The Architecture of Wealth
Funding a Trust with a Family Business
Incorporate First, or There Is Nothing to Transfer
The fourth essay in the funding sequence. Land answers to a state register and shares answer to a company register. The family business, in most Nigerian households, answers to no register at all — which is why it is the asset families most want inside the trust and least often succeed in putting there.
Paul Magaji · 17 min
Ask a Nigerian family what the trust is for and the answer will usually be the business. Not the house in Maitama, not the shares, not the policy. The business — the depot, the pharmacy, the block factory, the haulage fleet, the school. It is the thing the father built, the thing the children argue about, and the thing everyone assumes will be settled by the deed.
It is also the asset that most often does not go in. Not for want of intention, and not usually for want of money. It does not go in because, at the moment counsel asks for the documents, it turns out that there is nothing capable of being transferred.
Land is a thing. A share is a thing. A policy is a thing. A business is a description — of premises somebody owns, stock somebody bought, customers somebody serves, a name somebody registered and staff somebody pays. Those components are each capable of being owned. The description is not.
This essay is therefore shaped differently from the three before it. Land, shares and insurance each had one operation to get right. The family business has a prior question, and until it is answered nothing in the funding sequence applies.
What, exactly, are you assigning?
Act One
Four Shapes, and Only One of Them Moves
A Nigerian family business is, in law, one of four things. The family very often does not know which.
It may be a company incorporated under the Companies and Allied Matters Act. If so, the business is a legal person distinct from the family, it owns its own assets, and there is a clean transferable interest in it: the shares. Funding the trust with the business then means funding the trust with the shares, and the operation is the one set out in the essay on funding with shares — the register of members decides. Everything after Act Two of this essay concerns what the shares do not carry.
It may be a registered business name. This is the shape most Nigerian family enterprises actually take, and it is the source of most of the confusion. Registration of a business name records that a named person carries on business under a style; it does not create a legal person. There is no entity. The proprietor owns the assets personally, contracts personally, is sued personally, and dies owning everything the business consists of. A trust cannot be funded with a business name, because a business name is not property. It is a label attached to a man.
It may be a partnership. A partnership is a relationship between persons, and the general law of partnership permits a partner to assign his share — but the assignee takes only the right to receive that partner's profits. The assignee does not become a partner, cannot interfere in the management of the business, cannot require accounts, and cannot inspect the partnership books during the partnership. A trustee holding an assigned partnership share holds an income stream and no control whatsoever. Where the family enterprise is a genuine partnership, the limited liability structures now available under the Act should be considered before anything is settled.
Or it may be nothing at all — an unregistered trade, run on a personal bank account, from premises held under a tenancy in the founder's name, with staff paid in cash. This is more common at real scale than the profession likes to admit, and it is not a defect the trust deed can cure.
Only the first shape moves. The other three must be converted into the first before the funding sequence can begin.
Act Two
The Business That Was Never Separated from the Man
Even where a company exists, the separation is frequently notional. The company was incorporated for a bank account or a tender, and the enterprise carried on as before.
The pattern repeats with unnerving consistency. The factory sits on land held under a Certificate of Occupancy in the founder's personal name. Two of the four trucks are registered to his wife. The generator was bought with company money and nobody recorded it anywhere. The distributorship agreement with the multinational is in the founder's name, not the company's, because that is who the regional manager knew. The lease on the depot was signed by the founder personally. The company's bank account and the founder's personal account have been used interchangeably for eleven years, and the accountant reconciles them by instinct.
Counsel is then asked to put the business into a trust, and discovers that transferring the shares would transfer perhaps a third of what the family means by the business.
This is not a tidying-up exercise to be done after the deed is signed. It is the substance of the funding work, and it is expensive, slow and politically difficult inside a family, because it requires the founder to accept in writing that assets he has always regarded as his are not his. Many funding projects fail precisely here, and they fail quietly: the deed is executed, the shares are transferred, everyone is satisfied, and the separation is deferred to a year that does not arrive.
There is a second and subtler version of the same problem. Some of what the family calls the business is not an asset at all. Where the customers deal with the enterprise because they trust the founder personally, where the licences were granted on his professional qualification, where the credit terms depend on his relationships — that value is attached to a person, and it cannot be assigned to anybody. It can only be transferred by being rebuilt in someone else's name while the founder is still alive to assist. the essay on family business succession on family business succession treats that work; this essay treats only what can be moved by instrument.
Act Three
The Operation, in Six Steps
The sequence assumes the harder and commoner case: an enterprise that is not yet a clean corporate holding, to be brought into a state where a trust can hold it.
Step One
Establish the Legal Shape
Not what the family calls it. What the Commission's record says it is.
Obtain the entity's status report from the Corporate Affairs Commission, together with the certificate, the constitution as currently in force, the register of members and the filing history. Where the enterprise trades under a business name, obtain the business name registration and establish who the registered proprietor is — it is not always the person running the enterprise, and it is sometimes a relative who was available on the day of registration.
