A DETAILED RESEARCH PAPER ON TRUSTEESHIP IN NIGERIA

BY

CHRISTIANA FEHINTOLA
 1. ABSTRACT

Trust is an institution of equity received into the Nigerian Legal System, and like
all equitable institutions and remedies, any claim arising from trust must be
shown to have an ancestry founded in history and in the practice and precedents
of the courts administering equitable jurisdiction. This paper examines the
concept of trust in relation to the persons that may be trustee. It also goes several
steps further by outlining the various statutes that govern the appointment of
trustees. The methods of appointment of the original trustees by either a settlor
or a testator will also be discussed on in this paper. The research method
employed for writing this paper covers useful materials from both primary and
secondary sources of law. This is in an attempt to obtain a brilliantly detailed
essay on the given subject.

2. INTRODUCTION

Trustee (or the holding of a trusteeship) is a legal term which, in its broadest sense, is a
synonym for anyone in a position of trust and so can refer to any person who holds property,
authority, or a position of trust or responsibility for the benefit of another. A trustee can also
refer to a person who is allowed to do certain tasks but not able to gain income. 1 Although in
the strictest sense of the term a trustee is the holder of property on behalf of a beneficiary.

A trust can be set up either to benefit particular persons, or for any charitable purposes:
typical examples are a will trust for the testator's children and family, a pension trust (to
confer benefits on employees and their families) and a charitable trust. In all cases, the trustee
may be a person or company, whether or not they are a prospective beneficiary

A trust is a legal arrangement where a trustee holds and manages assets for the benefit of one
or more beneficiaries. Unlike companies, trusts are not separate legal entities, although they
are treated as a separate entity for taxation purposes. The trustee is the legal entity who owns
the assets, manages the trust and enters into contracts as trustee of the trust. A trustee can be
either one or more individuals, or a company. The next part of this paper shall be examining
the category of persons who may be appointed as trustee.

1
https://en.wikipedia.org/wiki/Special:BookSources/0-8299-2041-2
 3. WHO MAY BE A TRUSTEE

Adopting the provision of Section 10 of the Indian Trusts Act, any person who is capable of
holding property can be appointed as a trustee. A person is deemed to have the capacity to
hold property, if such a person is capable of administering the property effectively and
efficiently with ordinary prudence. Depending upon the nature of the trust, a trustee is
required to play a passive role without any scope of discretion; a minor may as well be
appointed as trustee.2

However, where the trust involves exercise of discretion such as trustee acquiring sale of
property or its investment, the trustee should be of the age of majority, of sound mind and
should not be disqualified by any law. A Corporation, a company or association of persons,
being a ‘person’ may as well be appointed as trustee.

3.1 INDIVIDUAL

An individual trustee is a structure that has up to four individuals who are called the trustees.
Each trustee has an active role in managing the trust and complying with relevant super and
tax laws. It is generally said that the ability to be a trustee is co-extensive with capacity to
hold property.3 Any person who can legally hold property and dispose of same can be
appointed as a trustee over property. An infant can however not be appointed as trustee in
relation to any settlement or trust in the states comprising the former Western Region 4.
Pursuant to Section 18 of the Property and Conveyancing Law5; the appointment of an
infant to be a trustee in relation to any settlement or trust shall be void, but without prejudice
to the power to appoint a new trustee to fill the vacancy’.

This position however relates to express trust as an infant can hold property other than a legal
estate in land. Anyone who can legally hold property and dispose of same can be appointed a
trustee upon resulting, implied or constructive trust.6

There are numerous considerations you must take account of when selecting an individual
trustee structure. Generally, members of the fund cannot simultaneously be an employee of

2
https://indiancaselaws.wordpress.com/2014/11/25/trustee-who-can-be-appointed/
3
Hansbury’s Mordern Equity (9th ed 1969); Snell’s Principles of Equity (27 th edition) p 189; Pettit, Equity and
the law of Trusts, 1974, p 226.
4
Ogun, Oyo, osun, Ondo, Ekiti, Edo and Delta states.
5
Cap 100, laws of Ogun State 1978.
6
Re Vinogradoff (1935) WN 68
 another member of the fund, unless they are relatives. Another requirement is the trustees
cannot be paid for their services (however, it is possible in some circumstances). A
distinguishing feature of an individual trustee structure is the assets of the fund need to be
registered in the name of the individual trustees of the fund7.

