#PFSeries4 - Planning for the After Life: Focus on Wills and Trust

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"There is something about wills which brings out the worst side of human nature. People who under ordinary circumstances are perfectly upright and amiable, go as curly as corkscrews and foam at the mouth, whenever they hear the words 'I devise and bequeath." - Dorothy L. Sayers, Strong Poison

 

Wills can be nasty affairs if not treated carefully and could be disastrous if not treated at all. Many African families have seen the bloodbath that occurs where a family patriarch dies without a will (in other words he dies intestate) or leaves a will that slices and dices his estate in unexpected ways, the battle royale between three brothers (all of whom are lawyers) over the estate of Nigerian legal doyen, Chief Rotimi Williams (SAN) is one of many notable contemporary consequences of not leaving a will.

 

The same internecine struggles were witnessed over the property of highlife music impresario Sir Bobby Benson, whose children allowed his popular hotel along Ikorodu Road in Lagos fall into disrepair before the Lagos State government took over the building and demolished it in overriding public interest.

 

The absence of a document handing over assets of a deceased individual to designated survivors creates a maze of social and legal problems that usually results in the creation of a shopping lit of 'dead' assets that in the Nigerian parlance are 'Not for Sale'. Dorothy Sayers was right on the money in the quote above when she noted that typically sane people become rabid creatures once the issue of a will arises.

 

The decision and preparation of a will is a necessary and meaningful exercise to ensure the peaceful intergenerational transfer of assets and the guarantee of social harmony within and between families (see illustration 1 below).

 

Illustration 1 Intergenerational Transfers

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But transfer of assets do not only occur when a person dies, it could take place while the individual is alive by way of a Trust. A trust is a fund set aside for beneficiaries to draw from while the asset owner is alive. The trust allows beneficiaries access to assets in a prearranged manner over a period of time in line with the instructions of the creator of the Trust.

 

A trust is usually managed by a board of Trustees appointed by the trust creator while alive. Trusts usually allow beneficiaries access to cash flows or a stream of revenues from underlying assets that guarantee a minimum wellbeing while the creator of the trust is alive and perhaps even when the person dies, notable large trusts are those created by the late Sam Walton of global consumer retail giant Walmart, Bill and Melinda Gates of the Bill and Melind Gates Foundation and Microsoft, and Warren Buffet, the investment sage of Omaha and Chairperson of Birkshire Hathaway.

 

The trust option is not very common amongst high ranking and wealthy Nigerians as many prefer to give designated beneficiaries of their wealth regular freebies and leave instructions on who control certain assets after their death. In polygamous family arrangements this could be difficult and have unintended consequences. Hence, a preference for a formal trust scheme and a legal will.

 


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The Will to Support

In Nigeria the fear of death is gripping and individuals simply wish away the notion of passing to the great beyond and believe that it protects them from the inevitability of the event, it explains why several Nigerians have no retirement plan and end up broke and down at sorts after a long and healthy professional or business career.

 

The notion of mortality scares the average Nigerian stiff and stops them hard in their tracks from planning their personal estate for transfer to the next generation. Surprisingly this is as common amongst the well-heeled and educated as it is amongst the less literate. The decision not to plan for tomorrow's inevitable passing away of individuals has created a large and growing pool of dead assets and has allowed avoidable internal conflicts within families to flourish. The scars of strife resulting from the poor handling of a deceased's assets have bookmarked major social and economic challenges not common in more mature societies and economies.

 

The Nigerian has a romance with life and living that extends beyond the corporeal to the spiritual, and therefore, the thought of passing off assets to a new generation raises a mental picture of giving up on life. The aversion for wills as last testaments reflects a deep seated complex in which the Nigerian cannot come to terms with his or her mortality. This creates a major problem for value creation and asset use. 

 

For example, in many rural communities family heads own farmlands for which there are no titles and passing on the asset after death is a treacherous path of family horsetrading, politicking and deceit. It is not uncommon for family members to throw out the children and wife of a man after he is dead claiming that the decease's assets are 'family' property. Many women have had to face the heartrending challenge of starting life anew with the burden of taking care of their husbands children without a financial fallback position or social safety net. The harrowing tales told by these women underscore the need for heads of families to obtain proper title documents for their assets and ensure that a will exists that is suitably registered and handled by a competent lawyer.

