Question Tag: Trusts

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  • 15 Marks

TAX – May 2015 – L2 – SC – Q7 – Taxation of Trusts and Estates

Determine computed income of a trust, tax liabilities, and apportionment of income among beneficiaries.

Chief Zeta created a Trust many years ago for the benefit of his four children, Alpha, Beta, Cepha, and Delphi. A lawyer was appointed as the Trustee to his Estate.

For the year ended 30 September 2014, the Trust income amounted to ₦3,120,000. Each of the beneficiaries receives an annuity of ₦150,000 every year while the expenses incurred on the administration of the Trust was ₦57,500 per annum. The trustee is on a remuneration of 2% of the Computed Income.

Chief Zeta instructed that discretionary payments of ₦22,500, ₦17,500, ₦15,000, and ₦12,500 respectively should be made to Alpha, Beta, Cepha, and Delphi respectively. In addition, nine of the ten portions of the remainder of the Computed Income should be shared equally among the four children.

Chief Zeta has requested you to supervise the administration of the above Trust.

You are requested to:

a. State the basis of assessment of Estates, Trusts or Settlements. (1 Mark)

b. Identify the persons chargeable to Income Tax under the Trust or Settlement created by Chief Zeta. (3 Marks)

c. Compute the income of the Trust. (3 Marks)

d. Determine the amount due to each beneficiary. (6 Marks)

e. Explain how the Computed Income should be apportioned and how the Income Tax burden will be shared by all the parties. (Ignore Withholding tax). (2 Marks)

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  • 20 Marks

TAX – Nov 2020 – L1 – SA – Q3 – Taxation of Trusts and Estates

State the tax authorities of a trust or settlement and special provisions for unmarried children.

A settlement is a means by which enjoyment of an estate or part of it is transferred to another person, either through a disposition, trust or covenant, agreement, arrangement, or transition of assets by reference to a trust for the benefits of persons specified.

The term “trust” relates to an equitable obligation, binding a person, called the trustee, to deal with a property over which he/she has custody (which is called the trust property), for the benefit of persons (beneficiaries) of which he/she may be one.

Required:
a. State the relevant tax authorities of a trust or settlement and the beneficiaries.
(8 Marks)

b. State the special provisions in respect of settlement on unmarried children.
(12 Marks)

Total: 20 Marks

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  • 1 Marks

BL – May 2012 – L1 – SA – Q20 – Law of Trusts

Identify the duty that requires a trustee to act impartially.

A trustee must not favour the interest of one beneficiary against the other. This is called the trustee’s duty of:

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  • 1 Marks

BL – May 2012 – L1 – SA – Q12 – Law of Trusts

Identify the certainty required for creating a trust.

Apart from certainty of words and certainty of subject matter, state the other certainty which is required for the creation of a trust.

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  • 20 Marks

TAX – May 2021 – L1 – SB – Q1 – Taxation of Trusts and Estates

Calculation of net distributable income of a trust and assessable income of beneficiaries.

Chief Adio Jaiyesimi, a Chartered Accountant, died in London after a brief illness on June 10, 2015. He was survived by four children namely: Akeem; Ayodeji; Olabisi; and Adekunle. He created a trust for the benefits of his four children. The records of the trustee for the year ended December 31, 2020, have revealed the following:

Description Amount (N)
Adjusted trading profits for the year ended December 31, 2020 36,400,000
Dividend (gross) 305,000
Rental income (gross) 820,000
Interest received (gross) 118,500
Sundry income 24,800

Additional information:
(i) Fixed annuity paid to Deji, his first child: 81,000
(ii) Fixed remuneration for the trustee: 500,000
(iii) Variable remuneration of the trustee – 5% of gross income: 56
(iv) Allowable expenses of the trustee as agreed: 60,000
(v) Capital allowances as agreed with the Revenue: 395,000
(vi) Discretionary payments were made by the trustee in agreement with the trust deed as follows:

Beneficiary Amount (N)
Akeem 300,000
Ayodeji 250,000
Olabisi 220,000
Adekunle 180,000

(vii) One third of the distributable income is to be shared equally among the children.