Where filings are years in arrears, that is the first item of work, not a footnote. An entity whose returns have not been filed cannot be relied on to complete a transfer on any predictable timetable.
The Verification
the status report from the Commission, dated within the funding window, and the constitution as currently in force rather than as originally registered.
Step Two
Draw the Line Between the Business and the Family
Every asset the enterprise uses, listed, with the name it is actually held in.
Prepare a schedule of everything the enterprise depends on: land and premises, plant and vehicles, stock, receivables, bank accounts, intellectual property, licences and permits, and the material contracts. Against each, record the name in which it is held and the document that proves it. The gap between the column marked used by the business and the column marked owned by the business is the funding project.
Assets held personally must then be transferred into the company by their own proper route. Land goes by the operation in the essay on funding with land, with consent and registration. Vehicles are re-registered. Intellectual property is assigned in writing. The schedule is not a formality: it becomes the trust's asset inventory, and it is the document a successor trustee will need in ten years when nobody remembers what the enterprise consisted of.
The Verification
the asset schedule, with a title document referenced against every line and the discrepancies listed rather than smoothed over.
Step Three
Incorporate or Reorganise, so There Is One Thing to Transfer
This is the funding step, whatever else the plan calls it.
Where the enterprise is a business name, a partnership or unregistered, a company is incorporated and the enterprise's assets are transferred into it. Where a company already exists but the group has grown into several entities and a scatter of personal holdings, a holding company is formed and the operating entities placed beneath it, so that the trust may hold one interest rather than seven.
Two things deserve care here and are commonly rushed. The first is that transferring assets into the new company is itself a set of disposals with its own consequences, and it should be planned as a single transaction with advice taken in advance, not executed asset by asset as convenience allows. The second is that the constitution of the new company is being written at exactly the moment the family has the least appetite for the argument and the most need of it — pre-emption, deadlock, valuation on exit, the directors' power to refuse a transfer, and the position of a corporate trustee as member all belong in the articles now, while there is one shareholder and nothing to fight about.
The Verification
the certificate of incorporation of the vehicle the trust will hold, and the executed instruments transferring the enterprise's assets into it.
Step Four
Value It, and Settle the Tax Position Before Executing
A transfer into a settlement is a disposal even though no money changes hands.
The family business must be valued, for three separate reasons that families tend to collapse into one. It is valued for tax, because a transfer into trust is a disposal even where no money changes hands, and because the Act fixes the consideration at market value where the transfer is not at arm's length. It is valued for fairness, because the trust will hold it alongside other assets and the beneficiaries' relative positions depend on what it was worth on the day it went in. And it is valued for governance, because the trustee cannot discharge a duty of care over an asset whose worth it has never established.
Under the Nigeria Tax Act 2025, which replaced the separate capital gains legislation with effect from the beginning of 2026, a disposal arises wherever a sum is derived from a sale, transfer, assignment or any other disposition of an asset, and the chargeable range expressly reaches incorporeal property, which is where goodwill sits. A transfer into a settlement is therefore a disposal. But the Act does not leave it there. Section 54 qualifies the disposal where it is a gift, so that the transaction takes the character of a gift rather than of an ordinary realisation; and section 36 directs that where a trustee holds for a person absolutely entitled, the acquisition by the trustee is disregarded. Where the transfer is not at arm's length, the same section fixes the consideration at market value — which is why the valuation in this step is not optional. The Act also narrows conveyance-on-sale duty to transfers of an interest in real property, so the transfer of the premises is plainly chargeable while the instruments moving goodwill, intellectual property and the other business assets arguably are not. Arguably, because the Act's schedule still prices instruments of transfer ad valorem by cross-reference to conveyance, and no tribunal has yet construed the new text. Rely on the narrower reading only on advice, and budget for the wider one until the position settles.
That drafting is broad, and its edges have not been tested. The character of the transaction governs — but which transfers into which settlements fall inside the qualification is a question no court has yet answered, and the Act appears content to leave it to them. Treat the outline as settled and the margin as open. No rate, threshold or computation is published in this essay, and none should be relied on from any secondary source; the position must be taken from the Act as in force on the date of the transfer, with advice instructed before execution rather than after assessment.
The Authority
the Nigeria Tax Act 2025 is the operative statute and the earlier capital gains and stamp duties legislation is repealed. The propositions above are taken from the Act as gazetted. The rates, thresholds and reliefs are not published here and require verification against the current text and the Revenue's guidance at the date of the transfer.
Step Five
Clear the Consents the Shares Will Not Carry
The company keeps its contracts. Some of those contracts have opinions about who owns the company.
A share transfer changes ownership of the company, and the company's contracts survive it — which is the great advantage of the corporate route. But a well-drafted commercial agreement anticipates exactly that, and the family enterprise is usually party to several.