 

For example, the estate of Chief Moshood K.O. Abiola is still a matter of court adjudication while assets such as Abiola Bookshop, Concord Newspaper, Concord Airlines and a few other businesses have hit the deck. The same is true with other wealthy Nigerian families, but the rich have close cousins in the less privileged members of society as assets easily turn to dross as a result of lengthy battles over the property of deceased persons.



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The Strength of Flexibility

A way to ensure that wills are put in place before a person dies is to have a basic will as soon as possible while one is in ones twenties and this will would be adjusted either annually or every two years to make the will as current as possible and ensure that assets accumulated are put into the document. A schedule of an individuals fixed and floating assets should be prepared annually and this should be aligned to the details of the most recent will available.

 

'Rolling' or regularly adjusted wills ensure that contention concerning a person's assets at the time of death are reduced to the barest minimum. This protects the immediate family from the onslaught of third parties keen on taking predatory advantage of the deceased's direct family. The deceased would do well to ensure that the will includes liquid and near-liquid assets that could be used in paying the required duties and taxes on property transfers. For example, as part of the will process if the writer of the will has assets in the form of equities listed on the stock market, pre-signing undated share transfer forms would make the process of selling some of the shares to raise urgent cash easier for the beneficiaries of the will, particularly if one of the beneficiaries is made next of kin to the decease's bank account/s. 

 

As the will writer acquires more shares the will can be updated or a general commitment to transfer all equities in companies listed on an official stock exchange anywhere in the world could help reduce paperwork.

 


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Avoiding a Sting in the Tail

As good as a regular review of a will is, there are some overlooked parts of a will that must be addressed. For instance If a will refers to Mr. and Mrs. X such a will can easily bring about confusion and even chaos where the exact Mrs. X is not clearly identified. If there is a hidden Mrs. X that appears at the demise of Mr. X the courts may have a tough time untangling the knot where the newly discovered Mrs. X has children for the departed Mr. X. Mr. X must state clearly in his will which Mrs. X is a beneficiary of what. For example, the will should mention Mrs. Margaret X and not Mary X.

 

Other tail stings could occur in wills but the writer of a will should ensure that ambiguity is removed from the will and that the will is registered at a probate office.

 

Illustration 2 Wills: Avoiding Booby Traps

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This House is Not for Sale

A story of a Benin family told by a law firm Eghobamien & Eghobamien is instructive in understanding how wealth accumulation without appropriate legal backstops could lead to asset destruction and avoidable family infighting, the story goes as follows:


The practice of inheritance as a means of devolution or disposal of property has in recent times been divisive. This age-long concept is particularly sacred to the Benis who ascribe significance to customary devolution of property. However, this practice is not without some challenges, with the attendant effect of creating family feud and disenchantment among family members.

 

In a bid to secure the assets of a deceased relative, families have resorted to various means of ensuring that the properties do not fall into the hands of undeserving individuals. Some of these means are in fact detrimental to the value of the property. The story of Mr. Imafidon is commonplace as it underscores the need to avoid property devaluation and deterioration.

 

Mr. Imafidon was a very educated, wealthy and industrious man who had amassed so much wealth and assets in his lifetime but died in his prime subjecting his properties to the vicissitudes of disposal under native law and custom. As a young man he excelled in academics obtaining a Masters degree from University of Nigeria, Nsukka at the age of 24 and was very knowledgeable in the area of financial accounting. His excellent academic records did not go unnoticed as he was invited as a keynote speaker at the University of Alberta, Canada where he obtained his Doctorate degree.

 

While on his visit to Canada, he came down with severe cold and shortness of breath, he was later diagnosed with acute pneumonia. Having exhausted all options of English medicine to no avail, he was flown back to Nigeria for traditional treatment. His family rallied around to provide the best healthcare for Mr. Imafidon whose ill-health had deteriorated so badly and was now receiving treatment at home. For about two years, he had suffered severely with this illness and on the 24th of March, 2014 the cold hands of death greeted Mr. Imafidon who by this time was 45 years old.

 

Soon after the conclusion of the burial rites, Mr. Imafidon's second son, Omoruyi Imafidon who has always had a witty attitude and has been nursing intentions of relocating to the United Kingdom, began selling off his father's properties to enable him gather funds to cover his travel expenses. Also, Mr. Nosa who is the deceased elder brother, was very close to him during his lifetime and being one of his closest confidant had managed to lay hands on some documents relating to the Late Mr, Imafidon's assets also sold off some of the deceased properties.

