Can a Trust Be Used to Manage Real Estate Assets in Lekki?

Introduction

In recent years, Lekki has become one of Nigeria’s most vibrant real estate corridors, attracting investors, developers, and homeowners both locally and internationally. From luxury residential estates to commercial developments and mixed-use projects, Lekki represents the pinnacle of Lagos’ urban property market. However, with high-value real estate comes complex ownership and management challenges—especially when it comes to succession, taxation, and asset protection.

This is where the concept of a trust becomes incredibly valuable. A trust is not only a legal tool for inheritance planning; it is also a powerful instrument for managing real estate assets efficiently, securely, and strategically. By setting up a properly structured trust, property owners in Lekki can ensure that their assets are managed according to their wishes—whether they are alive, incapacitated, or deceased.

This comprehensive article explores, in depth, how a trust can be used to manage real estate assets in Lekki, the legal framework that supports it, the various types of trusts applicable in Nigeria, the process of setting up a property trust, the advantages and potential pitfalls, and a real-life case study. We will also conclude with a detailed FAQ section to clarify common questions from investors, parents, and estate owners who wish to protect and preserve their Lekki properties through a trust structure.

Understanding the Concept of a Trust

A trust is a legal arrangement in which one party (the settlor) transfers property or assets to another party (the trustee) to hold and manage for the benefit of a third party (the beneficiary). In the context of real estate, it means that a property owner can legally transfer ownership or control of a property into a trust to be managed for specific purposes.

This system is common in advanced jurisdictions such as the UK, the US, and Canada, and is gaining popularity in Nigeria—particularly among high-net-worth individuals and diaspora investors who want to protect their properties in Lekki and other prime locations.

Under a trust, the trustee holds the legal title to the property, while the beneficiaries hold the beneficial or equitable interest. This means that although the trustee manages or controls the property, the ultimate benefit still belongs to the beneficiaries.

For example, a father who owns multiple properties in Lekki can transfer them into a trust, appoint trustees (including himself or a lawyer), and specify that the rental income or proceeds should go to his children for education, maintenance, or investment purposes.

Legal Framework for Trusts in Nigeria

Trusts in Nigeria are governed primarily by:

The Trustee Act of 1893 (as adopted and amended in Nigeria)
The Land Use Act of 1978 (for land ownership and Governor’s Consent)
The Conveyancing Act of 1881
The Lagos State Land Registration Law (2015)
The Administration of Estates Law of Lagos State (2003)
The Companies and Allied Matters Act (CAMA 2020) (for corporate trustees)

These laws collectively provide the foundation for creating, operating, and enforcing trusts in Nigeria, especially when the trust involves real estate in Lagos State.

Why Use a Trust to Manage Real Estate Assets in Lekki?

Using a trust to manage your property in Lekki offers multiple benefits, particularly in a legal environment where inheritance disputes, property fraud, and family conflicts are common. Below are key reasons why a property trust is advisable:

Asset Protection: A trust shields properties from creditors, lawsuits, or claims against the settlor or beneficiaries.
Succession Planning: A trust ensures smooth transfer of assets to beneficiaries without the need for probate or court delays.
Tax Efficiency: Properly structured trusts can help reduce certain taxes or fees associated with estate transfers.
Continuity of Management: In case of incapacity or death, trustees continue to manage the property seamlessly.
Privacy: Unlike wills, which become public documents during probate, trust arrangements are confidential.
Avoidance of Family Disputes: Trusts clearly define beneficiaries and eliminate ambiguity.
Professional Oversight: Trustees, often lawyers or corporate entities, provide expert management of property.

How a Trust Works for Real Estate in Lekki

Let’s break down how a trust functions in the context of property management in Lagos State.

When you create a property trust, you are essentially transferring ownership of your Lekki property from yourself to a trust entity, which is legally recognized under Nigerian law.

The parties involved are:

Settlor (Grantor): The person creating the trust and transferring the property (you, the owner).
Trustee(s): The individuals or corporate entities responsible for managing the property per the trust deed.
Beneficiaries: The people or entities who will receive the benefits of the trust (such as your children or family members).

For instance, if you own two duplexes and one commercial building in Lekki, you can create a Chaman Family Trust and transfer those properties into it. The trustees will then manage them—collecting rent, handling maintenance, and ensuring compliance with Lagos real estate laws—while your family benefits from the proceeds.

Types of Property Trusts You Can Use in Lagos

Trusts can be customized to meet your personal and business goals. The most common types used in Lagos, including Lekki, are:

1. Living Trust (Inter Vivos Trust)

A living trust is created during the lifetime of the settlor. You transfer your Lekki property into the trust while you’re alive, allowing the trustee to manage it immediately. It’s particularly useful for avoiding probate.