Also, each trustee must play an active role in managing the trust and comply with their duties
as trustee.

The main advantages of having an individual trustee include the low set-up and management
costs, and the minimum complexity involved in setting it up (i.e. Unlike a corporate trustee,
an individual trustee does not require its members to understand and follow corporation law
requirements.)

There are however some disadvantages of having an individual trustee including:

 The individual(s) could be personally liable;

 It may be difficult to distinguish personal and trust assets; and
 If an individual trustee dies, the trust’s assets will need to be transferred to another entity.
This requires executing a deed of appointment and, in most cases, transferring the trust’s
assets into the new trustee’s name (or jointly with other trustees). This can result in
significant administrative problems particularly if the trust’s assets include shares and real
property.

3.2 TRUST CORPORATION

An organization (usually with a commercial bank) that is engaged as a trustee or fiduciary or

agent in handling trust funds or estates of custodial arrangements or stock transfers or related
services. A company that has as its main or subsidiary sphere of operations the administration
of trusts, with itself as TRUSTEE. The company should have an issued capital of at least
$250,000 should have been paid up. It is empowered to charge fees for its services at a level
not higher than those charged by the public trustee.

The public trustee, set up under the public trustee act 1906, is in effect the nationalized trust
corporation. Its fees may be altered from time to time by statutory instrument.

7
https://lawpath.com.au/blog/need-know-individual-trustee-structure
A corporation empowered to act as a trustee, provided that it is a registered company which
satisfies certain conditions. A company that carries out trust business or acts as a corporate
trustee, or whose name includes the words “TRUST CORPORATION” or “TRUST
COMPANY”, does not necessarily have trust corporation status. Bodies that have trust
corporation status include those entitled by rules made under section 4(3) of the public trustee
act 1906 (public trustee rules 1912 (s1 1912/348) to act as CUSTODIAN TRUSTEE. `

Trust Corporations have traditionally been owned by high street banks or firms with
substantial private client departments. However, some new entrants into the legal market are
combining them with a consumer brand to provide legal services, while more established law
firms are creating them in response to demand. Trust corporations are separate entitles to the
parent partnership or LLP, so carry a separate risk, and require a certain paid-up capital in
cash. The note covers the practicalities of establishing a corporation, including regulatory
requirements. A trust corporation is a company, especially a commercial bank, organized to
perform a fiduciary of trust and agencies.

The TRUST name refers to the ability of the institution’s trust department to act as the trustee
– someone who administers financial assets on behalf of another. The assets are typically
held in form of a trust, a legal instrument that spells out who the beneficiaries are and what
the money can be spent for. A trust will manage investments, keep records, manage assets,
prepare court accounting, and pay bills (depending on the nature of trust) medical expenses,
charitable gifts, inheritance or other distributions of income and principal.

3.3 PUBLIC TRUSTEE

The public trustee was established by the Public Trustee Act8 and Laws. A public trustee is
a corporation sole under that name, with perpetual succession and an official seal. He can act
as a sole trustee or jointly with any other person or body of persons. It may act as an ordinary
trustee to custodian trustee and may also in appropriate cases be appointed as trustee by court.
the difficulty frequently experienced in times past of finding a person willing to act as trustee
is now met with the existence of the office of the public trustee.

According to Snell’s Principles of Equity, the chief advantages derived from the appointment
of public trustee are as follows:

8
Cap 170 Laws of Nigeria 1958 (applicable to lagos State) now Public Trustee law Cap 162 Laws of Lagos
State 1994
 First, being a corporate sole, the office has perpetual existence, despite the death
or retirement of the individual holding it; secondly, the state is responsible for
any loss to the trust estate caused by breach of trust and thirdly, public trustee,
has wide experience in trust matters, and his fees are moderate.9

Any person beneficially interested may apply to court for appointment of Public Trustee in
place of all existing executors or administrators or of the guardians of infants or committee or
receiver of a person incapable of managing his own affairs, if sufficient cause is shown.

