Introduction
Probate valuation is a critical aspect of estate administration in Nigeria, ensuring that assets are accurately valued for inheritance and tax purposes. This article examines the current practices, issues, solutions, and recommendations for probate valuation in Nigeria. Probate valuation is a statutory requirement for estate administration in Nigeria, governed by laws such as the Estate Duty Act and the Probate (Procedure) Rules. The process involves determining the fair market value of a deceased person’s assets, including real estate, to facilitate inheritance and tax obligations. Issues in Nigerian probate valuation include the lack of precision in valuation methods, reliance on traditional and rigid techniques, and a shortage of reliable market data, which can lead to varying values for the same property. Other problems are the encroachment of unqualified practitioners, potential corruption, and the difficulty in valuing specialized properties or informal settlements.
Operational issues
Lack of precision: Property is unique, making a precise valuation difficult, especially when there is limited transaction data or when valuers use subjective criteria.
Rigid and traditional methods: Valuation practices often rely on traditional methods like the Cost Approach, which can lack the analytical depth of contemporary techniques.
Unqualified practitioners: Competition from unqualified individuals who “encroach” on the roles of Estate Surveyors and Valuers creates an unreliable market and issues with practice quality.
Data and market-related problems: Unreliable data of market records is a significant issue, contributing to inaccurate valuations.
Informal settlements: Properties in informal settlements or those without proper documentation complicate the valuation process and increase risk.
Difficulty valuing specialized assets: Valuing specialized properties can be challenging due to a lack of information and the need for specialized knowledge.
Culture and beliefs
Culture and beliefs in Nigeria significantly affect probate valuation by influencing property distribution, often leading to conflicts and skewed valuations. Patriarchal systems that favor male heirs, such as primogeniture, can result in assets being undervalued or ignored by the family to favor the eldest male. Additionally, religious and ethnic customs can dictate specific valuation practices, such as those for community property like shrines, which require specialized assessment to reflect their cultural rather than market value.
Effects of culture and beliefs
Gender and primogeniture: Many traditional cultures prioritize the eldest male, which can influence the valuation and division of assets. This can lead to the exclusion of daughters and other female family members, who are legally entitled to inherit but are often barred by cultural practices. Some valuations might be conducted with the assumption that certain assets will be passed to male heirs, which can affect their market value or distribution.
Customary vs. statutory law: Customary laws often supersede statutory laws in intestate succession, meaning the deceased’s wishes as stated in a will may be disregarded in favor of traditional practices. This can lead to disputes among family members who disagree on the appropriate method of inheritance, such as the Yoruba “Idi Igi” (per stirpes) versus “Ori Ojori” (per capita) methods.
Valuation of culturally significant property: Property with social and cultural value, such as a shrine or ancestral land, may have non-market values that need to be assessed using specific methods. This requires a different approach than traditional market valuation, as the cultural significance is a key factor in determining its true worth.
Impact on valuation practice: Cultural beliefs can create an environment of pressure on valuers to adjust final reports to satisfy the client’s expectations, leading to a less objective and potentially skewed valuation. The lack of transparency, reliance on customary rules, and a preference for certain distribution methods can result in inconsistent and inaccurate valuations.
Conflict and family dynamics: The propagation of traditional beliefs, such as primogeniture, can lead to family discord and conflict when those beliefs are not aligned with statutory laws or individual needs. This can result in an increased number of disputes and challenges to the probate valuation process.
Islamic laws and beliefs: Islamic laws and beliefs in Nigeria primarily affect probate valuation by prioritizing the settlement of debts and funeral expenses before asset distribution, mandating distribution according to pre-determined shares (mirath), and limiting a testator’s ability to will away the entire estate. While traditional valuation methods may exist, Islamic inheritance principles require that valuation consider the mandatory payment of debts and obligations first. The prescribed shares for heirs can influence how assets are valued and divided, with specific rules for family members like multiple wives.
