Understanding Wills, Trusts and Estate Planning

One of life’s greatest achievements is leaving a legacy behind for the people we care about. But like all things in life, it will only happen when we plan for it.

Estate planning is a dreaded yet very important topic. It is dreaded because it forces us to remember our mortality and the fact that one day, we will all pass on. However, it cannot be ignored because when we are no more, we will leave loved ones behind. At that point when we can no longer make decisions, estate planning covers for us and ensures our loved ones are well taken care of.

In simple terms, estate planning entails preparing for the transfer of a person’s assets and wealth in the event the latter becomes incapacitated or dead. That’s just on the surface. We took a deep dive into the concept of estate planning to help you understand how it works.

Watch the video below:

In our usual fashion, participants had the chance to seek clarity on grey areas about estate planning. Here are some questions and answers from the webinar.

Q1: How often should one update his Estate Plan? Annually or what?

Your Estate Plan can be updated as you acquire more assets, include more beneficiaries or where there is a significant change in your life

Q2: What is the range of legal drafting fees obtainable in Nigeria?

Well, there are various types of Drafting, however, we believe you meant that of a Will. Our Will drafting costs the sum of 60,000 for the Classic Will and 250,000 for the Comprehensive Will.

Q3: If you have a Will outside Nigeria, is it also effective in Nigeria? If not, how can it be effective in Nigeria?

A Will is a globally recognized document, so it would be recognized in Nigeria however it would need to be reregistered or resealed here in Nigeria.

Q4: How does one tackle the inclusion of a retirement fund in a foreign country?

Each Jurisdiction (foreign country) has its separate pension laws, however, if such jurisdiction allows for you to directly transfer your retirement fund to your beneficiary then you can simply do that and your beneficiaries would have access to the fund in the event of your passing on.

In Nigeria for example, for your beneficiary to access your Pension or Retirement Savings Account, you are required by the Pension Reform Act to include such beneficiaries of your Pension in your Will, before they would be allowed by the Court to access the funds when one has passed on.

Q5: What happens if the trustee company shuts down?

A Trustee’s proprietary assets do not co-mingle with clients in any form. Hence if a Trustee shuts down, all clients’ assets would be transferred to a successor Trustee who would then administer the same or the assets could revert to the Client/Settlor if they so desire.

Q6: To include more assets, will there also be a charge or are the charges paid once?

Yes, to include more assets or update your Estate Plan (Will & Trust) there would be an additional charge.

Q7: Does a Trust offer any tax advantages for beneficiaries resident abroad or with dual citizenship? In some counties, residents or citizens are taxed on worldwide income.

A Trust would provide your beneficiaries with Tax Protection because whilst the property is vested with a Trustee, it is still in fact the property of the beneficiaries and a Trust cannot be taxed. Taxation only comes in at the point where such a beneficiary receives the funds and is obligated to file a Personal Income Tax.

Q8: How does one go about setting up Education Trust?

The process is very easy.

a. Completion and execution of the Education Trust Formation Form

b. Submission of KYC documents to create the Trust. These include:

  • Your Passport photograph, Means of Identification (Copy of your passport biodata page, Driver’s licence, Permanent Voter’s Card or National Identity card) and Current Utility bill (not more than 3 months old).
  • iPassport photographs, Means of Identification (Copy of passport biodata page, Driver’s licence, Permanent Voter’s Card or National Identity card) and Current Utility bill of your beneficiaries. Birth Certificates would also be required for Minors.

c. Payment of the Trust Set-Up fees.

d. Drafting of the Education Trust Deed by the Trustee and execution of same by the Settlor and Trustee.

e. Transfer of Financial assets to the Trust.

Q9: Why the need for a next of kin on official documents when they do not have access to any of your estates in your demise. What then are their roles?

Next of Kin only means your contact person and does not afford the person any right to your property.

Q10: How does a Trustee know when you’re no more there and the Trustee is to act?

A Trustee in addition to holding your assets is like a confidant as it keeps in constant touch with you and any other person you direct. In the attempt to reach out to you, the Trustee would become aware of such an event.

Q11: How do you determine the value of 1% in landed property?

This is done independently by an Estate Valuer.

Q12: You talked about the annual management fee for trust. Hope it does not apply to wills.

A Will is a one-off payment. There is no annual Management Fee

Q13: What is the charge for setting up a trust and is the fee annual?

The fee for a Trust ranges and is dependent upon the analysis of assets that are to constitute your Trust and the administrative work to be done. Yes, there is an annual fee to be charged.

Q14: How do you charge me a Fee on a property based on a valuation that is not realized?

The valuation is to be done by an independent Estate Valuer and the fees charged are based on that valuation.

Now that you have a fair idea of what estate planning is, the next step is taking action. Delay can be dangerous. Now is the best time to take care of everything you hold dear.

If you have further questions or would like to get started, kindly send an email to trustees@afrinvest.com and we will be more than glad to help.

That’s a wrap! The full webinar recording is available on YouTube.

Before you go, check our website to see how we can help you reach your financial goals.

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