The act also provides further that: any person who is aggrieved by any act or omission or
decision of the public trustee in relation to any trust may apply to the court, which may make
such order in the matter as it thinks just.

The office of public trustee was established in Nigeria by the Public Trustee Act of 1938,
which was applicable to Lagos State alone. The Public Trustee Law of Western Nigeria,
1959 is applicable in the States comprising the Old Western Nigeria.

According to Jegede, the office of the public trustee was originally created in Nigeria solely
for the benefit of the English Colonial servants who had died in Nigeria and whose families
had returned to England. The function of the public trustee was to administer the estate of
such servants and if such estate is a yielding one, sent the proceeds to the families in
England. The services of the Public trustee were not then extended to Nigeria partly because
this aspect of English aw was foreign to the well-known methods of managing estates of
deceased Nigerians.10

Now the services of the public trustee are available to all who may wish to avail themselves
of his services. The office has become an institution with laws creating and regulating it.
There are certain limits to the functions and powers of the public trustee. He may decline to
accept any trust, except that he cannot decline solely on the ground of smallness of the trust
property. Also, he cannot accept any trust exclusively for religious or charitable purposes, 11
or any trust under a deed of arrangement for the benefit of creditors; nor can he undertake the
administration of any estate known or believed by him to be insolvent.

Once a public trustee is appointed, he has the same powers, duties and liability as a private
trustee. He is equally entitled to the same privileges, rights and immunities and subject to the
9
See Megarry & Baker, @ 199
10
Jegede, Law of Trusts, Bankruptcy and Administration of Estate, @ 205-206
11
Re Hamptons (1919) 88 LJ Ch. 103
control and order of the court as a private trustee. Anyone who is aggrieved by any act of or
omission or decision of the public trustee in respect of the administration of the trust, has the
right to apply to court and the court is empowered to make any order in the matter as it thinks
fit.12

3.4 JUDICIAL TRUSTEE

A trustee is a person or entity who holds the assets’ of a trustee for the benefit of the
beneficiaries and manages the trust and its assets under the terms of the trust stated in the
declaration of trust which created it.

A judicial trustee is a person appointed by the Court under the Judicial Trustees Act, 1896.
Such a person is appointed as trustee by the court as a means to “… provide a middle course
in cases where the administration of the estate by the ordinary trustees had broken down and
it was not desired to put the estate to the expenses of a full administration”. 13 On application
by the settlor or a trustee or a beneficiary, the court may appoint any fit and proper person
who is nominated in the application14, or an official of the court (usually the official solicitor),
to be a judicial trustee to act alone or jointly with any other person. In all cases, the
appointment of a judicial trustee is absolutely discretionary.15

a judicial trustee is different from an ordinary trustee in a number of ways. He is an officer of

the court and subject to its control and supervision; he is entitled to such remuneration as the
court allows him; his accounts are audited every year and cannot appoint a successor under
the statutory power for this would usurp the function of the court.16
In Bankruptcy cases a court may appoint a trustee to manage the funds of the insolvent party. 
Trustees who are appointedby bankruptcy courts are paid for their services from public fund.
Trustees who manage trusts for private parties also arepaid for their services, but their compe
nsation comes from the creator of the trust or from the trust's funds.

As stated earlier, The Judicial Trustee Act 1896 is the statutory enactment that governs the
appointment of a judicial Trustee by the Court, their duties and also their benefits. Section 5

12
See section 13 & 19 of the Public Trustee Law, Laws of Oyo State, 2000; public Trustee Law, Laws of Ekiti
state 2010, also Re Wilson (1964) All ER 196; Re Williams Deceased (1945) 11 WACA 53
13
Re Ridsel (1947) Ch. 597 @ 695, per Jenkins J; also Section 1(1) of the Judicature Trustee Act, 1896) Britain.
This is a statute of general application in Nigeria.
14
Douglas v Bolan (1900) 2 Ch 749
15
Re Ratcliff (1898) 2 Ch 352
16
Re Johnson (1911) 105 LT 701; Megarry & Baker, p 197
 of the Act defines an “official of the court” as “the holder of such paid office in or connected
with the court as may be prescribed. The expression “prescribed" means prescribed by rules
under this Act.”