Required:
a. Compute the net distributable income in the hands of the trustee. (13 Marks)
b. Compute the assessable income in the hands of each beneficiary. (7 Marks)

 

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  • 1 Marks

BL – Nov 2012 – L1 – SA – Q20 – Law of Trusts

Identify two certainties required for the creation of a valid trust.

State any TWO certainties required for the creation of a valid trust.

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  • 1 Marks

BL – May 2014 – L1 – SA – Q20 – Law of Trusts

Identifying the term for a person holding legal title to property for another.

A person who holds the legal title to a property for the benefit of another is a ____________.

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  • 1 Marks

BL – Nov 2013 – L1 – SA – Q20 – Law of Trusts

Explains why a trustee is typically not remunerated.

A Trustee is not paid a remuneration because

A. He is a friend of the testator
B. He is a volunteer
C. He is a rich man
D. His reward is in the hereafter
E. He has no need of money

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  • 20 Marks

BL – May 2018 – L1 – SB – Q6 – Employment Law

State rights of beneficiaries, differentiate dismissal from interdiction, and discuss rights of owners in hire purchase agreements.

a. The beneficiaries under a trust have certain rights in a situation where the trustee does not administer the trust diligently.

Required:
State FOUR rights of a beneficiary against abuse of powers of a trustee. (6 Marks)

b. One of the ways by which a contract of employment could be terminated is by dismissal of the employee.

Required:
(i) Differentiate between dismissal and interdiction. (4 Marks)
(ii) State FOUR reasons for the dismissal of an employee. (4 Marks)

c. The owner of the goods in a contract of hire purchase has some rights against a third party who has acquired no good title to the goods under the agreement.

Required:
State THREE rights of the owner against a third party that has acquired no good title to the goods under a hire purchase contract. (6 Marks)

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  • 1 Marks

BL – Nov 2014 – L1 – SA – Q20 – Law of Trusts

Identify who manages a Trust.

A Trust is managed by the
A. Beneficiaries
B. Trustee
C. Person that created it
D. Court
E. Bailiff

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  • 15 Marks

TAX – May 2015 – L2 – SC – Q7 – Taxation of Trusts and Estates

Determine computed income of a trust, tax liabilities, and apportionment of income among beneficiaries.

Chief Zeta created a Trust many years ago for the benefit of his four children, Alpha, Beta, Cepha, and Delphi. A lawyer was appointed as the Trustee to his Estate.

For the year ended 30 September 2014, the Trust income amounted to ₦3,120,000. Each of the beneficiaries receives an annuity of ₦150,000 every year while the expenses incurred on the administration of the Trust was ₦57,500 per annum. The trustee is on a remuneration of 2% of the Computed Income.

Chief Zeta instructed that discretionary payments of ₦22,500, ₦17,500, ₦15,000, and ₦12,500 respectively should be made to Alpha, Beta, Cepha, and Delphi respectively. In addition, nine of the ten portions of the remainder of the Computed Income should be shared equally among the four children.

Chief Zeta has requested you to supervise the administration of the above Trust.

You are requested to:

a. State the basis of assessment of Estates, Trusts or Settlements. (1 Mark)

b. Identify the persons chargeable to Income Tax under the Trust or Settlement created by Chief Zeta. (3 Marks)

c. Compute the income of the Trust. (3 Marks)

d. Determine the amount due to each beneficiary. (6 Marks)

e. Explain how the Computed Income should be apportioned and how the Income Tax burden will be shared by all the parties. (Ignore Withholding tax). (2 Marks)

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  • 20 Marks

TAX – Nov 2020 – L1 – SA – Q3 – Taxation of Trusts and Estates

State the tax authorities of a trust or settlement and special provisions for unmarried children.

A settlement is a means by which enjoyment of an estate or part of it is transferred to another person, either through a disposition, trust or covenant, agreement, arrangement, or transition of assets by reference to a trust for the benefits of persons specified.

The term “trust” relates to an equitable obligation, binding a person, called the trustee, to deal with a property over which he/she has custody (which is called the trust property), for the benefit of persons (beneficiaries) of which he/she may be one.

