- WHAT IS A TRUST?
This is an equitable obligation binding a person (called a Trustee) to deal with property over which he has control (the Trust Property), for the benefit of persons (the Beneficiaries). In other words, the concept of trust enables a trustee to be the legal owner of an asset AND still hold it ‘on trust’ for beneficiaries who actually receive the benefits of ownership.
The Trustee is an independent and impartial 3rd Party playing a key role in estate planning and financial transactions and is often charged with protecting/bridging varying interests such as between co-beneficiaries to private trusts, Issuers & Bondholders, Unit holders and Fund Managers, etc.
The concept of Trust can be divided into 2 broad areas;
PRIVATE TRUSTS and CORPORATE TRUSTS
- WHAT IS A CORPORATE TRUST?
This covers a whole range of commercial trust services to Public & Private Sector entities such as State Governments, Parastatals, Corporate entities, foreign entities and Issuers of Debt & Hybrid instruments, Mutual Funds and Structured Finance. Such services include Investors Protection, Bond Trusteeship, Security Structuring, SPV Administration, Security Trusteeship, Compliance Monitoring and other similar services to Public & Corporate Debt & Hybrid issues.
- WHAT ARE THE ROLES OF A TRUSTEE IN CORPORATE TRUST TRANSACTIONS?
In corporate transactions such as Bonds, Project Finance, Structured Finance etc, a trustee can do any or all of the following:
• Hold security on behalf of lenders / investors, whoever and wherever without having to amend the documentation each time a holder buys or sells;
• Monitor compliance with Issuer obligations to finance parties
• Exercise discretion on behalf of lenders / investors in respect of non-material changes in terms to accommodate subsequent changes in Issuer’s circumstances or the law.
• Manager Sinking funds, reserve funds and other trust monies for the benefit of parties
• Provide necessary ownership of special purpose vehicles, a structure often used in securitizations;
- WHAT SPECIFIC VALUE WILL UBA TRUSTEES LIMITED ADD TO FINANCING TRANSACTIONS?
Large financing arrangements such as Syndicated loans, Consortium lending, Project and Structured finance often involve multiple lenders and other providers of finance or guarantees, all desiring security for their investments. This is usually best achieved through a Security Trustee or Debenture Trustee like UBA Trustees acting as:
• Holder of security for the benefit of all lenders (who may have differing interests);
• Holder of bank accounts into which project cash-flows are paid prior to further distribution in a predetermined manner; and
• Holder of covenants protecting interest of parties.
- WHAT ARE MUTUAL FUNDS?
Mutual Fund is a pool of funds for collective investments professionally managed by a Fund Manager on behalf of the various investors, whose interests are protected by a trustee. Normally such collective investments are deployed into shares, bonds, real estates, money market instruments etc.
- WHY A TRUSTEE TO MUTUAL FUNDS?
To achieve regulatory compliance and for Investors Protection, UBA Trustee Limited acts as Trustee to various Mutual/Unit Trust Schemes and other related Managed Funds. In this regard, it monitors Fund Managers’ activities to ensure compliance with the Trust Deed, Prospectus and relevant regulations. It also acts on behalf of Unit holders and keeps custody of scheme assets.
- WHAT ARE BONDS?
Bonds are long term fixed income financial instruments issued by governments, companies, banks, public utilities and other similar entities to raise money from investors.
Bonds are appropriate for investors who require fixed regular income and guaranteed principal.
- WHY A TRUSTEE TO BONDS?
As Bond Trustee, we are responsible for :
• Computation of Bondholders Principal and Interest entitlements and ensuring they are paid on due dates.
• Protecting bondholders’ interest in general.
• Monitoring compliance with Bond Covenants.
• Holding and managing charged security assets.
• Managing of Sinking Funds and other relevant Accounts.
• Representing Bondholders’ interest and giving necessary approvals including consents to investment activities.
• Exercising discretionary powers in the interest of bondholders, avoiding the need for unnecessary meetings.
• Authorizing waivers and modifications.
- WHAT ARE REITs?
A REIT is an investment vehicle that packages real estate investments into exchange tradable securities that investors can subscribe to. In other words, it involves pooling of funds together to acquire real estate assets and unitises returns for distribution to investors. REITs enjoy significant tax rebates / exemptions in most jurisdictions.
- WHAT IS THE TRUSTEE’S ROLE IN A REIT?
