TRUST PROPERTY: A LEGAL LINK BETWEEN TRUST PROPERTY AND TRUSTEE UNDER THE NIGERIAN LEGAL SYSTEM

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Abstract

This research was set to investigate trust property; a legal link between trust property and trustees under the Nigerian legal system. Black’s Law Dictionary, 6th edition: “Any money or property put aside as a trust for the benefit of another and held by a trustee” defines “trust property” as such. The person with the authority to hold property in trust on behalf of the beneficiary is known as the trustee. The purpose of a trust relationship is to make it possible for a testator or settlor who has a legal estate to provide for his close relatives or dependents after his passing. The trust’s assets must be given to the trustee in order for the trust to be validly established. The act of depositing the trust property in the trustee creates a legal relationship between them. If this has been done correctly, the trustee will be able to manage the trust property appropriately. Only assets that have been properly vested in the trustee may be claimed by beneficiaries. The legal relationship between the trust property and the trustee under Nigerian law must therefore be examined in order to determine the trustees’ authority to manage trust property under a trust relationship.

 

 

CHAPTER 1

GENERAL INTRODUCTION

1.0.0: INTRODUCTION

Trust properties are those that are managed by one person, a group of individuals, or an organization for the benefit of another in the majority of common law systems. The English court of chancery1 is where the contemporary principles of equality originated and developed. These principles were legally adopted by the Nigerian legal system through a number of statutory enactments. Trust is an institution of equity that is recognized by the Nigerian legal system, and like all other equitable institutions and remedies, any claim arising from trust must be demonstrated to have historical roots in addition to those established by the customs and precedents of the courts exercising equitable jurisdiction.

The law of trust, which is an equitable principle, is one such development. It is noteworthy that the idea of equity evolved in order to temper the severity of common law. Nigeria did not choose to adopt the English law of trust on its own volition. Through the Re-english legislation that Nigeria obtained and that went into effect on January 1st, 1900, it was enforced. Nonetheless, it should be recognized that the idea of trust existed under our own customary norms before the colonialists forced their legal system on us.

To this end, one can logically state that the incorporation of the English law of trust into the Nigerian legal system is advantageous because the property to be held by the trustee on behalf of the beneficiary will be managed wisely without concern for exploitation, and even if there is exploitation, the adage “equity will not suffer a wrong without a remedy” will be applied in such a case. A trust is a relationship defined by the common law (legal systems) in which real, tangible, and intangible property is handled by one person (or group of people) for the benefit of another. A settlor or testator establishes a trust when he or she assigns some or all of his property to the trustee(s) or reoffer to uses of his or her choosing. For the benefit of one or more people or organizations (beneficiary or cestui que trust), typically named by the settlor, who holds equitable title, the trustees hold legal title to the property. The beneficiaries, who are the true owners of the assets in the trust, are obligated to the trustee(s) under a fiduciary responsibility.

The trust is governed by the terms of the trust document, which is usually written and occasionally set out in deed form. It is also governed by local law. The trustee is obliged to administer the trust in accordance with both the terms of the trust document and the governing law. Trust relationship creates a fiduciary relationship among all the parties to the trust which has regards to property and subjects the person with title to the property to equitable duties to deal with it for another’s benefit, thereby placing a confidence in the trustee for the proper management of the property and the enjoyment of the beneficiary. Trust property is the essence for which trust relationship was created. Without the existence of a trust property alone without the vesting of such property in the trustee does not warrant a valid trust but rather the trust property must be properly vested in the trustee

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1.1.0: BACKGROUND TO THE STUDY

The long essay leans on the wall of trust relationship which centers on trust property and trustee under the Nigerian legal system envisaging the legal link between the two concepts. The vesting of trust property in the trustee shall be examined and other related concepts to it under the Nigerian legal system shall not be left out. In the light of the above, recourse shall be made to the definition and examination of trust property and trustee complemented with definitions of other related terms which fall within the scope of this long essay.

1.2.0: statement of the problem

The trust is governed by the terms of the trust document, which is usually written and occasionally set out in deed form. It is also governed by local law. The trustee is obliged to administer the trust in accordance with both the terms of the trust document and the governing law. Trust relationship creates a fiduciary relationship among all the parties to the trust which has regards to property and subjects the person with title to the property to equitable duties to deal with it for another’s benefit, thereby placing a confidence in the trustee for the proper management of the property and the enjoyment of the beneficiary.