2. Testamentary Trust

This type of trust is created under a will and takes effect after your death. It ensures your Lekki property is managed and distributed according to your wishes.

3. Revocable Trust

A revocable trust allows you to change, modify, or revoke the trust terms during your lifetime. You maintain flexibility while ensuring control.

4. Irrevocable Trust

Once established, an irrevocable trust cannot be altered without court approval. It provides strong asset protection against legal claims or creditors.

5. Discretionary Trust

Here, trustees have the discretion to decide how and when to distribute benefits to beneficiaries. It’s ideal when you want trustees to act based on changing circumstances.

6. Charitable Trust

A charitable trust is designed to benefit public or community causes. For example, you could transfer a Lekki building into a trust for educational or health initiatives.

7. Family Trust

This is the most popular type in Nigeria. It ensures that family assets, especially high-value real estate, are preserved and managed across generations.

Step-by-Step Procedure for Creating a Property Trust in Lekki

Setting up a trust requires careful legal drafting and registration. Below is the standard procedure for establishing one:

Step 1: Engage a Property and Estate Lawyer

Consult a real estate or trust lawyer to advise you on the best trust structure for your goals—whether it’s for family, business continuity, or philanthropy.

Step 2: Define the Purpose of the Trust

Be clear about what you want to achieve. Is it inheritance planning? Asset protection? Real estate management? The purpose determines the structure of the trust deed.

Step 3: Choose Trustees

Select trustworthy individuals or a corporate trustee (such as a law firm or trust company). Trustees should be reliable, financially stable, and capable of managing property.

Step 4: Identify Beneficiaries

Clearly list the beneficiaries—your children, spouse, or designated heirs. Specify their percentage entitlements and conditions for benefit distribution.

Step 5: Draft the Trust Deed

Your lawyer will draft a Trust Deed that includes:

The name of the trust.
Details of the settlor, trustees, and beneficiaries.
Description of the property (attach survey plan and C of O).
Terms and powers of trustees.
Duration of the trust.
Distribution clauses.

Step 6: Execute and Register the Trust

Once signed, the deed should be stamped at the Lagos State Internal Revenue Service (LIRS), and registered at the Lagos State Land Registry if it involves real estate.

Step 7: Transfer the Property into the Trust

You must legally transfer ownership of the Lekki property to the trustees. This requires Governor’s Consent under the Land Use Act, as the property interest is changing hands.

Step 8: Obtain Governor’s Consent

Apply for consent through the Lagos State Ministry of Lands, attach relevant documents (Deed of Trust, Survey Plan, Tax Clearance, etc.), and pay the statutory fees.

Step 9: Register with the Probate or Trusteeship Department (if necessary)

For complex trusts or large estates, you may also need to file a copy of the trust deed at the High Court Probate Division to ensure enforceability.

Documentation Required for Property Trust Registration

Copy of the Deed of Trust.
Title document (C of O, Governor’s Consent, or Deed of Assignment).
Survey plan and land information certificate.
Passport photographs and IDs of the trustees.
Tax clearance certificates.
Application for Governor’s Consent.
Proof of payment of stamp duties and registration fees.

The Role of the Trustee

The trustee plays the central role in the success of any property trust. Trustees hold the legal title and are responsible for:

Collecting rent and income from the property.
Paying taxes, maintenance, and insurance.
Distributing benefits to beneficiaries as instructed.
Keeping proper accounts and records.
Protecting the property against encroachment or legal threats.
Reporting to the beneficiaries or the settlor annually.

Trustees act in a fiduciary capacity, meaning they must act in the best interests of the beneficiaries and cannot use the property for personal gain.

Advantages of Using a Trust to Manage Real Estate in Lekki

Avoidance of Probate: Property in a trust bypasses probate after the settlor’s death, ensuring quick transfer to beneficiaries.
Asset Protection: Protects properties from lawsuits, creditors, and family disputes.
Privacy: Trusts are confidential; they do not become public records like wills.
Continuity: Trustees continue managing properties without disruption even after death or incapacity.
Professional Management: Experienced trustees ensure compliance with Lagos property laws and maximize returns.
Reduced Family Disputes: The trust deed eliminates uncertainty about inheritance.
Long-Term Planning: Enables generational wealth preservation and estate growth.
Tax Benefits: Proper structuring can minimize double taxation on estate income.

