Inheritance Tax in Nigeria: A Guide Against Excess Probate Tax Charges
This is a guest article by Ferdinand Okekeobi
Inheritance tax in Nigeria – This topic was borne out of various knowledge gaps exhibited by Nigerians on the issue of probate and its related topic.
This issue manifests itself both in a testate and Intestate Situation.
The degree of these knowledge gaps manifestations is more prevalent in an Intestate Situation.
For the purpose of emphasis, kindly be informed that testate situation applies to cases where the testator also known as Executor dies with a will in place.
Meanwhile Intestate situation applies in cases where the deceased dies without a will in place.
One can now see how the later poses more challenge than the former.
For one to fully understand Probate Tax in Nigeria, there are other terminologies that such person must first get acquainted with which are:
This will now take us to the definition of Inheritance Tax in Nigeria.
INHERITANCE TAX IN NIGERIA:
This includes all the deductibles, charges, fees and payments to governments through its Ministries, Departments and Agencies on inherited Estates by the Beneficiary.
Prior to the days of Roman Empire and even before that time, taxation in general and estate taxation in particular has been a great income generation source to those governments.
Nigeria as a country is not exempted from these deductibles, charges, fees and payments hence the reason for the topic Inheritance Tax in Nigeria.
Below are applicable deductibles, charges, fees and payments in Nigeria under this topic; a guide against excessive probate tax charges in Nigeria:
- Inheritance Tax
- Probate Search Charge
- Letters of Administration Confirmation Charge
- Value Added Tax (VAT) on all these taxes.
- Will Deposit fee.
- Will Call-up fee
We made reference earlier that all issues with probate are more difficult in an Intestate Situation (where Intestate means that the deceased died without a will).
This is so because the person that died did not leave any legal and formal written statement that speaks his mind upon his demise.
To correct this mistake, the family of the deceased will first seek the acquisition of Letters of Administration.
This Letters of Administration will be sought by the living spouse of the deceased; the kids of the deceased; the relatives of the deceased person should the deceased die without raising a family of his own.
The testimony of the Next of Kin is needed too for clarity of the deceased person’s intention which will now form his will.
After this, the Letters of Administration will be issued and a flat fee of 10% charged on the said estate under claims.
This 10% charged on the Estate is what is referred to as Inheritance tax.
By definition, Inheritance tax is the 10% charged to the Beneficiaries that inherited an Estate on the said Estate(s) they took over its administration.
This aspect of Probate Tax in Nigeria is the most practised and most applicable. All cases of Estate Administration in Nigeria pass through this particular taxation.
PROBATE SEARCH CHARGE:
Probate Search Charge is the aspect of Probate Tax in Nigeria that sees to the fees charged on legal verification of the genuineness of any reported death case.
This is a mandatory Bank requirement when one dies without which access to the financial Estate of the deceased will not be granted to the beneficiaries.
When someone dies and it is reported to the Bank, the bank adopts two processes in ascertaining the genuineness of the death thus reported.
These processes include:
- Probate Search
- Confirmation of Letters of Administration
This Probate Search is what we are currently discussing.
The Bank will engage the services of an Independent Lawyer for clarity of purpose.
This Lawyer will visit the Probate Registry as described above and independently investigate the authenticity of the death claims.
If claims are true, the Lawyer will write to the Bank with his letter head paper on the subject.
The Lawyer will give details of his visit and must end it with a clause/phrase that goes this way, “The person in question is confirmed Deceased”.
While doing this, the Lawyer incurred some cost (about N500.00) at the Probate Registry which he will add to his processing fee and his professional fee and present to the Bank.
No matter what the Lawyer spent, the standard charge for this is N10,000.00 which will be debited from the deceased persons account with the concerned bank.
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The Bank will take N2,500.00 while the Lawyer takes N7,500.00.
Some Banks takes N1,000.00 while the Lawyer takes N9,000.00
This depends on the negotiation between the Bank and the Lawyer provided that the deceased account is not charged with anything more than N10,000.00
This aspect of Probate Tax in Nigeria is most adoptable and safe since it was done by an independent person.
LETTERS OF ADMINISTRATION CONFIRMATION CHARGE:
As stated in Probate Search, the Letters of Administration Confirmation Charge is one of Inheritance Tax in Nigeria administered by Probate Registry.
This is a mandatory Bank requirement when one dies which without, access to the financial Estate of the deceased will not be granted to the beneficiaries.
It is usually seconded to Probate Search.
Upon the receipt of Letters of Administration from a client, the Branch of the Bank that received the Letters of Administration will call on its legal team for advice.
As expected, the Legal team will ask them to proceed with the confirmation of the Letters of Administration.
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A letter will be drafted to the Registrar of the Probate Registry for the purpose of this confirmation.
At probate, the Registrar will simply stamp the Letters of Administration with the Confirmation Stamp of the Registry, sign off and Register same.
The Bank will be charged with the sum of N500.00 for this confirmation and receipt issued.
The Bank will add the total cost of all the expense incurred during this confirmation which include transportation costs and debit it to the deceased customer’s account.
This aspect of Probate Tax in Nigeria is the next alternative in account opening in Nigeria beside Probate Search.
VALUE ADDED TAX:
Simply put Value Added Tax (VAT) is the 5% of the face value of these fees charged on Estate account in the course of implementing Inheritance tax in Nigeria.
Please note that Value Added Tax is not only peculiar to Inheritance Tax in Nigeria.
It is equally deducted on many other fees on various ranges of items – both domestic and foreign.
This calculated 5% based Value Added tax is equally charged on the deceased customer’s account.
WILL DEPOSIT FEE:
This is the amount paid by the depositor of a will otherwise known as the Executor or the Testator in the course of depositing a will.
This is paid while he was alive and it is receipted too.
This receipt bears a reference number which must be presented by the deceased family up on the demise of the Testator/Executor.
WILL CALL UP FEE:
This is the amount paid by the family of the deceased person in other to call a will into action.
When the Testator dies, the family approaches the Probate Registry with the receipt that contains the reference on it.
They are expected to pay a certain fee. This fee and the reference will be used to get the approval of the Probate Registrar and the presiding Judge of the Probate to call the Will into action.
At this state, the will be read to the hearing of all.
Please take this topic very serious. Inheritance Tax in Nigeria must be mastered by all for Knowledge against fictitious charges, thus a guide against excessive probate tax charges in Nigeria.
Ferdinand Okekebi is an avid writer who believes that women should be allowed their rightful place unconditionally in a modern society. Checkout his website: Respect the woman initiatives
Raphael Orji is a freelance writer, professional blogger and a content marketing consultant. I work with small businesses, startups and entrepreneurs in building their brand image with high quality blogging and content marketing strategy.
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