To this end, one can 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. The study is therefore aimed at developing a legal link between trust property and trustees under the Nigerian legal system.

1.3.0: OBJECTIVES OF THE STUDY

This study focused on the below highlighted objectives:

1. 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.
2. To examine the rights, powers and duties of a trustee over the trust property
3. To establish the nature of rights that exists under a trust relationship.
4. To examine the concept of trust and other legal relationships showcasing the distinction between them and the uniqueness of trust over them.
5. To examine the concept of vesting trust property in the trustee as the legal link between them and its effect in a trust relationship.
6. To draw attention to the need to develop this area of property law so as to make it be in tune with modern reality.

1.3.0: FOCUS OF THE STUDY

This work has its focus on the legal link between trust property and the trustee under the Nigerian legal system by way of establishing the concept of vesting of trust property in the trustee and its effect if properly done or not. It also goes further to examine the different types of trustees and the scope of operation of each type.

1.5.0: Research Question

1. What is the concept of trust relationship and its relevancy under the Nigerian legal system ?
2. What is the concept of trust property and trustee under the Nigerian legal system ?
3. What is the rights, powers and duties of a trustee over the trust property ?
4. What is the nature of rights that exists under a trust relationship ?
5. What is the concept of trust and other legal relationships showcasing the distinction between them and the uniqueness of trust over them ?
6. What is the concept of vesting trust property in the trustee as the legal link between them and its effect in a trust relationship ?

1.4.0: SCOPE OF THE STUDY

Discussion on trust relationship centers on trustee(s) and trust property. Hence this study  limits it tentacles to the principle of law regulating the relationship between trustees and trust property though with reference to the beneficiaries’ interest in the trust property.

1.5.0: METHODOLOGY

This project employs historical, analytical and ethical methods to examine the relevant principles of law on the concept of trust property and trustee under the Nigerian legal system. It examines the issue from the historical perspective to afford the readers historical benefits on the development of legal principles in this area of property law. In carrying out a study like this, the sources of information could be relied on viz: primary and secondary source of information which will be gathered from textbooks both Nigerian and foreign authors, newspapers, law journals, judicial decisions, relevant statutes, law reports, the Nigerian constitution(1999) amongst others. Information gathered from the internet will equally be of immense help.

1.6.0: LITERATURE REVIEW

Various authorities on trust relationship have been consulted in the course of writing this research work and these authorities have immensely contributed to the development of trust agreement. Most writers and judicial decisions on the concept of trust as they relate to the relationship between trustee and trust property has been expressed and a review of this shall be examined.
M.I. Jegede[1] in his book is of the view that trust is an institution received into the Nigerian legal system and like all 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 the courts administering equity jurisdiction. He went further to say that one of the distinctive features of a trust is that it provides for a situation in which property is managed by one for the benefit of another. Even though other institutions provide for such property management relationships, notwithstanding that fact, when they are seen and examined in the context of the essential requirement of a trust, the difference becomes clear and the uniqueness of a trust becomes more pronounced. The office of a trustee is important to the smooth administration of a trust. The trust property is vested in the trustee who holds such property in accordance with the terms of the trust.

PROFESSOR KEETON in his book[2] described trust as the relationship which arises where person called the trustee is compelled in equity to hold property, whether real or personal and whether by legal or equitable title, for the benefit of some persons (of whom he may be one and who are termed cestui que trust) or for some object permitted by law, in such a way that the real benefit of the property accrues, not to the trustee but to the beneficiaries or other objects of the trust.
J.O. FABUNMI in his book[3] stressed that if a new trustee is appointed by deed which contains a declaration by the appointor to the effect that the trust property vests in the persons who by virtue of the deed became and are trustees for performing the trust, that declaration without any separate conveyance or assignment operates to vest in those persons the trust property.
MUIZ BANIRE[4]  opined that the trust property must be specified with reasonable certainty. If it is not so specified and it is incapable of precise ascertainment, the trust will fail, in the sense that the donee has nothing to hold absolutely and there can be no trust resulting to the estate of the testator since there is nothing to form the subject matter of such a trust. Hence a trust is not properly constituted unless the trust property is properly linked to the trustee i.e. properly vested in the trustee. A trustee cannot deal properly with the trust property until it is properly vested in him.

