Registering a Trust in Kenya

Introduction
A trust is a legal obligation where trustees are required to manage assets they control (known as trust assets) for the benefit of designated individuals (beneficiaries), following the guidelines set out in the Trust deed.

It is also referred to as a fiduciary relationship, where the settlor (the person establishing the trust) grants a trustee (another party) the authority to hold ownership of property or assets for the benefit of a third party, known as the beneficiaries.

In Kenya, trusts are established under the Trustees (Perpetual Succession) Act (Cap. 164 of the Laws of Kenya) and are also governed by additional laws, such as the Income Tax Act and the Tax Procedures Act, which influence their operation.

Process of registering trusts in Kenya

The registration of trusts in Kenya involves a structured process governed by the Trustees (Perpetual Succession) Act and the Registration of Documents Act. Below is a detailed overview of the steps involved in establishing and registering a trust.

Key Steps in the Registration Process
a. Preparation of the Trust Deed

The trust deed is a fundamental document that outlines the objectives of the trust, identifies the trustees and beneficiaries, and specifies the powers and duties of the trustees. It should also detail the assets to be included in the trust.

b. Payment of Stamp Duty

After drafting the trust deed, the next step is to pay the required stamp duty, which is necessary for the legal recognition of the trust deed.

c. Registration at the Lands Registry:

The trust deed must be registered at the Lands Registry under the Registration of Documents Act (Chapter 285). This step does not confer corporate status to the trust but allows it to operate as a simple trust. This registration typically takes 1-3 weeks.

d. Incorporation under the Trustees (Perpetual Succession) Act:

Following the initial registration, a petition for incorporation must be lodged with the Principal Registrar of Documents. This petition includes a certified copy of the trust deed and other necessary documentation. The incorporation process grants the trust a separate legal identity, allowing it to own property and enter contracts in its own name. This step may take 60-90 days for approval. This process occurs in the Business Registration System and is done online through manual.brs.go.ke.

The following persons can make an application for incorporation of a trust on behalf of the trust;

i. The Settlor,
ii. Trustee,
iii. Enforcer, or
iv. An Advocate

During the process of incorporation, the following information is needed:

1. Proposed name which must have the word ‘Registered Trustees’ at the end;
2. Objects or purpose of the trust;
3. A duly completed application for incorporation in the prescribed form (Form TR1) (available on brs.go.ke);
4. A Petition to have the trust incorporated (the document must be commissioned by a Commissioner for Oaths);
5. Duly Registered trust deed (registered under RDA with the Ministry of lands) or constitution;
6. Statement of donor funding/commitment;
7. Title deed belonging to the trust or one of the trustees or other documents of asset or property ownership.
8. Current search indicating ownership position of assets listed;
9. Financial statement of the organization or of one trustee such as a current bank statement;
10. Minutes appointing the Trustees;
11. Brief Summary of the Trust (should not exceed 1 Page);
12. Curriculum vitae of the trustees or employees;
13. Diagrammatic representation of the common seal;
14. Certified copies of ID, KRA Pin and passport photos of the Settlors, Trustees, beneficiaries and enforcers if any.

e. Post-Incorporation Activities:

Once incorporated, the trust gains a separate and distinct legal status. This means that it can operate as a body corporate, it can own property in its own name, has perpetual succession and can sue or be sued in its corporate name. The trustees can manage and hold property for the benefit of the trust beneficiaries according to the terms of the trust deed.

Types of Trusts

In Kenya, trusts can be categorized into various types, including:

Family Trusts:

A family trust is a type of trust, whether established during a person’s lifetime (living trusts) or through their will (testamentary), and can be either partially charitable or entirely non-charitable. It is created or registered by one or more individuals, either together or separately, to plan or manage their personal estate. Often it is established for wealth preservation and management for future generations.

Charitable Trusts:

A charitable trust is established solely to support the relief of poverty, the advancement of education, religion, human rights, and fundamental freedoms, or to protect the environment, as well as any other purpose that benefits the general public. These are set up for charitable purposes and often enjoy tax exemptions.

Non-Charitable Trusts:

A non-charitable is a trust created for a specific purpose, whether partly charitable or not, provided that the purpose/objects of the trust are not illegal.

Investment and Pension Trusts:

These are designed for specific investment or retirement purposes.

Conclusion

The registration and incorporation of trusts in Kenya is a process that requires careful documentation and adherence to legal requirements. By following these steps, individuals can establish trusts that serve various purposes, including estate planning and asset protection, thereby ensuring effective management of their assets for the benefit of designated beneficiaries.

The opinion expressed here in is purely that of the author. For further inquiries please contact our office on 0742028500