Posts tagged: Asset

The Macroeconomic Imperative for West African High-Net-Worth Individuals

High-net-worth individuals (HNWIs) in the West African sub-region operate within a highly dynamic and volatile economic landscape. In Nigeria, the largest economy in Africa, the real Gross Domestic Product (GDP) recorded a growth rate of 3.3% in 2022, down from 3.6% in the preceding year. This decelerating growth trajectory has occurred alongside sustained macroeconomic headwinds, driven by high domestic interest rates, severe currency volatility, and double-digit inflation. Additionally, global geopolitical developments, such as the conflict in Eastern Europe, have disrupted supply chains and increased energy costs, creating a dual-track economic environment. While the government has initiated business environment reforms—including electronic registration stamping, simplified construction permitting, and modernized tax payment channels—the local operational environment remains constrained by systemic bottlenecks. Infrastructure deficits, notably an underdeveloped domestic power sector that forces enterprises to generate their own electricity, and institutional challenges continue to affect corporate yields.

In this volatile climate, the preservation of accumulated capital has moved beyond simple asset accumulation. For wealthy families and entrepreneurial founders, protecting capital requires a proactive approach to structured legal and financial engineering. Strategic Asset Management has transitioned from a discretionary search for portfolio yields into a mechanism for defending purchasing power against inflationary erosion and local currency depreciation. Consequently, cross-border wealth management has become highly relevant for West African HNWIs. By diversifying wealth across jurisdictions and placing assets within structured legal vehicles, wealth creators can protect their assets from local market downturns, political transitions, and legal risks.

Analysis of the Global and Nigerian Asset Management Environment

A comprehensive Analysis of the global and Nigerian asset management environment reveals a dual-track market characterized by rapid modernization offshore and a profound democratization domestically. Globally, the asset management sector operates on a massive scale, with deep institutionalization and a structural shift toward alternative investments and digital assets. The global high-net-worth offshore investment market is projected to expand from 17.78 billion in 2025 to 26.35 billion by 2035, exhibiting a compound annual growth rate (CAGR) of 4.01%. This expansion is driven by a strong focus on wealth preservation strategies, with approximately 70% of HNWIs identifying asset protection as their primary motivation for offshore investment. Furthermore, global wealth management is experiencing a transition toward sustainable and responsible investing. This is demonstrated by the enactment of Bermuda’s Trustee Amendment Act 2025 (operative October 10, 2025), which provides explicit statutory authority for trustees to incorporate environmental, social, and corporate governance (ESG) factors alongside traditional financial performance criteria, aligning investment portfolios with family values without breaching fiduciary duties.

Conversely, the domestic asset management landscape in Nigeria is undergoing a transition driven by regulatory tightening, technological innovation, and changing investor demographics. Historically, the industry was an exclusive domain for ultra-wealthy families in major economic centers like Lagos and Abuja. However, the market has expanded to include the mass affluent and retail segments. Between 2016 and 2020, the industry’s Assets Under Management (AuM) recorded a CAGR of 29%, driven by retail-focused collective investment schemes. Despite severe macroeconomic pressures, the overall industry has continued its upward trajectory, achieving a CAGR of 21.9% between 2019 and 2023. This resulted in an estimated AuM of ₦5.9 trillion ($6.6 billion) by the end of 2023, representing a 40% year-on-year increase propelled by high-yielding assets and foreign currency-denominated portfolios. By 2025, non-pension asset management AuM crossed the ₦10 trillion threshold, while pension assets rose above ₦26 trillion, providing a deep institutional base for long-term domestic investments.

This shift is heavily supported by mobile investment applications and digital savings platforms, such as United Capital Asset Management, ARM Investment Managers, FSDH Asset Management, Chapel Hill Denham, and DLM Asset Management’s “DLM Thrive” online platform. These tools have lowered transaction barriers, changing investor behavior and offering tailored solutions like money market funds, fixed-income portfolios, and structured real estate vehicles. Notably, segregated portfolios have emerged as the dominant segment, accounting for approximately 58% (₦3.4 trillion) of total managed assets by the end of 2023. This dominance highlights how wealthy individuals are moving away from standard bank deposits, which are vulnerable to inflation, in favor of customized portfolios designed to hedge against currency depreciation and domestic economic shocks.

