A Legal Link Between Trust Property and Trustees Under the Nigerian Legal System
CHAPTER ONE
OBJECTIVES OF THE STUDY
This study focused on the below highlighted objectives: a. To examine the concept of trust relationship and its relevancy under the Nigerian legal system b. To examine the concept of trust property and trustee under the Nigerian legal system. c. To examine the rights, powers and duties of a trustee over the trust property d. To establish the nature of rights that exists under a trust relationship. e. To examine the concept of trust and other legal relationships showcasing the distinction between them and the uniqueness of trust over them. f. To examine the concept of vesting trust property in the trustee as the legal link between them and its effect in a trust relationship. g. To draw attention to the need to develop this area of property law so as to make it be in tune with modern reality.
CHAPTER TWO
CONCEPT OF TRUST UNDER THE NIGERIAN LEGAL SYSTEM
INTRODUCTION
The basic idea behind the trust lies in the fact that the management and enjoyment functions of ownership are split between different persons. The role of management is vested in a person called a trustee whilst the enjoyment of the thing subject to the trust is vested in persons called beneficiaries. The fragmentation of management and enjoyment is only possible where the legal title to the property is vested in trustees[1]. However, because the trustees have agreed to hold and manage the legal title for the benefit of beneficiaries, their conscience binds them in equity, thereby giving the beneficiaries an equitable interest in the property subject to the trust[2]. The net effect of fragmenting management and enjoyment is that there is a consequential fragmentation of title. The trustees hold the legal title, which is a nominal title[3], while the beneficiary holds the equitable title full of beneficial rewards from the property. The trust in this sense can be seen as a product of equity. One leading treatise on the law of trusts defines the trust as an equitable obligation, binding on a person (who is called a trustee) to deal with property over which he has control (which is called the trust property), for the benefit of persons (who are called beneficiaries), of whom he may himself be one, and any one of who may enforce the obligation. Any act or neglect on the part of the trustee which is not authorized or excused by the terms of the trust instrument, or by law, is called a breach of trust[4].
Unless a trust is implied by the courts, it is usually created by a deliberate act on the part of a settlor. Where a trust is created in a will, the settlor will be referred to as the testator or testatrix if it is woman creating the trust in the will. Where a settlor creates a trust during his lifetime, the trust is said be an inter vivostrust. Where the trust is created in a will, the trust is said to be a testamentary trust. There is nothing stopping a settlor also being a trustee, and indeed nothing stopping him being a beneficiary under the trust[5]. However, the trust property must be vested in one or more trustees who will hold the legal title to the property on trust for the beneficiaries. In principle there is nothing stopping any individual being a trustee; however, the appointment of an infant as a trustee will be void[6]. In the early days a trustee would often be a family member or a close friend who usually acted out of a sense of moral obligation. In more contemporary times, a trustee will often be a professional person, such as a solicitor or a bank, acting out of some contractual duty rather than a moral one. In the most typical case the trustee will be vested with the legal title to the trust property; however, it is quite possible to be a trustee of an equitable interest in favour of a beneficiary[7].
A trust must attach to some identifiable property over which the trustees have some control and over which the beneficiaries can claim an equitable interest. The identification of the trust property is important for two main reasons[8]. Firstly, it gives the beneficiaries an equitable interest in the property. Secondly, because the equitable right is a right in personal, the beneficiaries can follow that property into the hands of third parties who cannot purport to show that they are bona fide purchasers of the legal title without notice of the interest. The ‘bona fide purchaser principle’ is explored in more detail in the next section. For the time being the basic rule is that any type of property is capable of being subject to a trust: thus, both personal and real property can be the subject matter of a trust[9].
CHAPTER THREE
CONCEPT OF TRUSTEE AND TRUST PROPERTY UNDER THE NIGERIAN LEGAL SYSTEM
CONCEPT OF TRUSTEE UNDER THE NIGERIAN LEGAL SYSTEM
[1]The office of trustee is a gratuitous one, with the consequence that, in general, while trustees may be reimbursed for expenses properly incurred, they may not receive remuneration. To this general rule there are a number of exceptions, the most important of which is where the trust instrument expressly empowers trustees to charge for their services. Additionally, the court may, if it considers it in the interests of the trust, authorize charges to be made or to be increased. A trustee is personally liable for any loss to the trust estate caused by or resulting from any breach of trust committed by him, whether that breach was deliberate (i.e. fraudulent) or negligent. A person appointed to hold trust property and, in the case of an active trust, to administer it for the benefit of the beneficiaries is a trustee. In the ordinary case, trusteeship will be ‘full’ in the sense that the trustees will have vested in them the property subject to the trust together with the powers of management enabling them to discharge their functions[2].
INTRODUCTION
[3]A trustee manages property that is held in trust. A trust is an arrangement in which one person holds the property of another for the benefit of a third party, called the beneficiary. The beneficiary is usually the owner of the property or a person designated as the beneficiary by the owner of the property. A trustee may be either an individual or a corporation.