D.J. BAKIBINGA[5] expressed that mere appointment of a trustee does not, of itself vest property in him. It is of great necessity for the appointment to also provide for the vesting of the trust property in the trustees in order to properly constitute a valid trust. ROGER LEROY MILLER and GAYLORD A. GENTZ[6] offered a definitive description of the concept of trust. They defined trust to mean ‘any arrangement through which property is transferred from one person to a trustee to be administered for the transferor’s or another party’s benefit’. They also defined it as ‘a right or property, real or personal, held by one party for the benefit of another’. They said a trust can be created for any purpose that is not illegal or against public policy. They gave its essential elements which are: a. a designed beneficiary b. a designated trustee c. a fund sufficiently identified to enable title to pass to the trustee. d. actual delivery to the settlor or grantor to the trustee with the intention of passing. They also gave explanation on how a trust should be. They said there is a separation of interest in the trust property. The trustee takes a legal title, which is the complete ownership and possession but which does not include the right to receive any benefit from the property. The beneficiary takes equitable title, which is the right to receive benefit from the property.

1.7.0: DEFINITION OF TERMS

Trust relationship is not just an area we can discuss without first appreciating the meaning of its basic concept. Ideas are better illuminated and impacted when the basic principles of legal concepts in respect of a subject are well spelt out. Finding meanings to each of the terms to be used in this research make the research work easier. It assists in discussing the subject matter within its confines. The foundation of this project will be laid by bringing out the meaning of the legal terms or concepts associated with trust relationship such as trust, trustee, trust property, vesting etc. However, the definitions here will be brief as the in-depth meaning of each term shall be brought out later on in the subsequent chapters.

1. TRUST
   The Black’s Law dictionary9 defined the term trust as ‘A right of property, real or personal, held by one party for the benefit of another.’ ‘A confidence reposed in one person, who is termed trustee, for the benefit of another who is called the cestui que trust, respecting properly which is held by the trustee for the benefit of the cestui que trust’.
2. TRUSTEE
   The Black’s law dictionary10 defined a trustee as ‘person holding property in trust. The person appointed, or required by law to execute a trust; one in whom estate, interest or power is vested, under an express or implied agreement to administer or exercise it for the benefit or to the use of another called the cestui que trust’.
   Dictionary of English Law11 defined trustee as ‘a person who holds property upon trust’.

iii. TRUST PROPERTY
The Black’s Law dictionary12 defined trust property as ‘the property which is the subject matter of the trust; The property of which the trust consists. It may be real or personal and the trustee has legal title.’

 

1. CESTUI QUE TRUST
   The oxford concise English dictionary13 defined beneficiary as ‘a person who receives benefit especially under a trust, will, or life insurance policy’.
   Blacks law dictionary14 defined beneficiary as ‘one who benefits from acts of another. A party who will benefit from a transfer of property or other arrangement’.

1.8.0: CONCLUSION

The administration of the trust property should be treated with kid gloves because of its delicate nature and which if not wisely and properly administered would lead to a loss on the trust estate and the beneficiary, so the contributions of the trustee to the smooth running of the trust property should not be overlooked. Hence the acronym: existence of trust property coupled with the vesting of the property in the trustee on behalf of a beneficiary brings about trust relationship.

[1] M.I. Jegede , principles of equity Issue 12 of Ethiope law series.

[2] Keeton, H. Constitutional Law and Military Rule in Nigeria Ibadan: Evans Brothers Ltd., 1987.

[3] Fabunmi J.O., Essays on company law  Lagos: University of Lagos Press, 1992.

[4] Muiz Banire Nigerian Copyright Law and Practice (Abuja: Nigerian Copyright Commission, 2003) xxix, 763pp.

[5] D.J. Bakibinga The Nigerian Copyright Act with Introduction and Notes (Ibadan: Sam Bookman, 1994)

[6] Gaylord A. Gentz. The Company, The Shareholder, The Director and the Law Enugu, Nigeria: Fourth
Dimension Publishing Co. Ltd, 1994.

 

 

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