3.5 CUSTODIAN TRUSTEE

The term “custodian trustee” was introduced by Section 4 of the Public Trustee Act
1906. A custodian trustee is referred to as a person appointed to have the custody, as distinct
from the management, of trust property. A custodian trustee is charged with the responsibility
of holding trust securities as if it were sole trustee, thus, trust property is vested in the
custodian trustee but the general management, including powers and discretion exercisable by
a trustee in relation to the trust, is vested in the hands of the managing trustee 17. Simply put, a
custodian trustee is one who has the custody and care of trust property but not its
management. Their sole function is to hold the title to the property. They should not be
involved in the day to day running of the trust property, which is the responsibility of
managing trustees (unless the governing document gives them certain other rules or
responsibilities), in essence, whenever a custodian trustee is appointed, the trust property
shall be vested in him but the management of the trust property and incidental discretion
exercisable by the trustees under a trust shall remain vested in the managing trustees. Where
individuals are appointed to be custodian trustees, it must be remembered that these
individuals will need to be replaced from time to time, for example; when the present trustees
die or wish to retire. Custodian trustees can be either;

 Individuals
 A body corporate

A custodian trustee takes custody of all securities and documents of title relating to the
trust property, but the managing trustees have free access to them. 18 He has a duty to get in
the trust property or dispose of it as may be directed by the managing trustee. The custodian
trustee is bound to act in accordance with such direction of the managing trustee unless it is
inconsistent with the provisions of the trust instrument or trust law, in which case he may
apply to the court for directions which would be binding on both. Though actions relating to
the trust are brought in the name of the custodian trustee, he is not liable for any act or default

17
Section 8 (2) (b) of the Public Trustee Law
18
Section 8 (2) (c) of the Public Trustee Law
 of the managing trustee.19 A Custodian trustee and the managing trustee are different, the
relationship between them is stated in Section 8 (2) of the Public Trustee Law. In the case
of Forster v. Williams Deacon’s Bank Limited 20, Clauson J observed that a custodian
trustee discharges a special function which, by its very nature, is differentiated from the
functions of the managing trustees of it in which a custodian trustee has been appointed. The
very existence of a custodian trustee implies that there are certain functions which he is not to
discharge but which are to be discharged, if discharged at all, by some other person(s).

Furthermore, a person who is performing both the duties of a custodian trustee and all that
of an ordinary trustee is really no more and no less than an ordinary trustee. In Forster v.
Williams Deacon’s Bank Limited21, a bank that was appointed both custodian trustee and
managing trustee of a trust was not entitled to a charge fee as custodian trustee. By virtue of
Section 8 (1) of the Public Trustee Law, the Public Trustee and Trust Corporations are
usually appointed as custodian trustees as they are authorized by law to act in that capacity.
When appointed, they are entitled to charge fees for their services. But they may not contract
for their own profit with the managing trustee except where the authority of the court has
been obtained. One of the advantages of appointing a custodian trustee is that if and when a
new managing trustee is appointed, the necessity of having to vest all the trust property in
him is dispensed with thereby saving time and cost. In other countries like South Australia,
Tasmania and Victoria, the statutory legislation provides that the custodian trustee may be
appointed; under the trust instrument, by order of the court or by any person having the
power to appoint a new trustee.

Responsibilities of a custodian trustee include:

1. To hold title to the trust property on behalf of the trustees.

2. To carry out the instructions of the managing trustees, in so far as such instructions are not in
breach of the governing document.
3. They should not be involved in the day to day running of the trust property

4. APPOINTMENT OF TRUSTEE AND STATUTES GOVERNING

APPOINTMENT

19
Section 8 (2) (d) of The Public Trustee Law
20
(1935) Ch. 359
21
(1935) Ch. 359
4.1 APPOINTMENT BY THE SETTLOR OR TESTATOR

The original trustees are usually appointed by the settlor or testator because of the rule
“equity never wants for a trustee”, if all the trustees of a settlement disclaim, the settlor will
hold as trustee, and if all the trustees die, the personal representatives of the last survivor will
hold as trustee. Where a trust is created by will, the same persons will normally be executors
and trustees.
A settlor has no general power to appoint new or additional trustees, but he may expressly
nominate himself in the trust instrument as the person empowered to appoint new trustees; in
which case he will be able to appoint, not as settlor but as the person nominated. Further in
inter vivos, the settlor may appoint himself as trustee in the first instance. By ss.8&9 Public
trustee Act and public trustee law 22, the settlor or testator may appoint the public trustee as
an ordinary trustee or custodian trustee.

