Q & A FROM WEBINAR
Que: What are the types of Living Trust?
Ans: The applicable categories of Living Trusts would depend largely on the individual needs and requirements of each Client. However, the common types are (i) Children Education Trust (ii) Retirement Plan Trust (iii) Independent Care Trust (iv) Blind Trust (v) Clifford Trust and/or a combination of all of the above called (vi) Family trust
Que: Is there any major advantage of a trust over a will in estate management?
Ans: Both tools serve different purposes and their use would depend mostly on the intentions of the owner of the assets. However, a Living Trust has some advantages over a Will, some of which include:
(i) With a Will, your estate will go through probate. A living trust, on the other hand, does not go through probate, which often means a faster distribution of assets to your heirs in accordance with your stated wishes.
(ii) A living trust can also save the beneficiaries some cost since assets in the Trust will not go through probate and as such will avoid estate taxes.
(iii) One big difference between the two legal documents is the level of privacy offered with a Living Trust. As a living trust is not made public, your estate will be distributed in private. A Will, on the hand, is a public record and your information becomes public in the course of processing the probate.
Que: What is or are the difference(s) between Living Trust and Gift Inter Vivos?
Ans: A Living Trust provides you with the opportunity to gift an asset in the future or with a condition whereas the title still resides with you while alive, whilst a Gift Inter-vivos is an absolute and instant gift to the beneficiary upon the vesting of the Gift.
Que: What is the minimum threshold to institute a Trust?
Ans: There is no minimum threshold to set up a trust. One can decide to set up a trust with as little as N10,000. What is important is to ensure that the trust fund/assets are built upon as time goes on. Also, other assets apart from physical cash may be used to set up a trust such as stocks, bonds or insurance policy and of course, real property. Any of these can be constituted into the assets under a Trust.
Que: Is there a possibility or legality of registering a will with the Corporate Affairs Commission?
Ans: There is no possibility of registering a Will at the Corporate Affairs Commission because the CAMA does not provide for Will or Estate Planning in general. A Will is however registrable at the Probate Division of the High Court in which the maker of the Will (i.e. the testator) resides. In fact, it is advisable that upon the conclusion of a Will (i.e. drafting and proper execution) the Will should be immediately lodged at the Probate Division of the High Court of the State in which the testator resides.
Que: What is a Hybrid Trust?
Ans The word “Hybrid Trust” refers to a combination of estate planning tools
whereby the settlor decides to move the liquid portion of the assets into a Trust via available tools to preserve same, whilst the illiquid assets i.e. Real property is moved to a Will. These tools include Joint Ownership, Power of Attorney, Life Insurance etc., that could be combined to transfer assets to beneficiaries.
Que: Can one use a Trust company as an administrator to the estate of a deceased husband?
Ans: Yes, a Trust Company like STL Trustees can serve as an administrator of the Estate of a deceased intestate. In fact, this is one of the services offered under STL Trustees Estate Planning Unit. The advantages of using a Trust Company as Administrator of a deceased estate are numerous including:
- the company has perpetual succession.
- The client is able to leverage on the knowledge and expertise of various professionals within the company to give the best advice on the administration of the Estate.
- There is apparent neutrality, independence and professionalism in managing and administering the estate, etc.
Que: Does one need to register a Trust for it to be effective?
Ans: You do not need to register a Trust Deed for it to be valid and effective. A Trust is effective once it is carried out in accordance with the wishes of the Settlor and the terms are enforceable in a court of law being contractual as between the Settlor and the Trustee.
Que: What is the effective date of a Trust?
Ans: In most cases, it is the date the assets are moved to the custody of the Trustee.
Que: Can you please give more details regarding your fund management services?
Ans: STL Trustees is authorized and licensed by the Securities & Exchange Commission to carry out the business of Trusteeship and Funds/Portfolio Management. In that arm of our business, we manage our clients’ funds by investing the funds in different instruments such as money market, fixed income, etc and we invest same in line with the individual client’s risk appetite and expected returns on investment.