behalf of other persons or entities (the beneficiaries).

It stated that a corporate trustee is a corporation, usually a trust company, which is named as the trustee of an account such as a private trust or another fiduciary account.

While explaining the duties of corporate trustees in the presentation, it noted that, “they manage and administer the trust according to its terms and intent; communicating relevant information in a timely manner to co-trustees and beneficiaries; adopt sophisticated tax-planning strategies to minimise the tax liability to beneficiaries; and monitor investment performance.”

The association noted that a trustee files claims and collects proceeds on life insurance policies, hires professionals to carry out certain duties required by the trust, stays updated with all trust laws, rules and regulations.

According to the presentation, reasons for investors to consider using corporate trustees includes; access to wealth protection, reliable professional service, potential of greater investment returns, advantage of years of experience, rich sources of advice and referrals.

The association noted in the presentation that corporate trustees are duty-bound to act in the best interests of their clients and beneficiaries, knowing the interest of the client is critical.

Setting 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.

United Capital Trustee says: “we play a key role in major financing transactions and protect the interests of lenders and investors. We also keep custody of assets, documents, rights, shares, funds and other holdings in financial transactions.”