You may already be familiar with trust as an estate planning tool, but very few people are aware that it can also serve as a powerful instrument for building wealth and managing assets.
The concept of Private Investment Trust (PIT) revolves around addressing the need for liquidity while incorporating a trust element into the investment strategy. That means, the trust focuses on managing assets that can be easily converted into cash (liquid assets), so you have access to funds when necessary.
In today’s dynamic financial landscape where investors are constantly seeking opportunities to maximize returns while effectively managing risk, private investment trusts offer the flexibility to achieve both.
During our webinar on building your assets with private investment trusts, a lot of insightful questions were asked.
You can watch the webinar below:
Now, let’s address those gray areas to give investors a deeper understanding of how PITs work.
1. How does a private investment trust work for someone in his late 50s whose current earning power is not good?
The private investment trust was designed to cater to all levels of income. With 200,000, you can set up a trust. You do not need to be in a position of excellent earning income to have your own private investment trust.
2. In a private investment trust, is capital guaranteed? If I set up a Private Investment Trust, is my capital guaranteed? Also, what is the ROI during the lockdown period?
Yes, your capital is guaranteed. The ROI is dependent on the amount invested and the tenor of the investment. The interest rates differ from amount to amount.
3. What’s the difference between trust and will?
A will is a legal document that outlines your wishes regarding the distribution of your assets after your death. It specifies who will receive your property and assets, who will manage your estate (executor), and who will take care of any minor children (guardianship). A will goes into effect after one passes on, and it goes through a process called probate, where a court validates the will and oversees its execution.
A trust is also a legal arrangement, but it involves transferring your assets to a trustee to hold and manage for the benefit of beneficiaries. You can create a trust while you’re alive (living trust). Unlike a will, a trust can go into effect immediately upon its creation, so it can manage assets both during your lifetime and after your death.
4. Is there a tendency for an increase in capital during the lockdown period? In addition, what are the investment windows the funds would be put into?
Yes, you can increase your capital as many times as possible. The investment is mostly made in fixed-income and money market instruments.
5. What is the minimum amount to get started, and can I be the beneficiary of my trust?
Absolutely! You can be the beneficiary of your trust. The minimum amount to be invested is NGN200,000.
6. What investment can one make within six months to be profitable?
The level of risk you are willing to take increases your chances of higher profitability. However, we usually advise clients to engage in low-risk instruments to guarantee profitability and the safety of the capital invested.
7. How will you ensure inflation and devaluation will not erode the value of the investment in the future?
We can only do our best as trustees to invest your funds in investments that will not erode their value and hedge against inflation and devaluation. However, we have no control over government policies or other economic factors outside our scope.
8. Can I open a private investment trust for a child?
Yes, you can open a private investment trust and make your child the sole beneficiary of the trust.
9. Can one make a lump-sum payment for the year?
Yes, you can make a lump-sum payment for the year.
10. Can we open a joint trust with my spouse?
Yes, a trust can have two settlors (persons who set up a trust).
11. What happens if Afrinvest isn’t operational at the time the PIT needs to be executed?
Afrinvest Trustees Limited is regulated by the SEC, and part of our obligations is to separate our clients’ assets from our proprietary assets. In addition, we are mandated to ensure a successor trustee is appointed to take over clients’ assets if anything happens to the company.
12. How often will the ROI be paid — monthly, quarterly, or yearly?
The investment is for 2 years; ROI plus capital would be paid at the end of the lock-in period at the client’s instance.
13. Can I still create a Trust after registering a Will with the court?
Yes, you can, but you need to ensure the assets listed in the will are separate from the assets you wish to put into trust. We would advise you to speak to a trust advisor for guidance. You can reach out to us at Trustees@afrinvest.com to discuss further.
14. Is the 25% on the liquidation fee before the lock-in period based on 25% of the trust value?
No, please, 25% of the interest element.
15. How can we access and subscribe to PIT on Afrinvest?
Please send a message to Trustees@afrinvest.com; a trust advisor will reach out to you to put you through.
16. Can it be monitored in real time by the subscriber like on your app or website?
We do not have a platform for real-time monitoring of investments, but you can request your cash and account statements at any time.
17. I have commercial papers, FGN bonds, and stocks with Afrinvest; can they be transferred to PIT?
You would need to create a living trust to transfer commercial papers, FGN bonds, and stocks with Afrinvest to a trust. PIT only deals with fiat and liquid cash.
18. Can a settlor create a trust in favour of himself as a beneficiary? Also, can I have trust in my own name, where I am the beneficiary?
Yes, a settlor can set up a trust in favour of himself as a beneficiary. It’s advisable not to open a trust in your real name; code words are much more advisable. Yes, you can be a beneficiary.
19. Do we have to start out as a one-time lump sum, or is it designed for routine top-ups?
You can inflow funds into your PIT as often as you can, or you can do a lump sum in the first instance.
20. Can I access my fund after the first two years if I no longer have a means of income to fund the trust? Also, what is your fee structure for the Private Investment Trust?
Yes, you can access your funds after 2 years of lock-in. There is no fee charged for our private investment trust.
And that’s it!
If you have more questions or want to explore private investment trusts in more detail, don’t hesitate to contact us at Trustees@afrinvest.com. We will be happy to assist you.
