How to Set Up Trust Fund Account for Child Savings in Nigeria
One of several choices for passing property, money, and other valuables to members of your family or charitable causes is to set up a trust fund.
It might be tough to decide whether to create a trust fund account and how to do go about the account creation process. You’ll require the assistance of a lawyer to make the best decisions when setting up trust fund for child savings in Nigeria.
Trust fund for child savings provides the child with more freedom, privacy, and control. While decreasing taxes and avoiding probate can save beneficiaries’ money, time, and a mountain of paperwork. Here are the basics you need to get familiar with as a Nigerian looking to set up a trust fund.
In this post, we’ll look at what a trust fund actually means, who the different parties to a trust fund represent, why you might need one, and how to put one up.
Trust Fund? What Does it Entail?
The relationship that comes up whenever an individual regarded as the trustee is imposed duties in law and equity to retain property collected from the grantor’s equitable or legal title, this could be personal properties or other valuables, for the gain of other individuals or some authorized object known as the beneficiary, has been defined as a trust fund.
A trust fund is set up so that the real benefit of the child’s property accrues to the beneficiaries or other trust fund objects rather than the trustee.
Trust fund is also explained as a legal arrangement in which an individual grants another party the power to administer their valuables for the benefit of another individual. Real estate, bonds, mutual funds, and even stock all stands as properties in trust fund.
Why Create Trust Fund in Nigeria?
Legal and individual entities in Nigeria create trust funds with the sole aim of managing manage the distribution of their properties. A trust fund can be utilized for a variety of things.
Parents can open trust fund for the care, maintenance, and education of their spouse, dependents, children, and members of the family during the grantor’s lifetime and after their death.
It can also be utilized for property transfer or make legal grants to people you care about. It can be utilized as a major source of life insurance and financial support for a legal grantor who is incompetent or disabled and a source of security in old age.
What Is the Procedure for Establishing a Trust Fund?
The following actions must be followed to establish a trust fund:
- Trustee Appointment
A trustee might be an individual, a company, a collection of firms or individuals.
- Determine the trust fund type you want to settle for
Private trust funds and public trust funds are the two primary forms of trust fund accounts. Public trust funds (which can also be charity trusts) are trust funds established for specific purposes and founded for the benefit of the society.
There are two types of private trust funds: implied and express trust funds. Express trust funds are established by the parties’ actions, whereas implied trust funds are those that develop through law operation.
- Assets are transferred to the chosen trustee:
This step is a crucial consideration because trust funds might be revocable or irrevocable.
How to Create a Trust Fund (Private) in a Flash
In Nigeria, there is absolutely no explicit legislation controlling private trust fund agreement. As a result, cases decided under the control of English law are relied upon.
Private trust fund can be established either during one’s lifetime or via the use of a will.
The living type of trust fund is established when a person known as the grantor makes a trust fund declaration during his lifetime, ordering a person or persons seen as the trustee to retain assets or properties for the benefit of the beneficiaries of the guarantor following the conditions outlined in the trust fund set up guide.
In that instance, the beneficiaries slowly become owners of trust fund’s subject (i.e., the assets or properties), the trustee retains the interest legally.
Establishing a private trust fund, the following must be in place:
Intentional certainty – The grantor is expected to state or demonstrate full intention to create a trust fund. It is insufficient to communicate desire or hope.
Subject matter certainty – The trust fund’s assets must be appropriately specified. The trust fund’s topic can be anything from a land stake to a car, a debt, money, or even a promise. The trust fund’s subject, whatever shape it takes, must be elucidated with reasonable confidence.
Object certainty – This explains that the trust fund’s intended beneficiaries must be ascertainable or known. The trust fund will fail if the beneficiaries’ identity can’t be confirmed, and the trust fund’s subject will revert to the donor/settlor or his property, as the situation may be unless it is a trust that is charitable.
Criteria for Trustees’ Appointment, as well as a Trustee’s Responsibilities
The legal capacity to establish trust fund is solely determined by an individual’s or a group’s ability to have an interest in land; thus, such persons have the legal capacity to do so. Whereas, if an individual cannot own land, his ability to establish a trust fund can be harmed.
A trustee can be appointed by an adult of great mind, a corporation, or an institution with the legal authority to hold property.
The trustee’s responsibilities are as follows:
- It is your responsibility to safeguard and collect the trust fund’s assets.
- It is his responsibility to run a trust fund investment in his possession.
- Obligation to distribute trust fund asset and ensure equality among beneficiaries unless the testator or the grantor expresses a contrary desire in the deed of trust fund.
- Obligation to account for trust fund assets and give information to beneficiaries as requested.
Individuals, particularly individuals with high net worth, who desire to maintain control over their assets can establish a trust fund throughout and beyond their lives. Trust fund ensures that the resources within your reach are put to the best possible use.