Generally, a gift is a voluntary transfer of property to another without compensation.[1] This is achieved through the instrument of a deed of gift. A deed of gift is a gratuitous arrangement that voluntary transfers and delivers the legal ownership, with the physical control over an existing real or personal property, by its owner (‘the Donor’) to another person (‘the Donee’) without any compensation, consideration or payment emanating from the Donee to the Donor, for the gift.[2]

It is noteworthy that due to the legal and non-legal challenges associated with estate planning as a wealth management and transfer tool, more consideration is now given to executing a deed of gift.[3]

Therefore, in drafting and executing the deed of gift, our client, Mrs. Ekah (the Donore) transfers legal ownership along with physical control over an extant real or personal property without a condition. In the circumstance, the Donee replaces the Donor as the legal owner of the property by virtue of the executed deed of gift. Thus the settlor can only transfer the kind of title she has and nothing more based on the principle of nemo dat quod non habet. In the circumstance, where the settlor possesses legal title, he/she can only transfer a legal title. Likewise, the settlor can only transfer equitable title if he/she has equitable title based on the aforementioned principle/maxim. Based on the foregoing, we need to ascertain the kind of title our client has, whether it is legal or equitable.  

The property must be free of any encumbrance whatsoever, either legal or equitable. It now behooves on us as our client’s solicitors to carry out due diligence and investigation at the appropriate registry (land, court, probate, corporate affairs commission, and so on) as well as physical inspection to ensure that there is no latent or patent defect in the title of our client.

1.1       Legal and Tax Implications of Creating a Deed of Gift

i.          Generally, a deed of gift once executed and delivered to a Donee, is irreversible and irrevocable; however, it can be set aside on the following grounds which include cases where:

• The gift was given through fraudulent means;

• The gift was given pursuant to a misrepresentation or mistake as to the surrounding circumstances;

• The gift was transferred with the intention of defrauding creditors or tax evasion

ii.         Under the law, a gift that is not delivered to the Donee is invalid in law

Based on the foregoing legal effects and facts, we, the solicitors need to carry out due diligence and inquire from the client so as to ensure that none of the negative intentions and implications are present in or surrounding the gift intended.

1.0                                      Elements of a Trust

i.                    There must be a settlor (person creating the trust);

ii.                  There must be a trustee (person holding or vested with the trust property;

iii.                There must be beneficiaries; and

iv.                There must be a property or more subject to the trust.

Note that:

A person can be a settlor, a trustee and a beneficiary at the same time. In such circumstance, for the trust to be valid, there must be other beneficiaries beside him/in addition to him.[4] In this instance, our client (a settlor) can appoint herself a trustee for her own benefit however she must add other beneficiaries and not just her.

However, where as in the usual case the trustee is different from the settlor, the settlor vests the trust property in the trustees not for the benefit of the trustees but for the benefit of the beneficiaries.

2.0                                      Mode of Creation of Trust in Nigeria

A trust is created through the instrument of a deed (deed of trust), as it transfers an interest or right in property and or create an obligation, binding on some person or persons.[5] As a deed it must contain all the requirements for a deed, it must be signed/executed by the parties (section 83(4) of the Evidence Act, 2011) and duly witnessed. Also it must be registered with the ….. in order for it to be admissible or relied upon in court. It must be dated and not have a false or impossible date (Jegede v. Citicon Nig. Ltd.).[6]

3.0                                      Capacity to Create Trust

The following persons have no capacity to create trusts. They are:

i.                    Infants;

ii.                  Lunatics;

iii.                Bankrupts

In Simpson v. Simpson,[7] it was held that a patient with the settlor’s mental complaints will deteriorate to a pint where a lack of mental capacity must be presumed in the absence of evidence rebutting the presumption. Hus, his dispositions were held ineffective.

4.0                                      Requirements for Creating Trust

The requirements for creating a valid trust largely depends on the type of trust intended. For example, an express private trust and to some extent an express charitable trust cannot be created unless the three certainties (certainty of words or intention, certainty of subject matter and certainty of objects or beneficiaries) are present.

That notwithstanding, the above requirements would not hold good for other types of trust such as an implied, resulting, constructive, secret and half secret trust. Also  

5.0                                      Appointment of Trustees

A trustee may either be appointed expressly by the settlor in the trust instrument, by a court under a statutory provision, or by the exercise of judicial powers. In the case of our client, appointment is by the client, (the settlor).

It is worth noting that the mere appointment of a trustee does not vest the trust property in him. It is therefore important that upon appointment of a trustee, steps be taken by the settlor to vest the property in the trustee.

In the case of original trustees, this is done by transferring the property to them using the appropriate method of transfer, like for instance, in the case of land, executing a deed of conveyance of the land in favor of the trustees.

In the case of subsequent trustees, the vesting could be by a vesting declaration by the appointing agency or contained in the deed of appointment, conveyance or transfer to the new by the previous trustee or trustees in whom the property is vested, or a vesting order by the court in cases where it is impossible or difficult to procure the transfer of the trust property to the new trustees by the settlor or existing trustees.

7.0       Legal Qualification for Trustees

The legal qualification for the appointment of a trustee depends on the type of trust concerned and the person making the appointment.

If the trust is expressly, positively and deliberately created by thee settlor and the trustee or trustees are appointed by the settlor, any person of full age and capacity may be appointed. So also may a trust corporation be appointed as a trustee.

[1] G.A. Garner, Black’s Law Dictionary 8th Edn., Boston: West Publishing Company, 2004) p. 2026.

[2] Proshare, ‘Deed of Gift -  Estate and Tax Planning’ Available at: <https://www.proshareng.com/news/Business%20Regulations,%20Law%20&%20Practice/Deed-of-Gift---Estate-and-Tax-Planning/38192> Accessed 10 May, 2019.

[3] Ibid., Proshare.

[4] A.K. Usman, The Law and Practice of Equity and Trust (1st Edn., Zaria: Faith International Printers, 2012) p. 169.

[5] O.A. Onadeko, SAN (ed.), Property Law Practice Handbook Review (Panaf Press Nigeria) p. 41.

[6] (2001) 4 NWLR (Pt. 702) 112 at 139.

[7] (1992) 1 FIR 601.