4.2 APPOINTMENT UNDER THE TRUSTEE ACT 1893, SECTION 10 AND

TRUSTEES LAW SECTION 24(1)

A new trustee may be appointed 23 under the Acts in place of a former trustee in the following
circumstances;
Where the trustee is dead; this includes a nominated trustee who dies before the testator
Where a trustee remains out of Nigeria for more than 12 months; the period must be an
uninterrupted one, and so could be broken by, e.g. one week’s return.24
Where a trustee desires to be discharged or refuses to act: this includes retirement and
disclaimer respectively.
Where a trustee is unfit to act; a trustee who is insolvent will probably come into this
category.
Where a trustee is incapable of acting; this would include, e.g. infancy, mental disorder or
senility. A trust corporation which has been dissolved would also come under this head.

5.3 APPOINTMENT UNDER THE TRUSTEE LAW, SECTION 24(6)

22
cap 170 and 108
23
The appointor may appoint himself.
24
Re Walker (1901) 1 ch . 259
 New trustees may appoint under this sub-section even if none of the above event has occurred
provided (a) none of the existing trustees is a trust corporation, and (b) the appointment will
not bring the total above four.
Appointments under the above sections are made (1) by the person or persons nominated
by the trust instrument to make it or if there is no such person willing and able to act, (2) by
the surviving or continuing trustee or trustees, or if they are all dead, (3) by the personal
representatives of the last surviving or continuing trustee.
The appointment must be in writing, but need not be by deed unless it is desired to
incorporate a vesting declaration.

5.4 APPOINTMENT BY THE COURT

The court has power to appoint new trustees under Trustee Act, section 25 and Trustee Law
section 28, when it is expedient to appoint them and inexpedient, difficult or impracticable to
do so without the courts assistance. The appointment may be in place of or in addition to
existing ones.
In exercising power, the court will consider the wishes of trustees and cestuis que trust, it
is a matter to be taken into consideration in determining whether the trustees should be
removed or not.
Finally it should be noted that section 11 of the public trustee Act and public trustee Law
provide that “the court may remove a private trustee if the court is satisfied that the
continuance of the existing trustee in office may be detrimental to the execution of the trust,
notwithstanding that misconduct or maladministration has not been proved against him”.

6 APPOINTMENT OF ORIGINAL TRUSTEE BY EITHER A SETTLOR OR A

TESTATOR

Trustee or Trustees are usually appointed either at the creation of a trust or at any time doing
the continuance of the trust. The first trustees are normally appointed by the settlor or testator
who creates the trust.

6.4 WHO IS AN ORIGINAL TRUSTEE

Appointment by the settlor is of course the usual way in which trustees are appointed when
the trust is first created. Best practice must be for the settlor to declare the trust in a written
document, so that there can be no doubt over its exact terms. A trust can be declared orally,
providing there are no special formalities that must be fulfilled due to the type of property
being left on trust (for example, in the case of land, a trust for which must be evidenced in
writing to fulfil the provisions of s 53 (1)(b) of the Law of Property Act 1925).

Whether the trust is declared in writing or orally, the settlor will usually either choose
trustees, or alternatively, appoint himself to be a trustee, possibly in combination with other
people.

