Mr. Yinka Adegbola, managing director and chief executive officer of Meristem Trustees Limited, in this interview with Olushola Bell (Leadership Newspaper), shares the benefits of trust and the challenges confronting the industry.
What is trusteeship all about?
Trust business has been in existence for a long time, it is taught at the university level. It’s a subject for law students. But coming to the practical aspect of the business, trust can be seen as a triangular relationship where you have three parties involved: there is the aspect of the owner of an asset, aspect of a trustee who holds the asset in trust and then there is the aspect of the beneficiary.
Typically, you see us in financial transactions. When you have somebody that wants to borrow money from a bank for instance, he has a particular asset and he wants three, four or five banks to share in the asset, a trustee will come in because the title document cannot be given to a particular bank. He will give it to a trustee who is in between the owner of the asset and the beneficiary and if the loan goes bad, the trustee sells off the asset to pay the banks.
In the private aspect of the business, we come into play when an individual wants to set up a trust but does not want to write a will. If you want to distribute your assets to members of your family, you simply transfer the assets to a trustee who will hold the assets in trust for the benefit of your children who are the beneficiaries. Usually, we use it to escape the problem in probacy. You know there are problems when a will is read. Wills are generally challenged.
Going down memory lane, we know the first federal minister of finance of Nigeria and what happened to his will after several years and another legal luminary in Nigeria whose will was subject of contention. Why? Because when you write, there is room to challenge the will. One of the children who is of age could contest what is written in the will and of course, the man has written his will and is gone. So this could bring issues and the will cannot be altered since the man is no more until the court gives them the power to do so.
Now this is where trust comes in, to help you remedy all these problems in will administration; the trustee will come in when the man is still alive to transfer his assets to the trustee for proper management. A trustee is used to eliminate the problem of probacy, will administration and even in commercial transactions, especially when there is the need for huge borrowing.
A trust is a triangular relationship where you have someone who transfers assets to a trustee to hold. In every trust relationship, there must be three parties: the owner of the asset, the trustee and the beneficiary.
What is the size of the industry presently?
The market size of the industry is very huge; the assets trustees are currently managing can be valued in trillions of naira.
How well are people enlightened about trust?
When I came into the industry, awareness about the industry was really low. People used to see it as mortgage transaction, especially in the area of private trust; people see it as taking risk. The first question one should ask oneself is how many people are aware of the advantages of trust. In advanced countries, the trust industry is very rich, they use it to plan estates, write wills and prepare wills and when you want to have a lasting legacy, you set up a trust to cater for future generations.
The level of awareness in the country about trust is still very low but in the area of commercial transactions, people are well enlightened. For instance, a state government that wants to borrow money from the public must have a trustee because they (trustees) will represent the investors’ interest to make sure that the money borrowed is used for that particular purpose. So, it is a matter of compulsion in the corporate and commercial world, it is even stipulated in law. But in the private sector, awareness is poor because people don’t like to think about death, not to talk of preparing a will.
What happens when a state government borrows money and it is not used for the specific purpose for which it was borrowed?
The duty of trust is to see to it that the state government performs the right duty as regards the money borrowed but in a situation where the reverse is the case, the monthly allowance of the state would go to the trustee. We have not had that situation in Nigeria because state government bonds have been performing.
What type of trust is Meristem Trustees into?
We cover both private and corporate trusts. Under the private trust, we have living trust which is setting up a trust while you are still alive, so that in case of death, there will be no troubles. We have the education trust and education continuity trust programme, that is setting up a trust with us so that in case something happens to a child’s parents/guardian, such a child’s education is covered and the cost is minimal.
How much does it cost to set up a trust?
It depends, you can set up a trust with any amount, and it depends on the area of trust you are looking at. Our aim as a trust company is to add value to you.
What are the challenges you face in the course of your business?
Awareness is low, clients are reluctant to pay and there is the issue of capacity.
Who is Mr. Yinka Adegbola?
I am the Managing Director/Chief Executive officer of Meristem Trustees, which is a member of the Meristem family. We have four companies in the group: Meristem Trustees, Meristem Wealth Management, Meristem Registrars and Meristem Stockbrokers Limited.
I’m a trust practitioner. I have been in the market for about 14 years. I have worked in a number of institutions including Skye Trustees and Intercontinental Trustees, prior to which I practiced my profession, law, before I came into the financial industry.
Curled from The Leadership Newspaper