1. Introduction
A trust is a legal arrangement where a person (the Settlor) transfers property or assets to another person or entity (the Trustee) to hold and manage for the benefit of specified persons (the Beneficiaries) or for a charitable purpose.
In Nigeria, trusts are commonly used for asset protection, estate planning, charitable activities, investment holding, succession planning, and family wealth management.
Trusts in Nigeria are regulated mainly by:
• Common Law principles
• Trustees Act
• Companies and Allied Matters Act (CAMA) 2020
• State laws (especially as it relates to land and probate matters)
2. Legal Framework Governing Trusts in Nigeria
(a) Companies and Allied Matters Act (CAMA) 2020
CAMA regulates:
• Incorporated Trustees
• Registration and governance of trusts with corporate personality
(b) Trustees Act
Provides general rules on:
• Powers and duties of trustees
• Appointment and removal of trustees
• Protection of trust property
(c) State Property and Probate Laws
Applicable where:
• Land is held in trust
• Wills and succession issues arise
3. Types of Trusts in Nigeria
1. Private Trust
Created for specific individuals or families.
Examples:
• Family trust
• Investment trust
• Educational trust
2. Public / Charitable Trust
Established for public benefit.
Examples:
• Religious organizations
• NGOs
• Foundations
• Educational institutions
3. Testamentary Trust
Created through a Will and takes effect upon the settlor’s death.
4. Living (Inter Vivos) Trust
Created during the lifetime of the settlor.
5. Incorporated Trustees
Registered under Part F of CAMA 2020.
Has separate legal personality and can:
• Own property
• Sue and be sued
• Enter contracts
4. Parties to a Trust
(a) Settlor
• Person who creates the trust
• Transfers assets into the trust
(b) Trustee(s)
• Individuals or corporate bodies
• Hold legal title to trust property
• Must act in good faith and in the best interest of beneficiaries
(c) Beneficiaries
• Persons or groups entitled to benefit from the trust
(d) Protector (Optional)
• Oversees trustees
• Has powers to approve or veto certain decisions
5. Requirements for Setting Up a Trust in Nigeria
(a) Trust Deed
This is the foundational document and must contain:
• Name of the trust
• Objectives and purpose
• Details of trustees and beneficiaries
• Powers and duties of trustees
• Rules on appointment/removal of trustees
• Duration of the trust
• Asset distribution rules
(b) Trustees
• Minimum of 2 trustees
• Must be adults of sound mind
• No undischarged bankrupts
• For land ownership, trustees must be legally capable
(c) Trust Property
May include:
• Land
• Shares
• Cash
• Intellectual property
• Business interests
6. Registration of a Trust in Nigeria
Option 1: Unincorporated Trust
• Created by trust deed only
• No registration with CAC
• Limited recognition
• Cannot sue or hold property in its own name
Option 2: Incorporated Trustees (Recommended)
(b) Stamp Duties
• Trust Deed is registrable as stamp duty
(c) Capital Gains Tax
• Applicable when trust assets are disposed
(d) Charitable Trusts
• May enjoy tax exemptions where approved by FIRS
8. Duties and Powers of Trustees
Duties
• Act honestly and prudently
• Avoid conflict of interest
• Preserve trust property
• Account to beneficiaries
Powers
• Invest trust assets
• Sell or lease trust property
• Appoint agents and professionals
• Distribute income or capital as provided in the trust deed
9. Advantages of Setting Up a Trust in Nigeria
• Asset protection
• Succession planning
• Confidentiality
• Continuity beyond death
• Legal ownership clarity
• Professional asset management
10. Common Mistakes to Avoid
• Poorly drafted trust deed
• Appointing unqualified trustees
• Failure to register incorporated trustees
• Non-compliance with tax obligations
• Mixing trust assets with personal assets
11. Dissolution or Termination of a Trust
A trust may be terminated by:
• Fulfilment of its purpose
• Court order
• Provisions in the trust deed
• Agreement of beneficiaries (where applicable)
Assets are then distributed according to the trust deed or court direction.
12. Conclusion
For individuals and organizations seeking structure, continuity, and legal certainty, an Incorporated Trust under CAMA 2020 remains the most robust option.
Setting up a trust in Nigeria is a powerful legal tool for estate planning, asset protection, philanthropy, and long-term wealth management. However, due to the legal and tax implications involved, professional guidance, especially from legal practitioners and tax consultants is strongly advised. Contact our team for further legal guidance in setting up your trust.
Written by Ehisuoria Kelly Osagiede
Lead Consultant at Starlion Legal
0807-988-4099
STARLION LEGAL 