How to Register a Family Trust in Kenya

How to Register a Family Trust in Kenya

A Family Trust is a legal arrangement where a settlor (the person creating the trust) transfers their assets to trustees. The trustees manage these assets for the benefit of the beneficiaries. The beneficiaries, often family members, benefit from the trust without owning the assets outright. This is one of the forms of Estate Planning in Kenya. 

In a Family Trust, assets only become the beneficiaries’ property when the trustees transfer them. This offers continuity and security, as it ensures that the assets are passed down to future generations.

Unlike a will, a Family Trust allows for more control over how assets are managed, ensuring capable people administer the estate.

Key Parties in a Family Trust

1. Settlor: The person who creates the trust and transfers assets to the trustees.
2. Trustees: Individuals or entities responsible for managing the trust’s assets.
3. Beneficiaries: The individuals or groups who will benefit from the trust, including potentially the settlor.
4. Protector: A party with the power to oversee trustees and protect the assets. The protector is not common in Kenya but is gaining recognition.

How to Set Up a Family Trust in Kenya

1. Letters of Wishes: This document outlines the settlor’s intentions for administering the trust. While not legally binding, it guides trustees in managing the trust.
2. Trust Deed: This is the legal document that formally creates the trust, outlining the roles and responsibilities of the trustees, settlor, and beneficiaries. Both the settlor and the trustees sign the deed to show mutual agreement.
3. Transfer of Assets: The trust is only functional once assets are transferred into it. The process varies depending on the asset type, such as property or shares.

How to Register a Family Trust in Kenya

To establish a Family Trust in Kenya, follow these steps:

1. Drafting the Trust Deed: This deed must include the trust’s objectives, the names of the trustees, and the assets held under the trust. The Trust Deed is the governing document for the trust. Consult a legal expert to draft it for you.
2. Payment of Stamp Duty: After signing the trust deed, submit it for stamp duty payment.
3. Registration: There are two types of registration:
   • Under the Registration of Documents Act (RDA): This creates an unincorporated trust, which can operate but does not have legal personality.
   • Incorporation under the Trustees (Perpetual Succession) Act (TPSA): This step grants the trust legal personality, allowing it to own property and enter into contracts in its name.

Requirements for Registering a Family Trust in Kenya

The Trust will usually contain the following clauses:

• Trust Name
• Main Objective (e.g., education, medical, or beneficiary support)
• Settlor’s Information (Full name, ID/passport copy, or company registration)
• Physical Address of the Trust
• Trust Deed
• Beneficiaries (Details on who will receive assets)
• List of Assets held by the trust
• Trustees’ Details (Names, addresses, PIN certificates, ID copies)
• Administration Details (Appointment of trustees, operation of accounts, and meeting procedures)

Why Choose to Register a Family Trust in Kenya?

1. Avoid Probate: Trusts allow assets to pass to beneficiaries without going through the lengthy probate process, potentially saving up to 7% of the estate’s value.
2. Privacy: Trusts protect your assets from becoming part of the public record, offering confidentiality.
3. Control Over Inheritances: You can set conditions for when and how beneficiaries receive their inheritance.
4. Asset Protection: Irrevocable trusts protect assets from creditors and lawsuits.

How long does it take to establish a family trust?

It can take approximately 12-36 months to establish a family trust in Kenya. The Business Registration Service in Kenya is in charge of incorporation of trusts in Kenya.

If you’re interested in registering a Family Trust in Kenya, contact us at info@swkadvocates.com for assistance.