Conceptual Foundations of Private Wealth Safeguarding

what are the examples of with preservation?

When addressing the strategic imperative of family governance and asset protection, it is essential to ask: what are the examples of with preservation? Modern wealth preservation uses a range of legal structures and financial strategies to isolate capital from individual liabilities, tax inefficiencies, and administrative delays. These structures are designed to ensure that assets are protected from external threats while remaining accessible to intended beneficiaries.

A key example of wealth preservation is the Fiduciary Trust Arrangement. Under Nigerian legal practice and global common law, a trust is a legal relationship established when an individual (the settlor) transfers the legal title of specific assets to an independent party (the trustee) to hold, manage, and distribute for the benefit of designated individuals (the beneficiaries). The key feature of this structure is the legal separation of ownership: because the trustee holds legal title, the assets are removed from the settlor’s personal estate. This separation provides significant asset protection, shielding the trust assets from the personal liabilities, business failures, or creditor claims of both the settlor and the beneficiaries. However, this protection is not absolute; a trust can be set aside by a court if it is proven to have been established with the intent to defraud existing creditors, if it violates insolvency laws, or if the settlor retains excessive personal control over the assets.

Beyond basic trusts, other structured examples of wealth preservation include:

• Private Foundations and Family Office Frameworks: These structures are designed for multi-generational wealth preservation and family governance. They consolidate corporate assets, private investments, and real estate, and are particularly useful for managing family businesses and handling philanthropic or community commitments.
• Special Purpose Vehicles (SPVs): Regulated under the Companies and Allied Matters Act (CAMA) 2020, SPVs are used to isolate specific commercial investments—such as infrastructure projects or private equity acquisitions—protecting the broader family wealth from operational risks.
• High-Value Life Insurance Policies: These policies are used to provide immediate cash liquidity upon the death of a wealth creator. This liquidity covers inheritance taxes, probate expenses, and outstanding debts, ensuring that family businesses or prime real estate do not have to be sold under market value to meet immediate liabilities.
• Diversified Tangible and Digital Portfolios: Allocating capital into real estate in prime hubs (such as Lagos and Abuja), commercial agribusiness, private equity, venture capital in fintech, and regulated digital assets.

Detailed analysis of the tax implications of trusts as a wealth preservation tool in Nigeria under the Nigerian Tax Act is available at Andersen Global Trust Analysis.

Juxtaposing Local and Global Wealth Frameworks

When analyzed side by side, wealth preservation legal frameworks jaxtopose between global practice and practices in Nigeria in a way that highlights the differences between highly specialized offshore jurisdictions and the complex statutory, customary, and religious laws that govern estate planning domestically.

Global Practices: Dynamic Jurisdictions, ESG, and Fiduciary Capacity

Globally, wealth preservation has evolved to address the socio-demographic and administrative challenges of the modern world. Rather than relying on rigid statutory regimes, offshore wealth centers adapt their trust and corporate legislation to maintain administrative continuity. One of the most significant challenges facing global wealth management is the impact of cognitive decline and dementia on trust administration.

According to the World Health Organization, approximately 60 million people worldwide live with dementia, with 10 million new diagnoses annually—a figure projected to reach 80 million by 2030 and exceed 150 million by 2050. This demographic trend intersects with a major wealth transfer: women, who are statistically more likely to be affected by dementia, are projected to control up to 70% of global wealth by 2070. Because cognitive decline is often gradual, retroactively assessing mental capacity during trust disputes is extremely difficult. If a settlor with reserved powers, a trustee, or a trust protector loses capacity, it can paralyze trust administration, freeze investments, and lead to litigation.