The roles of the Trustee to schemes such as a REIT are undertaken in fulfillment of Rule 205 of the Securities & Exchange Commission (SEC) Rules issued Pursuant to the Investments & Securities Act 1999 (ISA), which provides that Trustees should perform the following functions:
• Monitoring of the activities of the Fund Manager on behalf of and in the interest of Investors or Fund contributors
• Maintaining custody of Funds and documents relating to the investments by the scheme or Fund
• Monitoring of the register of Unit holders or Investors
• Ascertaining the profitability rationale for investment decision making of the Fund Manager
• Ascertaining compliance with the provisions of the Trustee Investments Act 1962, the Investments and Securities Act 1999 and the Trust Deed, by the Fund Manager .
- WHAT ARE THE FEATURES & PURPOSES OF A PRIVATE TRUST?
• They protect personal or family wealth.
• They give control over property to Professional entities in the interest of “Beneficiaries”.
• Trustees have control, but the benefits of the Trust property are enjoyed only by the Beneficiaries.
• Trusts are made by Trust Deed, signed, sealed and delivered by the Parties.
• The Trust must describe the Trust property, Beneficiaries and other relevant terms and conditions.
• For a trust to be enforceable all trust property must be legally transferred to the trustees.
• This may be by additional legal document e.g. a legal conveyance of land, a share transfer or actual delivery in the case of chattels.
- WHY DO I NEED A PRIVATE TRUST?
A Private trust can be set up for many reasons including:
• To protect capital against effects of Beneficiaries’ bankruptcy or financial difficulties.
• To remove assets from the reach of doubtful claimants and creditors.
• To hold property for minors, who are not legally allowed to hold property including unborn children.
• To enable a Beneficiary enjoy income without access to the capital e. g. to provide for a widow but not her husband/children from another marriage.
• For various tax saving and avoidance purposes e. g. transfer wealth from a higher rate tax payer to a lower rate one e. g. the Trustees.
• Continuity of management (if assets are substantial and in different countries) or if there is a large number of Beneficiaries.
• To have assets professionally managed and preserved for Beneficiaries.
• To keep property in the family.
• To control /affect the behaviour of descendants even from beyond.
- WHAT ARE THE DUTIES OF TRUSTEES?
The duties of Trustees are partly determined by law and partly included in the trust document. Trustees should:
• Employ diligence in trust affairs as a prudent man of business dealing with his owns affairs would.
• Secure the trust assets under their control.
• Invest the trust property for the benefit of the Beneficiaries.
• Keep proper Accounts and avoid conflict of interests.
• Ensure that payment is made to genuine Beneficiaries.
- WHAT ELSE CAN THE TRUSTEES DO?
• Invest the Trust assets under their control.
• Keep Beneficiaries of Trust Assets in line with the terms of the Trust Deed.
• Exercise whatever discretion they are given in the Trust Deed.
• Do anything authorized by the Trust Deed.
• Take actions necessary to protect and preserve the Trust Assets.
- ARE THE REQUIREMENTS FOR CREATING A TRUST?
• Name of Settlor – Client or person setting up the Trust.
• The Trustees.
• The Beneficiaries.
• A Schedule showing the assets being transferred to the Trustees.
• Typical Roles/Duties: o Invest and manage Assets. o Apply/Distribute income for Trust purposes. o Apply/Distribute principal for Trust purposes. o Preserve assets. o Delegate and appoint agents.
- WHAT IS A LIVING TRUST?
A Living Trust is a Legal Document prepared to settle or handle the estate / financial affairs of a Settlor, which takes legal effect during his/her lifetime
- WHAT IS A WILL?
Literally, it is a document in which a person expresses how he/she wishes their property (otherwise called Estate) to be disposed after death. It takes effect after the death of the Settlor.
- HOW DO THEY DIFFER?
Once you execute a Living Trust, it kicks off legally and so Assets transferred under it are technically removed from your Estate at time of death and therefore not accessible to other claimants/relations, creditors etc. It is not subject to Probate or Letters of Administration process, nor is it a Public document, openly advertised like a Will or Letter of Administration. Rather only the Beneficiaries are entitled to its details/contents.
- WHAT HAPPENS IF ONE DIES “INTESTATE,” THAT IS WITHOUT A WILL?