Required:
a. State the relevant tax authorities of a trust or settlement and the beneficiaries.
(8 Marks)

b. State the special provisions in respect of settlement on unmarried children.
(12 Marks)

Total: 20 Marks

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  • 1 Marks

BL – May 2012 – L1 – SA – Q20 – Law of Trusts

Identify the duty that requires a trustee to act impartially.

A trustee must not favour the interest of one beneficiary against the other. This is called the trustee’s duty of:

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  • 1 Marks

BL – May 2012 – L1 – SA – Q12 – Law of Trusts

Identify the certainty required for creating a trust.

Apart from certainty of words and certainty of subject matter, state the other certainty which is required for the creation of a trust.

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  • 20 Marks

TAX – May 2021 – L1 – SB – Q1 – Taxation of Trusts and Estates

Calculation of net distributable income of a trust and assessable income of beneficiaries.

Chief Adio Jaiyesimi, a Chartered Accountant, died in London after a brief illness on June 10, 2015. He was survived by four children namely: Akeem; Ayodeji; Olabisi; and Adekunle. He created a trust for the benefits of his four children. The records of the trustee for the year ended December 31, 2020, have revealed the following:

Description Amount (N)
Adjusted trading profits for the year ended December 31, 2020 36,400,000
Dividend (gross) 305,000
Rental income (gross) 820,000
Interest received (gross) 118,500
Sundry income 24,800

Additional information:
(i) Fixed annuity paid to Deji, his first child: 81,000
(ii) Fixed remuneration for the trustee: 500,000
(iii) Variable remuneration of the trustee – 5% of gross income: 56
(iv) Allowable expenses of the trustee as agreed: 60,000
(v) Capital allowances as agreed with the Revenue: 395,000
(vi) Discretionary payments were made by the trustee in agreement with the trust deed as follows:

Beneficiary Amount (N)
Akeem 300,000
Ayodeji 250,000
Olabisi 220,000
Adekunle 180,000

(vii) One third of the distributable income is to be shared equally among the children.

Required:
a. Compute the net distributable income in the hands of the trustee. (13 Marks)
b. Compute the assessable income in the hands of each beneficiary. (7 Marks)

 

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  • 1 Marks

BL – Nov 2012 – L1 – SA – Q20 – Law of Trusts

Identify two certainties required for the creation of a valid trust.

State any TWO certainties required for the creation of a valid trust.

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  • 1 Marks

BL – May 2014 – L1 – SA – Q20 – Law of Trusts

Identifying the term for a person holding legal title to property for another.

A person who holds the legal title to a property for the benefit of another is a ____________.

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  • 1 Marks

BL – Nov 2013 – L1 – SA – Q20 – Law of Trusts

Explains why a trustee is typically not remunerated.

A Trustee is not paid a remuneration because

A. He is a friend of the testator
B. He is a volunteer
C. He is a rich man
D. His reward is in the hereafter
E. He has no need of money

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  • 20 Marks

BL – May 2018 – L1 – SB – Q6 – Employment Law

State rights of beneficiaries, differentiate dismissal from interdiction, and discuss rights of owners in hire purchase agreements.

a. The beneficiaries under a trust have certain rights in a situation where the trustee does not administer the trust diligently.

Required:
State FOUR rights of a beneficiary against abuse of powers of a trustee. (6 Marks)

b. One of the ways by which a contract of employment could be terminated is by dismissal of the employee.

Required:
(i) Differentiate between dismissal and interdiction. (4 Marks)
(ii) State FOUR reasons for the dismissal of an employee. (4 Marks)

c. The owner of the goods in a contract of hire purchase has some rights against a third party who has acquired no good title to the goods under the agreement.

Required:
State THREE rights of the owner against a third party that has acquired no good title to the goods under a hire purchase contract. (6 Marks)

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  • 1 Marks

BL – Nov 2014 – L1 – SA – Q20 – Law of Trusts

Identify who manages a Trust.

A Trust is managed by the
A. Beneficiaries
B. Trustee
C. Person that created it
D. Court
E. Bailiff

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