What trustee means
A trustee holds property for other people.
They have legal control of the asset, but the benefit belongs to somebody else, whether that is a beneficiary under a will, a minor whose inheritance is held until adulthood, or the objects of a registered NGO.
That split between control and benefit is the whole reason the law imposes such strict duties. Somebody with power over money that is not theirs needs watching.
How it is used
In estates, trustees hold and manage a beneficiary's share until they come of age or until conditions in the will are met.
In Nigeria the far more visible use is organisational. NGOs, churches, foundations and associations register at the CAC as incorporated trustees, and the trustees hold the organisation's assets for its stated objects.
That is why trustee records, trustee changes and trustee conduct come up so often in Nigerian not for profit governance.
Key features
- Holds legal control of property for the benefit of others
- Owes fiduciary duties, including loyalty, good faith and prudence
- Must avoid conflicts of interest and must not profit secretly from the position
- Must keep proper records and account for what they do
- Can be removed and held personally liable for breach
How this works in Nigeria
For incorporated trustees, the trustees are recorded at the CAC, and changes have to be filed through the proper process. Organisations that let those records go stale find that banks refuse transactions and grant makers refuse funding.
The recurring governance failure is founders treating organisational funds as personal. Trustees hold assets for the objects of the organisation, not for themselves, and doing otherwise is a breach of trust rather than a grey area of practice.
Trustee vs executor vs director
An executor administers a deceased person's estate and finishes once it is distributed. It is a task with an end.
A trustee holds property on an ongoing basis, potentially for many years, and manages it for beneficiaries throughout.
A director manages a company for its shareholders, and while directors also owe fiduciary duties, the company has owners who can take profits. An incorporated trustee has no owners, and nothing is distributed to the trustees.
Limits and risks
A trustee cannot benefit personally from trust property beyond what the trust instrument or constitution properly allows.
They are also exposed. Trustees who invest carelessly, mix trust money with their own, or fail to keep records can be held personally liable, and a defence of good intentions rarely helps where the records do not exist.
Worth knowing
Never mix organisational or trust funds with personal accounts. It is the single fastest route from a governance question to a breach of trust claim.
Questions people ask
What does a trustee do?
Holds and manages property for the benefit of somebody else, whether beneficiaries under a will or the objects of an organisation. They control the asset without owning it for themselves.
Can a trustee be paid?
Only where the trust instrument or the organisation's constitution properly allows it, and even then payment should be for actual services and properly authorised. Distributing organisational funds to trustees as a benefit is a breach of trust.
How are trustees of a Nigerian NGO changed?
Through the process set out in the organisation's constitution, followed by the appropriate filing at the CAC. Leaving the CAC record out of date creates real problems with banks and grant makers.
Can a trustee be removed?
Yes, under the constitution or trust instrument, and a court can also remove a trustee and order them to account for what they did.
What happens if a trustee misuses funds?
It is a breach of trust. Civil remedies include recovering the property, accounting for profits made, and removal from office. Where dishonesty is involved, the conduct can also amount to a criminal offence.
Documents that use this
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