Claimants will be subject to a lengthy process of obtaining “Letters of Administration” which may be frustrating, expensive and time consuming. During this process, Dependants may not have access to the Assets, or they may fall into the wrong hands. The process is also public and often combative.
- WHAT HAPPENS IF ONE DIES WITH A WILL?
Claimants will also have to obtain Grant of Probate which may also be lengthy, especially if contested. During that period, Dependants could suffer hardship because Account operation, dividend warrants and legal transfers will be suspended
- WHAT HAPPENS IF ONE DIES WITH A LIVING TRUST MANAGED BY UBA TRUSTEES?
Your Living Trust is deemed at law to take effect from your life time, as such assets transferred under it to the Trustees are not part of your Estate at time of death and therefore not accessible to other claimants/relations, and creditors etc nor are they public documents subject to Probate or Letters of Administration process. UBA Trustees would privately and discreetly notify your beneficiaries and effect your instructions, sparing them jealousy, ill-will, undue exposure or contention from rival claimants.
- WHAT IS UBA CARES?
It is an optional service for the benefit of all UBA Group Individual Account holders. Please click this link to find out more about UBA Cares Trust Service.
- WHO IS ELIGIBLE?
It is strictly for UBA Plc Account holders. However balances in other Accounts can be annexed into the Trust
- WHAT IS THE DIFFERRENCE BETWEEN UBA CARES & UBA SPECIAL PRIVATE TRUSTS?
o The Special Private Trusts version is not restricted to UBA Plc Account holders only.
o Special Private Trusts is designated for persons with assets worth over N10 million.
o Special Private Trusts covers a variety of assets
o Special Private Trusts enables you to stipulate more detailed terms, which UBA Trustees may implement over longer tenure,
- WHAT IS UBA PRESTIGE TRUSTS?
This is a Living Trust Fund designed to provide for your future and those of your loved ones by way of periodic contributions over your active years for a pre-defined terminal purpose such as Post Retirement needs, future business investment, Real Estate Acquisition, Annuity Procurement, Family Holidays etc
- WHAT ARE THE FEATURES OF UBA PRESTIGE TRUSTS?
o Initial Minimum Contribution of N50,000.00
o Minimum Annual Contribution of N 500,000.00
o 50% of the balance of the Fund could be used as collateral for a bank loan.
o Trust Funds will be invested in your preferred group of investment assets. Attractive returns based on selected Investment Plans.
o Protection by Trust Law.
o Access to the UBA Cares Trust Products (please ask for relevant Application Forms).
o Flexibility – ability to convert to other UBA Trustees Limited products such as Save for School Trust.
- WHAT ARE THE BENEFITS OF UBA PRESTIGE TRUST?
o Enjoy Life Insurance and Permanent Disability Benefits, up to 100% of Trust Fund invested.
o Qualification for participation in a draw upon achieving landmarks of 1, 3 and 5 years anniversaries of unbroken participation and every other two years thereafter, with exciting Prizes to be won.
o Trust Fund is separate and distinct from your personal estate and therefore not accessible to your creditors in the event of bankruptcy.
o Free consultation/advice on Estate Planning, Private Trusts, Charitable Trusts, Endowments and Foundations.
o Free periodic information and updates by e-mail on related topics to suit your Trust Purpose
- WHAT HAPPENS IF ONE DIES WITH UBA PRESTIGE TRUST IN PLACE?
The Trust Fund is made available to your named Beneficiaries or their Legal Guardians (if under age) privately and in line with your stipulated instructions
- WHAT IS THE DIFFERRENCE BETWEEN SAVE FOR SCHOOL (SFS) & UBA SPECIAL PRIVATE TRUSTS?
o UBA Special Private Trusts is mainly for Estate Planning and covers a whole range of Assets not just Invested Funds.
o SFS Trusts is targeted as Educational investment funds under Trust.
- CAN I WITHDRAW OR TERMINATE MY TRUST FUND AT ANY TIME?
Yes, subject to a minimum duration of one (1) year. Also, Life & Disability Insurance and other Special Benefits are subject to the stipulated minimum contributions
- HOW CAN I KNOW MORE ABOUT THESE PRODUCTS & SERVICES?
UBA Customer Interaction Centre:
Tel: 01-2808822, 08035606000, 08025606000
Fax: 01-2644760
Email: cic@ubagroup.com
SMS: 08035606000, 08025606000
Internet: www.ubagroup.com
