The Who, Why, When and How of Planning for the After Life with Wills and Trust

Proshare

Sunday, July 09, 2021 / 05:00PM / Proshare Finance / Header Image Credit: Federally Employed Women

 

Being an excerpt from the #PFSeries4 Report - Planning for the After Life: Focus on Wills and Trust"

 

Can one chart a better life for his/her dependents while alive? Or build wealth that can be easily transfer after life? These and many more are the questions that need to be answered as one acquires wealth and journey through adult life.

 

a. Who should Plan for the After Life

Anyone should plan the arrangement of their after-life affairs. This includes and is not restricted to every adult who has attained the legal age of 18 years. This is premised on the provisions of the Wills Law which is to the effect that no will made by any person under the age of eighteen (18) years shall be valid. 

 

Therefore, an underage person cannot make a Will, except he is a seaman, mariner or part of a crew of a commercial airline. The hazardous nature of their jobs makes the law envisage that there is more likelihood for them to die in the course of their duty. Hence, the law allows them to make a valid Will even though they are less than the statutory age.

 

It should be added that the Wills Law of Lagos State1 makes it lawful for every person to devise, bequeath or dispose of by will all real estate and personal estate which they are entitled to in law or equity. 

 

Contrary to widespread opinion, making a will is not only about planning for death but also about ensuring that your family and loved ones are adequately protected. In effect, making a will is one of the most critical things a person can do for his or her loved ones.

 

There are a lot of dissenting opinions among professionals about who should plan for the afterlife and make a will. However, while it makes compelling argument that it is always better to have a will, it must be mentioned that there are specific categories of people who need a will.

 

1.      For married couples, a will becomes very important to protect the interest of each other, as it is important to put into writing what assets a partner gets upon death. Traditionally, a spouse would likely inherit a deceased partner's things even if he or she dies without a will, but that should not be left to chance.

 

2.     Wills are also very important for parents because their kids are likely to inherit their assets if they die intestate (i.e., without a will) after their spouse, but not necessarily. This means parents that want their kids to inherit after their spouse need to put that in writing so there is no room for error or interpretation by the courts.

 

3.     Those that are single and don't have kids, but have a high net worth should have a will. Specifically, people who own assets that exceed more than N50 million should have a living trust which goes into effect right after it's signed.

 

In essence, for people who have assets that need to be distributed upon death, it's almost always easier on their family when a will or trust is in place. Once death is involved, clarity should be the operative word.

 

 

To participate in the Proshare Personal Finance Wills & Trust Webinar happening on July 14th, 2021 from 12pm, kindly register here https://bit.ly/PFWillsandTrust

 

 

b. Why should you Plan?

There are many reasons why every person must make plan for the afterlife which include having a will while they are still alive. This is because of the polygamous nature of our legal system which often suggests that citizens should be judged by their lifestyle and by implication you are subject to the whims and caprices of the court who may decide as to the application of law which may vary.  Where a person dies without a will, often referred to as dying intestate, the Courts will distribute the estate of the deceased according to the provision of the law.

 

There are three systems of law governing intestate succession in Nigeria. They are:

 

1.      Common Law

2.     Laws of various states (customary) and

3.     the Statutes of General Application/Acts and Statutes, Customary Law and Islamic Law.

 

The decision of the court would be premised according to the type of marriage contracted by the maker of the will, and where such a marriage was contracted outside Nigeria, the law of the last longest domicile of the maker of a will, will apply in the case of movable properties.

 

Where however it relates to immovable properties, the principle of lex situs (i.e. Law of the place where the land is situated) will apply. Also, if the immovable property is based in Lagos, Ogun, Oyo, Ondo or Edo state, the administration of estate law will apply when customary law does not apply. Where also, the property involved is movable and the deceased died domiciled in any of the five states listed above, then the administration of estate law applies notwithstanding the location of the property2.

