WE had previously discussed the issue of the requirement of a will admitted to probate for the payment of death benefits under the Contributory Pension Scheme (CPS). In view of several complaints we have received on delays in the payment of death benefits under the CPS and the challenges we have been encountering in assisting families of deceased employees to procure letters of administration, we have decided to once more discuss the place of a will in the payment of death benefits.
Black’s Law Dictionary defines ‘will’ as the disposition of real and personal property to take effect after the death of the testator. When the will operates upon personal property, it is sometimes called a testament, and when upon real estate, a devise; but the more general and more popular denomination of the instrument, embracing equally real and personal estate, is that of last will and testament. Last will is the most recent will of a deceased; the instrument ultimately fixing the disposition of real and personal property at the testator’s death.
Death is an inevitable part of life. As birth is the beginning of life, so also is death the ending of life. Every employee in the public or private sector who is covered under the Pension Reform Act (PRA) 2014, on retirement, is entitled to pension, either through programmed withdrawal or annuity after receiving the initial lump sum payment as provided for in Section 7 of PRA 2014. Unfortunately, some employees die before they get to retirement age or die as pensioners, leaving behind accrued benefits under the CPS, known as death benefits.
Section 8 of PRA 2014 provides that where an employee dies, his entitlements under the life insurance policy maintained under Section 4(5) of the Act, which we discussed extensively last week, shall be paid by an underwriter to the named beneficiary in line with Section 57 of the Insurance Act.
It must be noted that letters of administration cannot be transferred or inherited. Therefore, where an Administrator mentioned in a letter of administration dies, the deceased Administrator can only be substituted through a ruling of a court of competent jurisdiction, in this case the High Court of the State where the letter of administration was issued in favour of the person seeking to substitute the deceased Administrator.
Sub-section 2, states that upon receipt of a valid will admitted to probate or a letter of administration confirming the beneficiaries under the estate of the deceased employee, the Pension Fund Administrator (PFA) shall, with the approval of PenCom, release the amount standing in the retirement savings account (RSA) of the deceased to the personal representative of the deceased or to any other person as may be directed by a court of competent jurisdiction, in accordance with the terms of the will or the personal law of the deceased employee, as the case may be. These provisions are also applicable to deceased pensioners under programmed withdrawal.
In line with the provisions of Section 8 of the Act, the only document that can substitute a will admitted to probate is a letter of administration. A letter of administration in Nigeria is the legal authority granted by a probate court to a person(s) called administrator(s) or administratrix to administer the estate or property of a person who died intestate. A person is said to have died intestate when the person dies without leaving behind a will. When the letter of administration is not granted, the properties of the deceased are deemed to be vested in the Chief Judge of the state.
Section 4(1) of Administration of Estate Law, Lagos State, laid down the persons that can apply for a grant of letter of administration in order of priority and where they are of equal priority; the court has discretion to select any who in its view is most suitable. The persons are generally called NEXT-OF-KIN of the deceased. Thus generally, it is the next-of-kin of the deceased that is entitled to letter of administration in the following hierarchy: Surviving spouse(s) of the deceased, children of the deceased, parents of the deceased, brothers or sisters of the deceased of full blood or the children of such brother or sister who died in the life time of the deceased, brother or sister of the deceased of half-blood. Or children of brother or sister of such brother or sister who died in the life time of the deceased, grandparents of the deceased and uncles and aunts of full blood or their children. Grants of letter of administration would not be granted within three (3) months in Lagos State from death of the testator where he died intestate and every application of grant of letter of administration are published to allow for objections and filling of caveats.
It must be noted that letters of administration cannot be transferred or inherited. Therefore, where an Administrator mentioned in a letter of administration dies, the deceased Administrator can only be substituted through a ruling of a court of competent jurisdiction, in this case the High Court of the State where the letter of administration was issued in favour of the person seeking to substitute the deceased Administrator.
Sadly, most people in Nigeria don’t like talking about their death or addressing their mortality no matter how educated they are. They see it as a taboo or lack of faith to live as long as Methuselah. To compound matters, the very people who are going to suffer when a breadwinner dies intestate, are the very ones who most times discourage their breadwinners from talking about their death or addressing their mortality. One has heard relations rebuke their breadwinners with exclamations of “God forbid, nothing is going to happen to you”. They forget that death is inevitable.
There are various fees to be paid before letters of administration application can be evaluated and approved. Once a letter of administration is approved by Probate Registry, an estate fee of 5% to 10% of the value of the estate, depending on the state must be paid to the state government where the letter of administration application is made and approved. However, PRA 2014 exempts pension benefits from taxation. Section 10(3) provides that any amount payable as a retirement benefits under the Act shall not be taxable. There are also legal fees to be paid to lawyer who facilitate the issuance of letters of administration.
Most people have very strong feelings about who should receive their assets after they are gone. But many put off making a will until it is too late. No one wants to think about the time when they will no longer be around, but planning for the inevitable, that is setting down your wishes in the last will; cannot only give you peace of mind, it can also make things easier for a deceased breadwinner’s family and friends. Having a last will in place at the time of an employee’s death is a smart choice.
Sadly, most people in Nigeria don’t like talking about their death or addressing their mortality no matter how educated they are. They see it as a taboo or lack of faith to live as long as Methuselah. To compound matters, the very people who are going to suffer when a breadwinner dies intestate, are the very ones who most times discourage their breadwinners from talking about their death or addressing their mortality. One has heard relations rebuke their breadwinners with exclamations of “God forbid, nothing is going to happen to you”. They forget that death is inevitable.
Apart from the statutory provisions of Section 8 of PRA 2014, some advantages of having a will are that persons can leave property to those they choose. One can chose who should receive what from one’s estate. Without a will, a deceased’s estate is subject to state laws of “intestate”. That means the people the deceased will want to benefit may receive little or nothing while others with whom the deceased has no intention to benefit, will be the ones who will receive the bulk. If the deceased was in the process of a divorce but it had not been finalised, without a will, the deceased’s estranged husband or wife could make a claim on the deceased’s estate.
A will allows a person to choose a guardian for the children and set aside funds to make sure of their support and comfort. A person can choose executor(s), who will make sure all the deceased bequests are carried out. A will gives a deceased complete control over who this person will be.
Circumstances change, and so can ones will. Through a “codicil,” you can amend any provision of a will at any time so that it better reflect one’s most current wish and assets. If one finds that a will no longer represents the person’s interests, the person can revoke it entirely and start over.
Creating a last will can be surprisingly affordable, particularly if ones finances, assets and beneficiaries are straightforward. A will reduces the inconvenience and hardship the relations who are already emotionally and most times financially traumatised as a result of losing their loved one and breadwinner, as payment of death benefits to next-of-kin of the deceased will be quicker than those of a deceased who died interstate. Obtaining a letter of administration can be cumbersome as a result of the lengthy process and sometimes costly to next-of-kin already cash strapped. It can be a long process, which at times can be up to a year.
It is therefore strongly advisable for all employees, and pensioners, to have a will as against putting one’s loved ones into the stress of going for a letter of administration when the inevitable death occurs either during the cause of one’s working life or as a pensioner. I therefore, suggest that Human Resources departments of all organisations under the CPS and trade unions should educate their employees and members respectively, on the need to have wills.