Furthermore, offshore trusts often involve cross-border families whose members reside in different jurisdictions. Because capacity laws are highly jurisdiction-specific, conflicts frequently arise. For example, a trust protector deemed incapacitated under the laws of the UAE may still be considered legally capable of executing their powers under a Jersey-governed trust deed. Global wealth advisory practices resolve these issues by drafting specific provisions directly into trust instruments. These include:

• Detailed, custom definitions of capacity and clear assessment criteria (designating specific medical experts and clear standards of evaluation).
• Standby governance mechanisms that automatically transition fiduciary powers without requiring court intervention.
• Clause structures that protect trustees from retroactive challenges where a lack of capacity is weaponized to undo previous fiduciary decisions.
• Modernized definitions of “child” and “issue” that explicitly account for blended families, adoptions, surrogacy, IVF, and same-sex relationships, preventing beneficial class disputes.

Detailed strategies on how global private wealth structures adapt to these transitions are available at Collas Crill Private Wealth Insights.

Practices in Nigeria: Fragmented Received Laws and Customary Overlaps

In Nigeria, the legal framework for wealth preservation is a complex mix of received colonial-era English legislation, local statutory interventions, and deeply rooted customary and religious laws. Because Nigeria lacks a single, consolidated national “Trusts Act,” trusts are governed by a combination of the received English Trustee Act of 1893, state-level Administration of Estate Laws, judicial precedents from appellate courts, and indirect provisions in the Land Use Act of 1978 and CAMA 2020.

The main challenge for estate planning in Nigeria is the intersection of statutory, customary, and religious laws. In many regions, customary law and Islamic Sharia law dictate how estates are distributed, often imposing mandatory distribution rules that run counter to a wealth creator’s personal wishes. For example, under certain customary systems, patriarchal inheritance rules may exclude female descendants or transfer family business assets to distant male relatives. If a wealth creator does not establish a valid, proactive estate plan, their assets are distributed according to these customary or religious rules, which often leads to costly, multi-year litigation and the fragmentation of family businesses.

While global wealth hubs have adapted to address modern issues like cognitive capacity and non-traditional family structures, Nigerian practices remain highly focused on establishing basic legal validity to survive customary challenges and the lengthy, public probate system.

Strategic Succession and Wealth Protection in the Nigerian Context

How to protect your wealth in Nigeria?

For individuals seeking to protect their assets within the country, the question of How to protect your wealth in Nigeria? requires a structured legal approach to bypass the delays and public exposure of the traditional probate court system. Estate planning in Nigeria is not exclusive to ultra-wealthy individuals; it is an essential process for anyone who owns real estate, private company shares, cash deposits, or digital assets. Without a robust plan, family fortunes are highly vulnerable to ownership disputes and administrative paralysis.

To establish an enduring legacy, the private wealth team at Aluko & Oyebode recommends a disciplined planning methodology. The core strategy for effective Succession planning involves four main steps:

1. Identify and Define Goals: Clarifying personal, business, and philanthropic objectives, including how core family values and social commitments should be maintained across generations.
2. Capture Family Identity and Vision: Formally documenting family traditions, historical narratives, and establishing charitable foundations or trusts aligned with these values.
3. Build a Comprehensive Assets Inventory: Documenting all individually or jointly held assets, including real estate, bank deposits, public and private shares, retirement accounts, life insurance policies, digital assets, and intellectual property. Crucially, this must include business partnership stakes, offshore holdings, and personal liabilities to ensure an accurate net worth assessment.
4. Engage Multidisciplinary Advisors: Collaborating with specialized legal, tax, and financial advisors to design and implement appropriate legal vehicles.

Further insights on establishing structured family legacies in the domestic market are available at Aluko & Oyebode Private Wealth Blueprint.

When establishing a trust within the Nigerian legal framework, the settlor and their legal advisors must follow a specific, formal procedure to ensure the trust is legally valid and resilient against creditor or familial challenges. This step-by-step process is structured around received English statutes, local land laws, and corporate regulations.

This step-by-step procedure is discussed in detail at Mondaq Trust Registration Procedure.