 

The case of Cole v. Cole (1898) 1 NLR 15 is instructive as it highlights the instance where a person who died intestate contracted a marriage outside Nigeria and his estate was distributed according to the English Common Law.

 

Other reasons why you should plan are:

i.       To provide support and financial stability for your dependents either a spouse, children, or relatives.

ii.     To preserve one's assets for the future generation.

iii.   To give support to one's favorite charity organisation or other worthy causes.

iv.   To ensure that one's assets are distributed according to your wishes.

v.     To ensure that taxes and expenses liable to be paid on an estate is minimized to the barest minimum as dying without a will subjects one's estate to unnecessary taxes which could have otherwise been prevented.

vi.   To ensure that the individuals who you choose, have the capacity to make decisions on your behalf in the event of your incapacity.

 

 

 

Proshare Nigeria Pvt. Ltd.

 

 

 

 

c. When should you Start Planning?

Every person should begin planning their will early on in other to ensure that they are not caught by chance to the whims and caprices of life especially as no one knows their last day on earth. The ideal age for planning a will is 18 Years. See Section 3 of the Wills Law.

 

It is important however that you sit down to count the costs, in counting the cost it is important to consider the following:


i.      Your Income Level?

Income received monthly and yearly is a consideration when discussing when an individual should begin planning his/her estate. It however should not be a consideration for you to postpone planning your estate on the ground that "you are not earning enough". Other considerations which shall be discussed below will also provide more insight in this regard as every individual has a unique experience and life trajectory and as such should not be subject to a yardstick which may not be entirely applicable to them.


ii.   How many dependents do you cater for?

The number of dependents which you currently cater for is important in determining the income which would be required to be generated by the estate upon your demise to ensure that your dependents do not suffer adversely. It would also be important in allocating gifts to them as you are better equipped to make a well-informed decision as to how you would be gifting your dependents on a "needs basis" and not "wants basis".  

 

Section 2 of the Wills Law is also instructive as it provides that the wives, husbands or children of the deceased may apply to the court for an order on the ground that "the disposition of the deceased estate effected by the will is not such to make reasonable financial provision for them (the applicant)". The Act also defines Reasonable Financial Provision as "such financial provision as it would be reasonable in all the circumstances of the case for husbands or wife to receive, whether or not that provision is required for the applicant's maintenance". 

 

iii. The adverse effect likely to be encountered should you fail to plan your Estate today?

The effect of your demise must be properly considered and in this instance need not only apply to your immediate family but is also inclusive of employees (where you are an employer of labour). You must thus draw up your will bearing in mind that where it is not properly considered, it can lead to a citation of your will which may be upheld or set aside and would undoubtedly lead to unnecessary litigation expenses. 

 


iv.   Debts owed (if any)

It is important to consider existing debts and consider them in two tranches, which are those which are payable within a reasonable time possible or a long period of time. Where it is the later, it is important to provide how such debts are to be cleared from your estate which may be from the income or residue of the estate.


v.    Existing Contract and obligations at the point of drawing up your will.

It is presumable that during your lifetime, you may possibly enter into agreements which binds yourself, assigns and successors-in-title. It is also agreed that each of those agreement bears its own peculiarities, it is however important to collate and indemnify your successors or dependents of any liabilities where possible and where this is not possible, it is important to properly include necessary details which they should be aware of in the will. This may be further amended by a subsequent codicil depending on the circumstances of the case surrounding a specific agreement which is binding.

 

 

 Proshare Nigeria Pvt. Ltd.

 

 

d. Who should you talk to when planning?

Generally, anyone can plan the affairs of their estate whilst still living, it is however advised that professionals be involved in this process particularly legal practitioners and trust firms.

 

Any person who seeks to make a will or plan their lives after their death is advised to engage the services of a legal professional or a trust firm who exudes skills and experience in this regard. The reasons for such choice are numerous but the major reasons are highlighted below:

 

A legal practitioner will help in preparing a legal binding document, this he/she will do by asking the necessary questions and providing you with options on how to leave your property.
 