Bank facilities commonly contain change-of-control provisions permitting the lender to review, reprice or call the facility where ownership shifts. Distributorship, franchise and supply agreements often prohibit change of control without consent, and the multinational counterparty may treat a trustee shareholder as a material change even where the family's economic position is unaltered. Sector licences may be personal to the holder or subject to regulatory approval on a change of controlling interest. Leases may contain alienation clauses. Some public-sector contracts contain their own consent regimes.
Each of these should be identified from the material-contracts schedule and cleared in writing before the transfer, not discovered afterwards by a lender's letter. The corporate trustee's identity should be explained to counterparties as a governance arrangement rather than a sale, and it is generally worth the conversation happening between the founder and the counterparty rather than between two sets of solicitors.
The Verification
written consents or written confirmations of no objection from every counterparty whose agreement contains a change-of-control or alienation provision.
Step Six
Transfer, Register, and Settle the Founder's Continuing Role
The transfer ends the ownership question and opens the control question.
The shares move by the operation in the essay on funding with shares, and the register of members decides. What remains is the arrangement that most Nigerian trust files omit entirely: what the founder does the day after.
In the ordinary case the founder continues to run the enterprise, and he should do so under an instrument rather than by assumption. A service agreement records his role, his authority and his remuneration. The company's constitution records what the board may do without reference to the shareholder. A reserved-matters schedule records the decisions on which the trustee's consent is required — disposals above a threshold, borrowings, related-party transactions, changes to the constitution. Restrictive covenants record what he may not do with the trade connection if he leaves. And the enterprise's dependence on him should be insured, by a policy owned by the company or the trustee, which is the operation in the essay on funding with insurance.
Without this, the trustee is the registered owner of a business it does not run, cannot direct and did not price, and its fiduciary exposure is real while its control is fictional. That is the position a corporate trustee will decline to accept, and it is right to decline it.
The Verification
the updated register of members, the founder's service agreement, and the reserved-matters schedule signed by the trustee and the board.
Act Four
The Determination
Each essay in this sub-cluster states, at its close, what in the asset class can actually be moved and what cannot. For the family business the determination is a single proposition, and it is the reason the essay exists.
An unincorporated Nigerian family business cannot be funded into a trust. There is no interest to assign, because there is no entity, and the assets are held personally by a proprietor whose death is the very event the trust was created to survive. Incorporation is not preparation for the funding step. Incorporation is the funding step, and everything else in the sequence follows from it.
Two consequences follow that counsel should state to the family in plain terms at the first meeting.
The first is cost and time. Where the enterprise is unincorporated and its assets are scattered across personal names, the funding project is a corporate reorganisation with a trust at the end of it, and it should be budgeted and sequenced as such. the essay on the first year of a trust on the first year of a trust sets the rhythm; this work belongs in the first months, not the eleventh.
The second is that this essay does not decide who runs the business afterwards. Ownership and succession are different questions with different failure modes, and a family that solves the first while ignoring the second has produced a trust that owns an enterprise nobody is competent to direct. That is the subject of the essay on family business succession, and of the second-generation question in the essay on the second-generation question.
Act Five
Five Ways the File Fails
The shares transferred, the assets left behind. The trust owns a company whose factory stands on land still registered to the founder. On his death the land goes to probate and the trust's principal asset is a company with nowhere to trade.
The reorganisation executed without advice. Assets moved into the new company one at a time as documents became available, producing a series of disposals nobody planned and a tax position discovered at assessment.
The facility called. A change-of-control clause in a bank agreement nobody read, triggered by the transfer, at a moment when the enterprise had no capacity to refinance.
The licence that did not travel. The permit on which the enterprise's entire revenue depends was personal to the founder or subject to regulatory consent on a change of controlling interest, and the transfer put it in question.
The trustee holding a business it cannot govern. No service agreement, no reserved matters, no reporting rhythm, no valuation on record. The trustee is liable as owner and powerless as manager, and the first time it is asked to account it has nothing to account from.
A business name is not a thing a trust can hold. It is a name a man trades under, and it dies with him.
Act Six
Which Book Decides
The sub-cluster has been asking one question of every asset class: which register settles the matter when the family's account and the institution's record disagree.
Land answered with the register of the state. Shares answered with the register of members. Insurance answered with the register the insurer keeps at its principal office, and with the date a notice arrived there. The family business answers differently, and the difference is the whole difficulty. There is no single book. There is the Commission's record of the company, the register of members, the register of persons with significant control, the land registry for the premises, the sector regulator's register for the licence, and the counterparties' own records of who they contracted with.
An enterprise is not an asset. It is a position held simultaneously in several registers, and funding a trust with it means moving the family's name out of each of them in turn. A file that has done one and assumed the rest is the ordinary Nigerian case.
You cannot settle a business. You can only settle the things a business is made of, and then only if somebody first put them in one place.