What is a Trust Lawyer?

Trust lawyers in Kenya specialise in laws related to trusts. A trust is a tool used in estate planning. In a trust, a relationship is created at the direction of an individual called a trustor or settlor. A trust directs one or more individuals, called the trustees, to hold the trustor’s property subject to specific duties to use and protect the property for the benefit of other individuals, known as beneficiaries.

Trusts are created for many different reasons. These may include the financial benefit of the individual who made the trust, financial support for a surviving spouse or minor children, or a charitable purpose.

Why is it Important to Have Trust Lawyers in Kenya?

There are many different types of trusts. A trust lawyer can help determine which may be the best fit for your needs.

The most common trusts that may be created include:

• An inter vivos or living trust. This is one of the most commonly created trusts. It is made while the settlor is still alive. It is often designed to be revocable so that the settlor can add or remove property freely during their lifetime;
• A testamentary trust is another joint trust created through a will. It typically becomes effective upon the death of the trust creator;
• A charitable trust is created to transfer and designate an individual’s assets or property to a charitable organisation to benefit a particular charity or organisation. The requirements for creating a charitable trust are usually more relaxed than the requirements for other trusts since they are seen as being a benefit to the public;
• A discretionary trust is a trust that allows the trustee, or the person who manages the trust property, to decide when and how the trust assets and property should be distributed to the beneficiaries;
• A special needs trust is created to provide additional income for an individual with disabilities while still allowing the individual to be able to receive government benefits;
• A spendthrift trust is a trust that is created to provide for the needs of another individual while also preventing the beneficiary from accessing the trust property and protecting the property from their debts or creditors or
• A land trust allows a trustee to hold title to a particular piece of land or property, giving the trustee the power to manage and distribute income.

A trust may contain characteristics of one or more trusts. For this reason, it is essential to consider the reason for creating trust and consult your lawyer to discuss the best solution for your needs.

What are Some Other Issues Related to Trust Law?

There are several requirements for creating a trust that must be satisfied to be valid. These include:

• Intent. The trustor, or creator of the trust, must have intended to create the trust at the time of creation;
• Trustee. An individual must be placed in charge of managing the trust for the beneficiary’s benefit and transferring the assets to the beneficiary. If a specific individual is not designated, the court may appoint one;
• Beneficiary. The trust must state who shall receive the assets in the trust;
• Purpose. There must be a specific purpose for the trust that does not involve illegal activity, and
• Assets. The trust must contain assets, such as money or property. A trust cannot exist without assets.

Some items cannot be transferred into a trust. These include:

• Life insurance policies;
• Retirement accounts;
• Pension plans, and
• Health savings accounts.

These cannot be transferred into a trust because the distribution of these items is determined by the beneficiary named in the individual policies. The named beneficiaries for the policies must be the trustees for these items to be placed in the trust. Your trust lawyer can advise you regarding what property you can put in a trust.

Individuals can be trust beneficiaries if correctly named in the trust document. Many individuals list their spouses, children, and grandchildren as beneficiaries. Beneficiaries must be specific. In other words, they must be ascertainable when the trust is created. The beneficiary’s description must be such that the court can determine who they are. Your lawyer can ensure your beneficiaries are appropriately named.

Registration Of Trusts in Kenya

Introduction

As explained above, a trust is a legal relationship between a Settlor (creator of the trust), a trustee (protector of the faith), and a Beneficiary. It is established through a written document known as a trust deed, which clearly outlines the Trustee’s duties and powers, the trust property, the settlor, and the beneficiary. Individuals or legal entities can hold these roles.

Trusts in Kenya are created under the Trustees (Perpetual Succession) Act (Cap. 164) and the Trustee Act (Cap 167), which set forth the duties and powers of a trustee under a trust.

Registration and Incorporation of a Trust

1. Registration under the Registration of Documents Act: A trust may be registered under the Registration of Documents Act. However, such registration does not attribute corporate status to the trust. As a result, the trustees bear joint and several liabilities.
2. Registration under the Trustee (Perpetual Succession) Act: A trust registered under the Trustee (Perpetual Succession) Act achieves the status of a corporate body, thereby acquiring a distinct legal persona. The trust can hold property in its name, initiate legal actions, be subject to legal proceedings, and enjoy perpetual succession.

The registration process:

Preparation of a Trust deed

The Trust Deed must incorporate fundamental particulars, including the name and objectives of the trust, comprehensive details, including the full names and addresses of the Trustees along with a delineation of their powers, identification of assets intended for inclusion in the trust, and specification of beneficiaries and their respective allocations, if applicable. Upon preparing the Trust Deed, all Trustees must affix their signatures.

Payment of Stamp duty.

Following the preparation and proper execution of the trust deed, the document is subject to assessment for stamp duty.

Lodging the Trust Deed for registration

The Trust Deed is submitted for registration through the Business Registration Service portal upon stamp duty assessment and payment. It is crucial to emphasise that trusts are now registered or incorporated exclusively through the Business Registration Service office, as stipulated in a Notice issued by the State Department for Lands and Physical Planning and the Business Registration Service on 22^nd May 2024.

Petitioning for Incorporation of the Trust deed

Upon registration, an application for the incorporation of the Trust under the Trustees (Perpetual Succession) Act is filed with the Business Registration Services. However, this process typically requires 7 to 10 months to obtain a certificate of incorporation.

Section 3(1) of the Act provides, inter-alia that the trustees who have been appointed by anybody or association established for any religious, educational, literary, scientific, social, athletic or charitable purpose or who have constituted themselves for any such purpose, may apply under the Act, for incorporation.

Further, Section 4 of the Act provides that upon issuance of the certificate of incorporation, it shall confer and vest in the body corporate all movable and immovable property and any interest belonging to or held by any person or persons for the benefit of the trust concerned.

Once the registration and incorporation of the trust are complete, it is essential to note that the burden to prove the existence of such trust lies on the one relying on such existence, as was held in the case of Gikonyo vs Mwangi (Environment and Land Appeal E001 of 2023) [2024] KEELC 221 (KLR) (25 January 2024) (Judgement), wherein the Honorable Court held that:

  “The existence of trust is a question of evidence, and the person claiming it must prove the same.”

What are the Benefits of Hiring a Trust Law Lawyer?

There are many benefits of hiring a trust law lawyer. Whether you have a small or large estate, your trust lawyer can help you determine what type of trust is best for you and what you can put in it. Your lawyer can also explain any potential tax implications and legal formalities relating to the trust to ensure that your estate is protected. They can also advise you on the best avenues to protect your assets for the best interests of your beneficiaries and family.

Remote Trust Lawyers in Kenya

Our lawyers work remotely, which not only helps to reduce costs but also provides us with the flexibility to engage with businesses from anywhere in the world. Rayness Analytica has years of experience in remote engagements, supporting onboarding and managing thousands of remote relationships.

If you have further questions or concerns, please get in touch with us through our Contact Us page. We aim to become your preferred trust lawyers in Nairobi, Kenya.