By Virtue of the Rules of Professional Conduct, which guides the actions and behaviour of legal practitioners in Nigeria, it mandates Legal practitioners to do the following:

 

i.       They are required to devote their attention, energy and expertise to the service of his client (a prospective testator) and to act in a manner consistent with the best interest of the client (Rule 14 (1))

 

ii.     A legal practitioner is also estopped from abandoning or withdrawing his employment once assumed except for a good cause. This provides a prospective testator with the security of his estate during the period of appointment of a legal practitioner to draft his wills (Rule 21 (1)).   

 

iii.   Communications shared with the legal practitioner are also deemed highly confidential and cannot be shared with third party except with where the confidence or secrets necessary when permitted under the RPC or law or a court order (Rule 19(3)(b)). This loosely translates as meaning that the legal practitioner can be called in to testify and give evidence should any issue relating to an executed will be an issue of contention before a court of law.

 

iv.   The legal practitioner is also not expected to call at a client's house or place of business for the purpose for giving advice to or taking instruments from (Rule 22). With the only exception in this case being when the prospective testator is unable to attend due to an urgent reason which usually in practice is ill health or old age of such a testator.

 

Other persons you can and should speak to when planning the affairs of your estate are:

 

Asset Managers - Speaking to Asset Managers is important because they possess specialized skill in management of assets and as such will provide quality financial advice which will be instrumental when applied to a Trust. This also often guarantees income for the estate.

 

Estate Planners - This may be an attorney who is skilled with knowledge in Estate Law. Estate Planners help to draw up an estate plan which could be long or short term in nature. Where required they provide advice on how an estate can be properly dispensed and aid the smooth handover of documents relating to the real estate of a deceased person.

 

Portfolio Managers - The importance of portfolio managers is becoming increasing important especially as the world becomes more technology inclined and has resulted in the use of safe locks, passwords and important information locked in the cloud. Persons who engage the services of a Portfolio manager preferably a company, provides their estate with appropriate security and access to the assets gifted to them which may range from shares and stocks in companies, to crypto currencies and title ownership documents as a proper planning with portfolio managers will ensure the security of assets of a deceased person and escapes liquidation by regulatory bodies which may be as a result of legislations passed from time to time.

 

Financial Analyst - You should also consider seeking advice from a Financial Analyst who can properly advise you on expected future returns of your estate within a specified interest as well as render necessary advice on your stocks/shares. 

 

You may also wish to speak to your intended Executors and Trustees intimating them of your desire to appoint them under your will and clarifying if they would like to act in such role as gratuitously or at a fixed fee. This is so important especially where you decide to create a secret trust under your will.  


 

 Proshare Nigeria Pvt. Ltd.  Proshare Nigeria Pvt. Ltd.



To participate in the Proshare Personal Finance Wills & Trust Webinar happening on July 14th, 2021 from 12pm, kindly register here https://bit.ly/PFWillsandTrust

 

 

 

Proshare Nigeria Pvt. Ltd.

 

 

Related News

1.      The Importance and Myths of Estate Planning

2.     Proshare to Host Personal Finance Webinar on Wills and Trust on July 14th, 2021

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

4.     FBNQuest Offers Insights on Inheritance Planning for Asset Protection and Wealth Transfer

5.     Estate Planning and the Role of Corporate Trustees

6.     FBNQuest Trustees Marks 40th Anniversary of Preserving Legacies in Nigeria

7.     FBN Trustees resumes its educative and empowering Legacy Series

8.     Latest Thinking on Wills and Trusts - Why Estate Planning is Essential

9.     Hearing on Suit by Aderinokun's Daughter against GTBank, Others Fixed for March 24

10.  Estate Planning for Discerning Individuals

11.   The Law on Debts After Death

12.  Plane crash victims families may get $1.7m claims

 

 

Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.


Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP