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Trusts in Kenya

REGISTRATION OF TRUSTS IN KENYA

Introduction

A trust is a legal relationship that exists between a Settlor (creator of the trust), a trustee (a protector of the trust) and a Beneficiary, established through a written document outlining with certainty the Trustee’s duties and powers, the trust property, the settlor and the beneficiary. This document is known as a trust deed. These roles can be held either by individuals or legal entities.

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 pursuant to 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 liability.
  2. Registration under the Trustee (Perpetual Succession) Act: A trust registered under the Trustee (Perpetual Succession) Act achieves the status of a body corporate, thereby acquiring a distinct legal persona. The trust is capable of holding property in its own name, initiating legal actions, being subject to legal proceedings, and enjoys perpetual succession.

The registration process:

  1. Preparation of a Trust deed

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

  1. Payment of Stamp duty.

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

  1. Lodging the Trust Deed for registration

Upon assessment and payment of the stamp duty, the Trust Deed is subsequently submitted for registration through the Business Registration Service portal. It is crucial to emphasize 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 22nd May, 2024.

  1. 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 therein belonging to or held by any person or persons for the benefit of the trust concerned.

Once the registration and incorporation of the trust is complete, it is important 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.”

Conclusion

Trusts may be employed individually or as part of a comprehensive strategy for various purposes including, but not limited to, succession planning, tax planning, confidentiality, and asset protection, among others.

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“The information provided in this article is intended for general legal advice and does not constitute legal advice for any specific transaction or case. Since each transaction presents a unique legal context, it is advisable to retain a legal adviser for specific transactions.”

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