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Children Education Trust

Last week, we began the subject of Education trust, with particular emphasis on Children Education Trust (CET). We also promised that this week we would discuss the things to consider when setting up a CET. Today, we resume that discussion.


When should the Trust take effect?

You may either direct that the Trust take effect during your life time (Living Trust) or after death (Testamentary Trust).

If a Living Trust is involved, there are a couple of options that apply to the operations of the Trust, particularly as it relates to funding and pay-outs of the Trust. In certain circumstances, the Settlor (originator of the Trust) may decide to continue with the funding of the Trust without making any recourse to withdrawals.

We recommend you ask a professional to prepare a projection to help you determine the total cost of funding the education of your wards. At FBN Trustees, we have developed a financial calculator for this purpose. The calculator factors in current tuition fee, expected growth rate, inflation, FX fluctuations, etc.

However, in the event that the beneficiaries are not expected to access the Trust fund until after your death, you can direct that the Trust kick-in thereafter. Note though, that in both instances you will be required to fund the Trust, putting as much as is required into it. This to a large extent will be determined by the computations made above.

Who would serve as Trustee to the Trust?

 Who you appoint as Trustee, determines to a large extent the success or otherwise of the Trust arrangement. While the Trust arrangement lasts, the Trustee is responsible for managing the Trust, including investments and disbursement of funds in accordance with the terms of the Trust Deed.

For a CET, the Trustee would be required to follow the dictates of the Trust Deed to pay for the Beneficiary’s education. This would mean direct transfer to the school’s account rather than transferring to personal accounts including that of the Settlor.

In determining the choice of a Trustee, we recommend institutional Trustees over individuals to ensure professionalism, credibility and transparency.

How many beneficiaries will the Trust cater to?

The CET gives you the additional benefit of naming more than one Beneficiary in the Trust arrangement. You can set up one CET with multiple Beneficiaries, while instructing the Trustee on how funds are to be utilised.

You may also set a pre-determined amount or percentage that each Beneficiary should get. This is especially important where a ‘pot’ arrangement has been put in place with the Trustee providing guidance. The ‘pot’ option is particularly useful if the Beneficiaries have different needs that will require the attention and dedication of the Professional Trustee.

What type of education will the Trust cover?

Some Beneficiaries may not desire formal education preferring either Trade School or some form of vocational education. Some may even desire to go into business, preferring that Trust funds be made available for that purpose. You will need to decide on the kind of education you want to sponsor and ensure the Trustee has it all covered in the Trust Deed. The most important thing is to have everything covered and well spelt out – leave no stone unturned.

How does the Trust end?

There is every chance that there may be funds left after each Beneficiary has completed their education. It is important to decide from the outset how such funds should be distributed to the Beneficiaries at the completion of the Trust arrangement.

In addition, you need to decide the following:

  • What if the Beneficiaries don’t go to school?
  • What balances are left in the Trust after Beneficiaries have completed their education?
  • What if a Beneficiary passes on?

These are some of the scenarios an institution like FBN Trustees can help you review so that you can provide directives against each potential outcome. Speak with an expert today and we will be happy to help with development of your Children’s Education Trust. Call us on 0805 4000 299 or send an email to [email protected]. Connect with us on Twitter – @fbnquest, on Facebook or LinkedIn at fbnquest.

For more insights on Estate Planning, Trusts, Wills, Executorship and Estate Administration, tune in to the Legacy Series on Classic 97.3 FM Lagos by 7pm on Mondays or Cool 96.9FM Abuja, by 8.30am on Tuesdays.

Visit for more information.

Contact Details

FBN Trustees Limited RC 29763

10, 16 – 18 Ke­ffi Street, Off Awolowo Road, SW Ikoyi, Lagos, Nigeria.

Tel +234 (1) 2798300, + 234 (0) 708 065 3100

A part of the FBN Holdings Group

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