Globalization and Nigerian Legal Practice: The Regulatory Transformation

The integration of global compliance standards into domestic frameworks has reshaped the relationship between Globalization and Nigerian legal practice. A key milestone in this evolution occurred on October 24, 2025, when the Financial Action Task Force (FATF) officially removed Nigeria from its Grey List of jurisdictions under increased monitoring for anti-money laundering and counter-terrorism financing (AML/CFT) deficiencies.

Nigeria was placed on the FATF Grey List in February 2023 after regulators identified gaps in its AML/CFT framework. This placement imposed a “reputational tax” on Nigerian businesses and wealth creators. International banking partners and global investors applied stricter due diligence checks on entities from grey-listed jurisdictions, which increased transaction fees, caused payment delays, and sometimes led international partners to exit transactions entirely.

To secure its exit, the Nigerian government worked closely with the Inter-Governmental Action Group Against Money Laundering in West Africa (GIABA) and the FATF to implement a comprehensive 19-point action plan. Key reforms included:

• Enacting Key Legislation: Passing and enforcing the Money Laundering (Prevention and Prohibition) Act 2022 and the Terrorism (Prevention and Prohibition) Act 2022.
• Enhancing Beneficial Ownership Transparency: Operationalizing the public Beneficial Ownership Register under the Corporate Affairs Commission (CAC), making it much harder to use corporate shells for illicit financial flows.
• Strengthening Institutional Coordination: Improving information sharing and enforcement outcomes among the Central Bank of Nigeria (CBN), the Nigerian Financial Intelligence Unit (NFIU), and the Economic and Financial Crimes Commission (EFCC).
• Supervising High-Risk Sectors: Tightening compliance guidelines for Designated Non-Financial Businesses and Professions (DNFBPs), including legal practitioners and trust administrators.

The official delisting on October 24, 2025, has significantly improved Nigeria’s standing in international financial markets. It has restored global investor confidence, lowered transaction costs, and simplified cross-border capital transfers.

However, for legal practitioners and wealth advisors, the exit does not mean a return to past practices. Instead, it signals the transition to a more stringent, enforcement-driven compliance environment. Regulatory bodies have shifted from simple, checklist-based compliance to risk-based, responsibility-driven oversight. Wealth management attorneys must now perform rigorous client due diligence and maintain complete transparency when designing cross-border asset protection structures to meet these high regulatory standards.

Fiscal Integration: Trust and Wealth Taxation Under the Nigeria Tax Act (NTA) 2025

The design of wealth preservation structures must be aligned with domestic tax laws. The tax treatment of trust income, asset transfers, and offshore distributions in Nigeria is governed by the Nigeria Tax Act (NTA) 2025, which introduced a comprehensive framework designed to prevent tax leakage, artificial income splitting, and the use of trusts as passive, tax-opaque holding shells.

The NTA 2025 outlines specific statutory mechanisms and compliance responsibilities for each party to a trust structure:

1. The Fiduciary Taxation of Trustees

Under the NTA 2025, a trust is recognized as a distinct taxable arrangement, with the trustee serving as the primary point of contact for tax administration. Trustees are personally responsible for computing, reporting, and filing tax returns on income earned by the trust.

• Representative Capacity Assessment: The income earned by the trust is assessed in the hands of the trustee. This includes income from both local and offshore sources, reflecting Nigeria’s expanded approach to taxing the worldwide income of residents.
• Deductions and Net Trust Profit: Trust income is calculated using standard individual income tax principles. Legally authorized administrative expenses and fixed annuities paid to beneficiaries are deductible from the trust’s gross income.
• Asset Disposals: Trustees bear primary responsibility for reporting and paying capital gains tax on the disposal or transfer of trust assets, which must be declared at fair market value. Crucially, the NTA clarifies that gains from asset disposals are ultimately attributed to the beneficial owner, ensuring that the final tax liability rests with the actual economic recipient of the gain, even when the trustee acts as a legal intermediary.

2. The Settlor “Look-Through” Rule

To prevent the use of trusts for artificial income splitting among family members to lower personal tax liabilities, the NTA 2025 establishes a robust anti-avoidance “look-through” rule.

