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Wills vs. Trusts: Choosing the right estate planning tool 

October 12, 2023

Estate planning is a critical aspect of financial management that ensures assets are distributed according to owner’s wishes upon passing. Two primary tools used for estate planning are Wills and Trusts. Both instruments serve the purpose of distributing assets to loved ones after passing. But they differ in their mechanisms and advantages. Understanding the differences between them can help you make an informed decision on which is right for your specific circumstances. 

Just like Trust Advisor, Adewale Arikawe,  of Coronation Trustees Ltd puts it, “A good financial plan is a road map that shows us exactly how the choices we make today will affect our future.” 

Do you know what a Will is? 

A last will and testament, commonly known as a Will, is a legal document that outlines your wishes for the distribution of your assets after passing. Here are some key characteristics of wills: 

Simplicity and Accessibility: Wills are straightforward to create and typically more accessible to the average person. You can draft a will with the help of an attorney or even use DIY will-writing software. Creating a will is less complex and more cost-effective than setting up a trust. 

Immediate Effect: A Will takes effect at once upon death. However, the distribution of assets can be delayed due to the probate process which can take three to six months on average, during which the court validates the will and oversees asset distribution. 

Guardianship: A Will allows you appoint an executor who will carry out your final wishes and distribute assets according to your instructions. Additionally, you can name guardians for minor children, ensuring their care and well-being. 

Last-Will-and-Testament - Estate Planning

Read also: Inheritance, Wills And Estate Planning

Cost-Efficient for Simple Estates: For individuals with small to moderately sized estates and straightforward asset distribution wishes, a Will may be a cost-effective solution. 

Testamentary Trusts: While a Will may not offer the same level of control as a Trust, it can create testamentary trusts. Upon the passing of the testator, these Trusts set up and can provide ongoing management of assets for beneficiaries, especially if they are minors or lack financial knowledge.

In Nigeria, various statutes primarily derive the laws guiding wills, including the following:

Wills Act (1837): This is a colonial-era statute that governs the making and execution of wills in Nigeria. It sets out the formalities for creating valid wills, including the need for a testator (the person making the will) to be of sound mind, among other requirements. 

Administration of Estates Law/Probate Rules: These laws, often enacted at the state level, provide guidelines for the administration of estates, including the probate process. The rules may vary from state to state, but they generally cover matters related to obtaining probate or letters of administration, which are necessary to distribute assets according to a Will or the law of intestacy

Trusts are a tailored estate planning tool for complex needs 

A Trust, also known as a fiduciary account, is a legal entity that holds and manages your assets. Trusts offer greater flexibility and customisation compared to Wills.  

Trusts have three main players: 


Grantor: The person who creates the trust and puts assets in it. 

Beneficiary: A person who eventually receives some or all the assets in the Trust. 

Trustee: The organisation, like Coronation Trustees, or person who administers the Trust. 

Trusts can be extremely useful parts of estate planning, but they may not be relevant or necessary for everyone. If you fall within the categories below, you may want to consider a Trust:  

  • Large estate owner 
  • Multiple heirs or beneficiaries 
  • A retired spouse 
  • A desire for financial privacy 
  • Heirs with large debt 

According to Kiplinger, if your estate is greater than $1 million (or ₦100 million) and includes real estate in more than one state or a family business, a trust is essential, and you should name a Trust company as the successor Trustee. 

Here are some advantages of trusts: 

Asset protection/management: Trusts provide enhanced asset protection. You can create specific conditions for asset distribution, such as delaying distributions until beneficiaries reach a certain age or achieve specific milestones. This can protect assets from creditors and ensure they are used wisely. 

Privacy: Trusts avoid the probate process, which is a public record. This means your financial affairs stay private, unlike Wills, which become part of the public record. 

Tax Efficiency: Certain types of Trusts, such as Irrevocable Life Insurance Trusts (ILITs) and Charitable Remainder Trusts (CRTs), can offer tax advantages and help reduce estate tax liability. 

Read also: Your Pension May Not Be Enough

Control Over Distribution: Trusts give you precise control over how and when assets are distributed. You can create complex Trust structures to accommodate various scenarios and beneficiary needs. 