The settlor has the freedom to select eligible persons to be the first trustees. He may appoint
the trustees inter vivos or by his will. In the case of an inter vivos trust the settlor is required
to transfer the property to the trustees for failure to achieve this result will make the trust
imperfect. In the case of a trust created on the settlor’s death, the trust can never be imperfect
for the settlor has managed to part with the trust property. If he does not name the trustees in
his will or those named are unable or unwilling to act, the trust will still be valid for it is
completely constituted and the maxim is ‘Equity will not allow a trust to fail for want of a
trustee.’25

6.5 APPOINTMENT OF AN ORIGINAL TRUSTEE INTER VIVOS

In the case of an inter vivos trust the settlor is required to transfer the property to the trustees.
He could appoint either himself or another person or persons as trustees. Where the settlor
fails to appoint a trustee, the court, in the exercise of its equitable jurisdiction may on reliance
that a trust would not fail for want of trustee appoint an original trustee

The jurisdiction of the court may however be ousted where the trust instrument contains an
express provision nominating someone in particular to appoint the trustee in general or
limited circumstances

The settlor however has no more power to appoint trustees after the trust has come into
existence except where such power is expressly reserved in the trust document, in which case
the appointment of trustees could be made by the settlor but not in his capacity as a settlor but
as someone expressly empowered by the trust instrument to appoint trustees26
25
https://lawexplores.com/appointment-retirement-and-removal-of-trustees/
26
M. I. Jegede “Law of Trust, Bankruptcy and Administration of Estate “
6.6 APPOINTMENT OF AN ORIGINAL TRUSTEE BY WILL

In the case of a trust created on the settlor’s death, a testator may by his will have appointed a
trustee. Where the testator did not appoint a trustee, the power to appoint a trustee will
devolve on the court in the absence of any provision in the will devolving it to a named
person.27 The trust property will, before the appointment of trustees, devolve on the testator’s
executor who will hold it as constructive trustee28

Thus in Re Tempest (1866) LR 1 Ch 485, in a testamentary trust, of the trustees died before
the testator. The persons with the right to choosing a trustee could not agree on a choice.
Most of the persons agreed with the choice of Edward Petre but Mr Flemming (a beneficiary)
opposed him because Mr Petre was not on friendly terms with the testator. No question arose
from the codicil as the two surviving trustees agreed in choice of Mr Petre.

On the question as to what criteria a court should use when making appointments for trusts?
The court should always have regard to three requirements: 1) the wishes of the person by
whom the trust was created; 2) the interests which may be conflicting of all the beneficiaries;
3) the efficient administration of the trust.

Holding: Overruling the Master of Rolls earlier decision and omitting Mr Petre. Court will
look to the wishes of the settlor, if ascertainable, will not make appointments which favour
some beneficiaries over others, and in general will make an appointment which will further
the proper execution of the Trust.

CONCLUSION

Conclusively, this paper has pointed out the categories of persons who may be appointed as
trustees. It thus follows that individuals, corporations, public trustees, judicial trustees and
custodian trustees are capable of being appointed.. Also, it is instructive to note that there are
various methods of appointing trustees and those methods are governed by statute. At all
relevant times, the general principle as regarding the appointment of trustees is that they must
be capable of holding legal interest in property.

27
Dodkin v. Brunt (1968) L.R. 6 Eq. 580
28
Re David’s Trust (1871) L. R. 12 Eq. 214
 REFERENCES

Nigel S. & Richard E, Trusts and Equity, 7th ed. Pearson Education Limited, 2005.

Pettit P. H., Equity and the Law of Trusts, 9th Ed. Reed Elsevier (UK) Ltd 2001

John McGhee QC, Snell’s Equity(trusts, wills and probate library), Sweet and Maxwell
2013

J. E Martin, Modern Equity, 17th Ed. Sweet and Maxwell

O. Yerokun, Casebook on Equity and Trusts (Comments & Cases), Princeton &
associates Publishing Co Ltd (2015)

A Husdon, Equity and Trusts, PALGRAVE (2014)

Fabunmi J. O, Equity and Trusts in Nigeria (2nd edn, OAU Press Ltd 2006)

Garner B, Black’s Law Dictionary (9th edn, Thomson Reuters 2009)

Halsbury’s Laws of England (3rd Edn ) Vol. 21

Jegede M.I, , Law of Trusts, Bankruptcy and Administration of Estate (MIJ Professional
Publishers Limited, 1999)