Disadvantages and Limitations

Cost of Setup: Drafting and registering a trust deed involves legal, stamp duty, and consent fees.
Loss of Direct Control: Once property is in trust, you cannot freely deal with it without trustee cooperation.
Breach of Trust Risk: Unethical trustees may mismanage the assets if not carefully selected.
Regulatory Delays: Obtaining Governor’s Consent and registration can be time-consuming.

Tax Implications of Property Trusts in Lagos

While property trusts offer flexibility, they are still subject to taxation under Lagos State laws. Applicable taxes include:

Stamp Duty: Payable on the Deed of Trust.
Governor’s Consent Fees: Charged during property transfer.
Personal Income Tax: Beneficiaries pay tax on any income received.
Capital Gains Tax: Applies if property is sold by trustees.
Annual Land Use Charge: Must still be paid by trustees.

To optimize tax outcomes, consult a tax lawyer or estate planner to structure the trust efficiently.

Case Study: Managing Lekki Properties Through a Family Trust

Background:
Mr. Adewale, a Lekki-based entrepreneur, owned four luxury duplexes and two commercial buildings. Concerned about potential inheritance disputes, he engaged Chaman Law Firm to create the Adewale Family Real Estate Trust.

Action Taken:

The firm drafted and registered a Deed of Trust, naming Mr. Adewale as settlor and his lawyer and wife as trustees.
The properties were transferred into the trust with Governor’s Consent.
The trust stipulated that rental income be used for his children’s education and maintenance.

Outcome:
After Mr. Adewale’s death, the trustees continued managing the properties. Rental income was remitted to the children’s accounts, and the trust ensured uninterrupted management without any probate delay.

Lesson:
Establishing a trust for Lekki properties protects against disputes and ensures that family wealth continues seamlessly across generations.

Common Mistakes to Avoid

Using unregistered trust documents.
Choosing unqualified or dishonest trustees.
Failing to obtain Governor’s Consent.
Omitting key property details in the trust deed.
Neglecting tax and compliance obligations.

Frequently Asked Questions (FAQ)

Q1. Can I create a trust while still living in my Lekki property?
Yes. You can retain a life interest, allowing you to live in or manage the property while it’s held in trust.

Q2. Do I lose ownership of my property when I create a trust?
Legally, ownership transfers to the trust, but you retain control as the settlor or trustee, depending on the trust type.

Q3. How much does it cost to register a trust in Lagos?
The cost varies based on property value, stamp duties, and legal fees—typically between 3% and 10% of the property’s value.

Q4. Can a trust own land in Lagos?
Yes. Once registered and consent is obtained, the trust can hold title legally in its name.

Q5. What happens if a trustee dies or resigns?
The trust deed should specify replacement procedures. Otherwise, the court can appoint a new trustee.

Q6. Can I make my children trustees?
Yes, but it’s advisable to include at least one independent or professional trustee for balance.

Q7. Does a trust expire?
It can be perpetual or limited to a specific term (e.g., until your youngest child turns 25).

Q8. Can a trust be challenged in court?
Yes, if fraud, duress, or undue influence is proven. However, properly executed trusts are highly secure.

Q9. What’s the difference between a will and a trust?
A will takes effect after death and requires probate; a trust can take effect immediately and avoids probate.

Q10. Can foreigners create property trusts in Lekki?
Yes. Foreign investors can establish trusts to manage their Nigerian properties through licensed local trustees.

Conclusion

As Lekki continues to grow into a global real estate hub, the need for structured property management, inheritance planning, and asset protection has never been greater. Setting up a trust is one of the most effective ways to ensure your properties are managed and transferred without dispute or delay.

A well-drafted trust deed can secure your family’s future, protect your investments from external threats, and maintain your legacy for generations. However, establishing a property trust in Lagos requires legal expertise, documentation precision, and government compliance.

At Chaman Law Firm, we provide comprehensive trust and estate planning services—helping clients create, register, and manage property trusts tailored to their specific needs. Whether you are a Lekki landlord, developer, or diaspora investor, we ensure your properties are legally protected and efficiently managed.

📍 Contact Us Today

📞 0806 555 3671, 08096888818, 08024200080📧 chamanlawfirm@gmail.com📍 Chaman Law Firm 115, Obafemi Awolowo Way, Allen Junction, Beside Lagos Airport Hotel, Ikeja, Lagos🌐 www.chamanlawfirm.com👉 Book a consultation now: www.chamanlawfirm.com/book-consultation

Build a legacy that lasts. Secure your Lekki real estate assets today with a legally structured trust through Chaman Law Firm—your partners in property, inheritance, and wealth protection.

Can a Trust Be Used to Manage Real Estate Assets in Lekki?

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