Impacts on Probate Valuation
Prioritizing debts and expenses: Before any valuation for the purpose of inheritance is done, all of the deceased’s debts and funeral expenses must be settled.
Mandatory distribution: The estate is distributed according to Islamic inheritance law (mirath), which allocates specific, predetermined shares to heirs, such as a mother receiving one-sixth if there are children, or one-third if there are no children and no brothers or sisters.
Wills limited by law: A will cannot disinherit an heir; it can only dispose of a maximum of one-third of the estate for purposes outside of mandatory inheritance rules. This means the valuation for the remaining two-thirds is governed strictly by Islamic inheritance law, not the will.
Impact on valuation specifics: The valuation must account for the specific distribution rules. For example, a deceased’s multiple wives will share one-eighth if there are children, which will require a valuation of their collective share and then division among them,
Potential challenges
Legal pluralism: The co-existence of Islamic law and secular laws can create confusion and conflict regarding which law should govern the estate, potentially impacting valuation practices.
Cultural practices: Some cultural practices may conflict with Islamic law, creating challenges in applying the law uniformly.
Valuation of specific assets: The valuation process may need to consider the specific nature of certain assets and how they are handled under Islamic law. For instance, certain assets may be handled differently in the context of a Sharia-compliant will versus a secular one. Culture and beliefs significantly impact government probate and estate duty collection by influencing how individuals plan their estates, their attitudes toward taxation, and the legal framework for inheritance. These factors can lead to tax avoidance strategies, non-compliance, and differences in the application of statutory versus customary laws.
Impact on Estate Planning and Compliance
Reluctance to Plan: A cultural “death-denying” attitude or a general discomfort in discussing end-of-life matters can lead to procrastination in writing wills or setting up trusts. This results in dying “intestate” (without a will), which forces the estate into the statutory probate process, which may or may not align with the individual’s wishes or optimize tax outcomes.
Use of Avoidance Strategies: Wealthy individuals, particularly in cultures with high inheritance taxes, are more likely to use sophisticated tax planning strategies, such as setting up trusts or gifting assets during their lifetime, to reduce the final tax burden on their heirs. This reduces the potential revenue from estate duty.
Cultural Resistance: In some contexts, strong cultural and religious norms regarding inheritance are resistant to state-imposed laws and taxes. This can lead to non-compliance or a preference for informal wealth transfer systems that bypass government oversight and taxation entirely.
Influence on Legal Frameworks
Customary vs. Statutory Law: In many jurisdictions (like Nigeria), a dual legal system exists where customary or religious law may apply to succession if a person dies without a will. These traditional laws often conflict with statutory laws regarding equal distribution (e.g., favouring male primogeniture or specific family branches) and may not be structured to accommodate modern tax regulations. This multiplicity of laws creates complexity in determining the correct tax liability and collecting dues.
Lack of Uniformity: Differences in how various cultures and regions administer estates can lead to inconsistencies in the application and enforcement of probate and tax laws. Inefficiencies, such as bureaucratic delays and a lack of public awareness, further exacerbate non-compliance and evasion.
Conclusion
In conclusion, probate valuation practices in Nigeria play a vital role in estate administration, requiring standardized practices and skilled professionals to ensure accuracy and integrity. Addressing current challenges, such as limited expertise, inadequate data, and bureaucratic hurdles, will enhance revenue collection and promote trust in Nigeria’s property market. Cultural factors significantly influence inheritance practices and tax compliance, making it essential for governments to consider these dynamics when implementing reforms. By streamlining processes, leveraging technology, and building capacity, Nigeria can improve probate valuation, increase revenue, and foster a more transparent and efficient property market, ultimately driving economic growth and development
ESV Augustine Oshikoyejo Osho
Membership M02508
Phone no 08028397946
Email: koyejoosho@yahoo.com
Office Address: Plot 267, Etim Inyang Crescent, Victoria Island, Lagos