Avoidance of Probate: Assets held in a Trust bypass the probate process, saving time and potentially reducing costs associated with probate. 

Laws guiding Trusts 

Nigerian Trustee Investment Act (1957): This act governs the investment and management of Trust funds in Nigeria. It establishes rules and regulations for trustees and how to manage and invest trust assets.

Nigerian Investment Promotion Commission Act (1995): While primarily focused on investment promotion, this act contains provisions related to the registration and regulation of business Trusts in Nigeria.  

Common Law and Equitable Principles: Nigerian Trust law also draws from common law and equitable principles inherited from the British legal system. These principles guide the creation, administration, and enforcement of trusts in Nigeria.  

It’s important to note that while there are federal laws and regulations, some aspects of wills and trusts are also subject to state laws, as certain legal matters fall under the jurisdiction of individual Nigerian states. As a result, there may be variations in the application of these laws across different states in Nigeria. 

Individuals should consult legal professionals or estate planning experts well-versed in the specific laws and regulations applicable to their jurisdiction and circumstances for precise guidance on Wills and Trusts in Nigeria.

Legal advice can ensure that individuals create and administer wills and trusts in compliance with Nigerian law.

Which is better for you?  

The choice between a Will and a Trust depends on your unique financial and personal circumstances: 

For simplicity: If your estate is small and straightforward, a Will may be sufficient. 

Privacy and asset protection: If you have significant assets or concerns about privacy and asset protection, a Trust may be a better choice. 

Tax planning: If your estate is large and may be subject to estate taxes, consulting with an estate planning attorney about tax-efficient trusts can be beneficial. 

For specific distribution wishes: If you have specific conditions or wishes for asset distribution, a Trust provides more control. 

For guardianship: If you have minor children and want to designate guardians, a Will is essential. 

In many cases, individuals use both Wills and Trusts in their estate planning.  

Estate planning is not a one-size-fits-all endeavour. Wills and Trusts are valuable tools, each serving specific purposes. Whether you choose a Will, a Trust, or a combination of both depends on your financial situation, family dynamics, and long-term objectives. Proper estate planning ensures that your assets are distributed as you intend and can provide peace of mind for you and your loved ones. 


A comparison of Wills and Trusts 

Wills  Trusts 
Wills specify how your assets should be distributed after passing, including beneficiaries and their shares. Trusts can ease the management and distribution of assets during your lifetime and after passing, offering more control and flexibility. 
Assets distributed through a will typically go through the probate process, which can be time-consuming and costly. Assets held in trusts often avoid probate, providing a quicker and more private transfer of assets. 
Wills become public records during probate, allowing access to information about the estate. Trusts usually remain as private documents, preserving confidentiality. 
Wills are generally simpler to create and may be suitable for straightforward estate plans. Trusts can be more complex but offer greater customisation for intricate financial situations. 
Wills do not provide for the management of assets if owner becomes incapacitated. Trusts can include provisions for managing assets if one becomes unable to do so oneself 
Wills allow you appoint guardians for minor children, but guardianship proceedings may still be required. Trusts can help avoid guardianship proceedings by providing for the financial needs of minor beneficiaries. 
Creating a will is usually less expensive than setting up a trust. Trusts can involve higher upfront costs but may result in savings during probate and provide better asset protection. 
Wills offer less flexibility for asset management and distribution instructions. Trusts provide flexibility for various asset management and distribution scenarios. 
Assets distributed through a will are generally less protected from creditors and lawsuits. Trusts can offer enhanced asset protection, especially in specific trust structures. 
Wills may not offer sophisticated tax planning options. Trusts can be used for advanced tax planning, including minimising estate taxes. 
Wills take effect after death and have no impact during one’s lifetime. Trusts can take effect at once or upon specific events during one’s lifetime and continue after death. 
While you can create a will without an attorney, legal aid is often recommended to ensure it meets legal requirements. Establishing a trust typically requires legal expertise due to its complexity. 

If you have any questions regarding wills or trusts, or you want to create one, reach out to Coronation Trustees via email:

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