Whereas families have been able to create and preserve wealth, the challenge has always been how to transfer the family wealth from one generation to the next. This has been a universal concern, impacting both families and organizations. In Nigeria, we have seen large family businesses go into extinction once the promoter or family head dies. A journey to Kaduna and Kano in Northern Nigeria for instance, tells the story of carcasses of factories and machines littering all over Sharada, Bompai industrial areas in Kano and abandoned textile industries in Kaduna. It is a similar story when you journey to the Eastern and western parts of Nigeria. In Lagos for instance, many of the industrial estates have been taken over by religious organisations.
In this article, we shall not only attempt to summarise how Trust can be used to aid or ease the transfer of wealth from generation to generation, leaving a Legacy for Prosperity, but we shall also highlight areas of its application and how such contributes to the nation’s economic growth and stability. The article will also attempt to summarise the symbiotic relationship between trusteeship and generational wealth transfer, shedding light on how these dynamics have a profound impact on Nigeria’s economic landscape.
Trusteeship: Safeguarding wealth and assets
Trusteeship in Nigeria, like in other climes, serves as a cornerstone for preserving wealth and assets. By establishing trusts, individuals and families can shield their resources from potential mismanagement and disputes. This wealth preservation not only ensures financial stability but also instils confidence in Nigeria’s economic landscape, attracting both domestic and foreign investors. In essence, trusteeship safeguards assets, making them resilient to economic uncertainties.
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Facilitating inter-generational wealth transfer
One of the most remarkable advantages of the application of trusteeship in Nigeria is its role in facilitating inter-generational wealth transfer. Trusts provide an organized means for the orderly transition of assets and wealth from one generation to the next. This process promotes long-term financial planning, ensuring that future generations have access to resources that can be harnessed for investment, education, and entrepreneurial endeavours. Such continuous wealth flow significantly bolsters economic growth by providing financial stability to beneficiaries.
Promoting investment and entrepreneurship
Trusts go beyond preserving wealth; they actively encourage investment and entrepreneurship in Nigeria through the creation of bankable assets. These assets offer a structured way for individuals and organizations to invest in various sectors of the economy. Trust funds can be mobilized to finance startups, bolster small and medium-sized enterprises (SMEs), and stimulate innovation. By fostering investment and entrepreneurship, trusteeship contributes to job creation, economic diversification, and overall prosperity.
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Enhancing charitable and philanthropic activities
Trusts in Nigeria extend their influence on charitable and philanthropic activities. Charitable trusts empower individuals and organizations to allocate resources to critical social causes like education, healthcare, and poverty alleviation. These contributions have a profound impact on society, improving the overall well-being of Nigerians and reducing the burden on government resources. Trustees, in this context, become catalysts for social change, aligning philanthropy with economic progress.
Ensuring corporate governance
Trusteeship also extends to the corporate sector in Nigeria, playing a pivotal role in maintaining good corporate governance practices. Corporate trustees ensure that businesses adhere to ethical standards, comply with regulatory requirements, and act in the best interests of their stakeholders. Effective corporate governance enhances investor confidence, attracts foreign investments, and contributes to economic growth, reinforcing the interconnectedness between trusteeship and Nigeria’s economic development.
Read also: How writing a Will can help you secure your wealth
Conclusion
While the use of trusteeship assists in generational wealth transfer and by implication offers substantial benefits to Nigeria’s economy, it does not come without challenges. How do you ensure transparency in managing the Trusts, how do you prevent abuse of trust assets, and how do you address the legal complexities around its establishment and operation? These challenges remain ongoing concerns that require concerted efforts on the part of the Trustors and Regulators. Additionally, there is a pressing need for increased awareness and education about how Trusts can aid wealth preservation and transfer among Nigerians. This collective awareness can help to ensure that trusteeship continues to play a positive and responsible role in inter-generational wealth transfer and ultimately, Nigeria’s economic advancement.
To fully harness its potential, stakeholders, including individuals, families, businesses, and the government, must collaborate to address these challenges and promote its responsible use. Trustees, in their various capacities, are indispensable tools that can propel Nigeria further along the path of economic prosperity and development. Generational wealth transfer should not only be seen as just a means to promoting and sustaining a family or personal legacy; it should be seen as an integral part of Nigeria’s economic future.
Gana is the managing director, Greenwich Trustees Limited. Email:[email protected]