 

The Late Mr. Imafidon's wife and other children upon having knowledge of the sale by Omoruyi and Mr. Nosa took steps to prevent them from further selling off the remaining properties owned by their father by putting up the inscription 'THIS HOUSE IS NOT FOR SALE' on the deceased properties.



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Not properly tidying up matters related to inheritance could result in family tragedies but beyond family woes there is the wider issue of the economic consequences of a sprawling mass of 'dead' or unusable assets across the country, whose economic values have been bootstrapped in court cases. 

 


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Section 1 of the report takes a bird's eye view of the concepts of wills and trusts and identifies parties to a will or trust and why they should be concerned with both types of asset transfers. It deals with the issue of who should plan for the afterlife, why they should plan for the afterlife, how they should plan for death, and when the afterlife planning should commence.

 

Section 2 of the report looks at the planning of a will writer's (testator's) estate. It clarifies issues around the estate planning of the will writers properties (management of the deceased's assets fixed and movable). The author's of the report bust the myth around wills and the argument around when people should start planning their affairs with regards to death, the "too young to write a will" argument.

 

The section also explains the various types of wills and the existing administration of will laws in Lagos State.

 

The third section, Section 3, features a contribution from a legal practitioner enlightening us about the common mistakes made in drafting a will and what the government and individuals need to do to facilitate seamless wills administration.

 

Section 4 of the report deals with what beneficiaries should know at the death of an individual. Rather than flaying around blindly trying to find direction, the section lays out the process of addressing issues related to the decease's bequest. It particularly provides guidance for those whose loved one passed away intestate (that is, without a will as is common in Nigeria).

 

The last Section of the report, Section 5, explains how people should order their affairs to ensure that they pass into the afterlife in a way that leaves little if any room for friction amongst family members and any other interested persons.

 

 

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Previous Personal Finance Series

1.      #PFSeries1 - Wedding-Marriage: Between an Event and A Journey

2.     #PFSeries2 - Raising a Baby: The Pleasures, Pressures and Financing

3.     #PFSeries3 - Investing in Peace of Mind: Focus on Insurance

 

 

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Related Links & References

1.      Nigeria - International Estate Planning Guide Individual Tax and Private Client Committee by Ese Nkadi

2.     University of Arkansas System Division of Agriculture Research & Extension https://www.uaex.uada.edu/publications/PDF/FSFCS56.pdf last accessed on 18 May 2021

3.     K. Abayomi, Wills: Law and Practice Pg 6

4.     Forse and Hembling Case (1588) 4 Co. Rep. 60b

5.     US Legal https://definitions.uslegal.com/a/animus-revocandi/ Last accessed on 5 April 2021

6.     Isaac Gaji & Ors. v. Emmanuel D. Paye (2003) LPELR-1300(SC)

7.     Adeyinka v. Ibidunni (1959) 4 FSC 282

8.     Section 11 Wills Act, Section 9 Wills Law of 1958

9.     G.W. Beyer and C.G. Hargrove; Digital Wills: Has the time come for wills to join the digital revolution? Pg. 870

10.  Section 11 Wills Act, Section 9 Wills Law of 1958

11.   G.W. Beyer and C.G. Hargrove; Digital Wills: Has the time come for wills to join the digital revolution? Pg. 870

12.  Section 4 Public Trustee Law of Lagos State

13.  Section 4 Trustee Act

14.  Section 3(2) of the Trustee Investments Act

15.  The Place of the Minor in the Administration of the Estates https://www.academia.edu/35692223/THE_PLACE_OF_THE_MINOR_IN_THE_ADMINISTRATION_OF_ESTATES Last accessed on 18 May 2021

16.  Section 3 Administration of Estate Law

17.  The Private Trustee in Victorian England by Chantal Stebbings

18.  (1957) No. 16

19.  See Sechedule II of the Constitution of the Federal Republic of Nigeria 1999

20. Order 62 Rule 26 (7) Lagos State High Court Civil Procedure Rules 2019

21.  https://deathwithdignity.org/news/2017/07/death-with-dignity-means/ Last accessed on 28 May 2021

22. 1999, Seventh Edition, West Publishing Company, page 945

 



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