Femi and Tina have been married for 20 years and have four Children within the age bracket of 10 to 19.
Femi is in his late 40’s and has a pool of assets worth Millions of Naira. Femi has begun the process of writing his will and has therefore sought advice from his best friend and close confidant, Chukwuma. During one of his consultations with Chukwuma, femi spelt out his concerns about having a will as the best form of estate planning and they are as follows:
- The probability of his kids managing the fortune set out in his will in the event of his demise
- How will he protect the beneficiaries from any claims/family law disputes as regards his assets upon his demise
- How can he preserve some assets for future generations e.g grandchildren, great grandchildren
- Whether the executor can diligently administer his assets according to his wishes as spelt out in the Will.
Femi is considering if a simple Will is the best option as opposed to a Living Trust or a Testamentary Trust.
THE SIMPLE ‘WILL’
A Will is a legal declaration by which a person, the Testator, provides for the transfer of his property upon his demise and names one or more persons to manage his estate. The main advantage is that it is easy to establish, enables the Testator determine how his estate would be administered and avoids recurrent administrative costs.
However, under a simple Will, apart from the most common issue of delay in executing a Will due to probate procedures, a beneficiary of a simple Will could be exposed to claims on the assets due to family disputes, claims from creditors as well as mismanagement of the assets by the beneficiaries.
A Living Trust unlike a Will, takes effect during the life time of the settlor and involves transferring the legal title of the assets to the Trustee. Key advantages of a living Trust includes:
- Elimination of delay due to probate procedures.
- Confidentiality of assets and named beneficiaries.
- Unlike a Will, a Living Trust is hardly contested.
- Administration of the assets after the demise of the settlor (done based on the wishes of the settlor as evidenced in the Trust Deed)
Furthermore, the settlor can verify the extent to which his assets are being managed while he is alive thereby relieving him of worries associated with how his beneficiaries are treated upon his demise
Testamentary trusts are express trusts created under a Will by the settlor. Under a Testamentary Trust, the trust so established, does not come into force until after the demise of the Testator. It could be said that after being set up in a will, the testamentary trust is dormant until the death of the testator who created the trust and during that time, the settlor may introduce changes to the trust.
Accordingly, the Trustees will be appointed by the Will and, once the process of administration on death has been completed, the executors will transfer the property of the deceased person to the trustees and the testamentary trust Will come into force.
The advantages of a Testamentary Trust include:
- Protection of assets from creditors
- Safe guarding the rights of beneficiaries e.g minors or teenagers who are unable to manage their finances
- Shielding the assets from family law disputes.
Femi needs to speak with a team of professionals who can advise him on the best estate planning option based on his unique circumstances. At MERISTEM TRUSTEES, we are just a phone call away….