• Retention of Control: Where a settlor retains significant control over the trust assets—such as holding powers of revocation, direct entitlement to trust income, or the ability to dictate trustee decisions—the trust’s legal separation is ignored for tax purposes.
• Direct Taxation: In such cases, the entire income of the trust is deemed to belong to the settlor and is taxed directly in the hands of the settlor at their individual personal income tax rate. Genuine economic separation is now a mandatory prerequisite for a trust to be recognized as a separate taxable entity.

3. Taxation of Beneficiaries and Cross-Border Distributions

Beneficiaries are taxed based on their specific rights and the actual distributions they receive under the trust deed:

• Fixed vs. Discretionary Beneficiaries: Fixed beneficiaries are taxed on their allocated share of the trust’s income, regardless of whether it is distributed. Discretionary beneficiaries, however, are taxed only when physical distributions are actually made to them.
• Undistributed Income: Any trust income that is not distributed or allocated to a beneficiary remains taxable in the hands of the trustee at the trust level.
• Offshore Distributions: Under the worldwide income tax regime, distributions made to Nigerian resident beneficiaries from offshore trusts, foreign bank accounts, or overseas corporate assets are fully subject to domestic taxation. To mitigate the risk of double taxation, the NTA 2025 provides proportional tax relief where foreign taxes have already been paid on the offshore sourced income.

4. Broad Fiscal Adjustments Under the NTA 2025

Beyond trust-specific provisions, the NTA 2025 introduces several structural tax changes that impact high-earning individuals and corporate groups:

• Progressive Individual Tax Bands: Section 58 of the Act establishes a tax-exempt threshold of ₦800,000 for low-income earners, while increasing progressive individual tax rates for high-income earners up to a maximum rate of 25%.
• Corporate Tax Differentiation: Small companies (defined as having a gross annual turnover of ₦100 million or less and total fixed assets not exceeding ₦250 million) are taxed at 0%, while large companies are taxed at a standard corporate rate of 30%.
• Tightened Expense Deductibility: Section 20 of the NTA limits corporate expense deductions strictly to those “wholly and exclusively” incurred in the production of income. The historical principles of “reasonably” and “necessarily” incurred have been removed, a shift aimed at reducing administrative disputes and litigation between corporate taxpayers and the FIRS. Furthermore, no deductions are allowed for royalties, licensing fees, or similar payments made to non-resident partners for the use of patents or intellectual property rights.
• Anti-Base Erosion and Deemed Distributions: Adopting global standards aligned with the OECD BEPS Pillar 2 framework, the NTA enforces a 15% minimum Effective Tax Rate (ETR). If a foreign subsidiary of a Nigerian parent company pays an ETR of less than 15% in its local jurisdiction, the parent company must pay a top-up tax in Nigeria. Additionally, if a foreign subsidiary retains profits that could have been distributed without hurting its operations, those profits will be deemed distributed and taxed in Nigeria, removing the deferral advantages often used in offshore tax planning. Chargeable assets under Section 34 are also expanded to explicitly include shares, options, debts, digital assets, and foreign currencies.

Nuanced Conclusions and Strategic Outlook

Securing wealth across borders in West Africa requires balancing international wealth structures with strict domestic compliance. As the asset management environment in Nigeria matures, and with the nation’s successful removal from the FATF Grey List, HNWIs have a clear path to formalizing and protecting their legacies.

However, this shifting landscape means that passive or opaque structures are no longer viable. The Nigeria Tax Act 2025 and global transparency initiatives demand active, well-documented, and legally robust arrangements. To achieve effective wealth preservation, West African HNWIs must work with multidisciplinary advisors to design structures that align local family governance with global compliance standards. By utilizing tools like irrevocable trusts, engaging regulated corporate trustees, and maintaining proactive compliance, families can successfully protect their wealth from economic shocks and preserve their legacy for generations to come.

This CNN feature profiles Bimpe Nkontchou, a Nigerian-born lawyer and Managing Principal at W8 Advisory. Operating out of London, her firm delivers tailored wealth management, cross-border legal advice, and succession planning for high-net-worth individuals across the African continent.

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