Trusts are useful for investment purposes, and they offer various tax advantages. Another purpose of trusts is to keep the trust property, usually money, out of the hands of the owner. This may be desirable if the beneficiary of the trust is incompetent, immature, or a spend thrift. Trustees have certain obligations to the beneficiary of the trust. State statutes may address the duties of a trustee, but much of the law covering such obligations is often found in a state’s case law, or court opinions.
A trustee is a fiduciary of the trust beneficiary. A fiduciary is legally bound to act, within the confines of the law, in the best interests of the beneficiary. A trustee is in a special position of confidence in relation to the beneficiary because the trustee has control of property that is essentially owned by the beneficiary.
CHAPTER FOUR
THE LEGAL LINK BETWEEN TRUST PROPERTY AND TRUSTEE UNDER THE NIGERIAN LEGAL SYSTEM
INTRODUCTION
It is logically affirm that the reception of the English law of trust into the Nigerian legal system is a blessing since the property to be held by the trustee on behalf of the beneficiary will be administered judiciously without fear of exploitation and even if there is exploitation the maxim ‘equity will not suffer a wrong without a remedy’ will be applied in such a case. Under the common law (legal systems), a trust is a relationship whereby property (including real, tangible and intangible) is managed by one person (persons or organizations) for the benefit of another. [1]When as Nigerians, we come in contact with the law, either through contracts or court prosecutions and civil actions; it is sometimes difficult to fully understand the system of the law so we usually depend on lawyers to interpret the laws or procedures and also to stand for us as advocates in court. This article will be giving a brief introduction to the Nigerian legal system in a lay man’s terms in other to help the common Nigerian on the street who has no legal training understand how the law affects his civil rights, duties and obligations.
VESTING OF TRUST PROPERTY IN THE TRUSTEE
Whenever any new trustee is appointed, all the trust-property for the time being vested in the surviving or continuing trustees or trustee, or in the legal representative of any trustee, shall become vested in such new trustee, either solely or jointly with the surviving or continuing trustees or trustee, as the case may require. Every new trustee so appointed, and every trustee appointed by a court either before or after the passing of this Act, shall have the same powers, authorities and discretions, and shall in all respects act, as if he had been originally nominated a trustee by the author of the trust.
CHAPTER FIVE
GENERAL CONCLUSION
A trust is a separate legal entity, so the money is generally safer than it would be with a family member. Even a relative with the best of intentions could face a lawsuit, divorce or other misfortune, putting that money at risk. Though they seem geared primarily toward high net worth individuals and families, since they can be expensive to establish and maintain, those of more middle-class means may also find them useful – in ensuring care for a physically or mentally deficient dependent, for example. Some individuals use trusts simply for privacy. The terms of a will may be public in some jurisdictions. The same conditions of a will may apply through a trust, and individuals who don’t want their wills publicly posted opt for trusts instead. In addition, the trustee has a duty to prudently invest the trust property in order to ensure that the income is sufficient to meet the needs of the beneficiaries.
CONCLUSION
Trusts are established to provide legal protection for the trustor’s assets, to make sure those assets are distributed according to the wishes of the trustor, and to save time, reduce paperwork and, in some cases, avoid or reduce inheritance or estate taxes. Trust is an institution of equity which is received into the Nigerian legal system and just like all other equitable institutions and remedies, any claim arising from trust must be shown to have an ancestry founded in history and in the practice and precedents of courts administering equitable jurisdiction. It is a notable fact that the doctrine of equity developed in order to mitigate the harshness of common law; hence the law of trust which is an equitable principle is one of such development. Trust Management helps charities make decisions, by equipping Trustees with the resources, advice and support needed to facilitate good governance of Charitable Trusts.
RECOMMENDATION
Recommendations need be made for an improvement in our laws.
- It is suggested that the provisions of the Act should be amended taking into account the vital differences between our laws and other countries.
- The provisions of the ISA as regards investment of Trust property funds needs to be revisited this is because it has been argued that the avenues for investment open to the Trust manager as a result of the provisions of the TIA are limited.
- It is suggested that the more effective the laws are and the more the investors are aware of the investments in a Trust property, more people will invest in the Trust property and this would lead to the growth of the country’s economy and may lead to the eradication of poverty in Nigeria.
- There should be amendment of EFCC Act, MLA, ACJA and relevant statutes to include provisions on backward tracing.
- Training of judicial officers to apply principle to the exclusion of 3rd Party interests. Balance should determined by Judges on a case-by-case basis.
- Increased budgetary allocation to the EFCC and ICPC to enable them effectively carry out extensive (and expensive) tracing. ALTERNATIVELY: Agencies can retain a percentage of recovered monies to fund their operations.
- Adoption of the Funds Settlement system used in the UK e.g. the Clearing House Automated Payment System used in the UK for funds transfer and exchange electronically monitors all payments made in and out of the UK. In 2015 alone, CHAPS recorded transactions worth over £ 68 trillion. All of these transactions are available for scrutiny.
