Generational Wealth And Legal Transfer: A Legal Perspective (1)

Introduction

I was a guest speaker at a gathering of some eminent men to brainstorm on the best way to ensure generational wealth and legacy transfer. Let me share my thoughts with you.

I was delighted when I got the invitation to be part of this epoch-making event which is no doubt relevant to our collective experience of nationhood, family and other endeavours. This Summit could not have come at a better time than now, when Nigeria is in search of enduring morality and values.

The first thing to note about transfer of anything is that you can only give what you have –quod non habet – no one can transfer wealth that he does not have or bequeath a legacy that does not exist. So, the priority of everyone should first be to gather wealth, sustain/preserve wealth and then transfer wealth. God our creator has stated His own preference to the extent that: “a good man leaveth an inheritance for his children’s children.” To be a ‘good man’ before God, you must have wealth and legacy that can be inherited by your children and by others. The wealth is linked directly to your children and family whilst your legacy relates to them and beyond, such as to the society. Let us therefore follow the precepts of God and be ‘good men’ and ‘good women’.

Definitions

Before delving into this topic in more detail, it is pertinent to identify and define the Key words used, to wit:

1. Generation; 2. Wealth; 3. Generational wealth; 4. Legacy; and Transfer.

GENERATION

According to Wikipedia, a generation refers to all of the people born and living at about the same time, regarded collectively or “the average period, generally considered to be about 20–?30 years, during which children are born and grow up, become adults, and begin to have children.” Without any doubt, one can say that we are in the generation of technology, or how else would you describe someone offering $44B to buy an invisible social media App majorly from an investment in which cars are driven without any engine? It is the generation of unlimited human exploration.

Wealth

This means abundance of financial resources or physical possessions. According to Investopedia, it is an accumulation of valuable economic resources that can be measured in terms of either real good or money value.

Generational wealth

This refers to assets that are passed down from parents to their children or grandchildren. These assets can be in the form of properties, bonds, monies, stocks or shares or ownership of a family business. It is generational wealth because it is wealth that gets transferred from one generation of a family to the next. Generational wealth may also take the form of education, contacts, ability to take greater risks and lucrative employment within a family business. It can occur on the death of a parent or other family member, or during the life of both people. While many households can expect to receive some sort of generational wealth, a small number of transfers within wealthy families accounts for a majority of the total value of generational wealth transfers.

Legacy

Legally speaking, this refers to money or properties left for a person in a Will. It also refers to something transmitted by or received from an ancestor or predecessor or from the past. Legacy is beyond material possessions and as such, Legacy may include a good name, an unblemished record or image which one has sustained, sound principles and beliefs, character, reputation, philosophy or principles, all of which can be transferred to impact society and the environment, for good.

Transfer

The learned authors of Black’s Law Dictionary define TRANSFER as follows:

To convey or remove from one place or one person to another; to pass or hand over from one to another, especially to change over the possession or control of. 2. To sell or give.”
In the context of generational wealth, transfer connotes the conveyance of right, title, or interest in real or personal property from one person to another, especially from the original owner, to another person linked or related to him, continuously in succession.

Legal perspectives of generational wealth transfer

Legally speaking, generational wealth and legacy (material possessions) can be transferred through a GIFT INTER VIVOS, WILL, TRUSTS or CUSTOMARY SUCCESSION.

Gift inter vivos

A gift inter vivos simply means a gift made to someone during the lifetime of the giver. A gift inter vivos is an act whereby something is voluntarily transferred from the true possessor to another person with full intention that the thing shall not return to the donor and with the full intention on the part of the receiver to retain the thing entirely as his own without restoring it to the given.

It can be done by either executing a Deed of Gift in favour of the beneficiary or buying properties in the name of your children. This was developed to avoid cases of disputes after the demise of the parent, so that in his lifetime, he takes the decision on wealth transfer and enforces it. An example of gift inter vivos in the Biblical case of the prodigal son, who compelled his father to share his wealth in his lifetime only to end up squandering them on riotous living. The lesson in this is for the father/mother to ensure close monitoring of the use of the asset that has been transferred to avoid wastages and abuses.

 Will

A WILL is a legal document through which an individual referred to as a testator, dictates how his/her property should be distributed after their demise. By authoring a will, an individual can make sure that his/her assets are passed down to his/her children, grandchildren, relations and even organisations, religious bodies and the likes, in a particular format

 Why write a will?

1. It eliminates the application of customary law to the deceased’s estate.
2. It helps to determine how your properties would be distributed to avoid confusion, wasteful dissipation of wealth/assets and intermeddling by strangers.
3. To appoint executors of your estate; Executors are the persons who control a deceased’s estate and are responsible for the transfer of the deceased’s properties to the beneficiaries. Therefore they should be persons who are trusted and responsible.
4. To cater for matters such as guardianship, in a situation where the Testator has young children or children with special needs.
5. Specific instructions as to funeral arrangements can also be included in a Will.