New Legal Regime On Registration Of Family Trusts In Kenya

The Trustee (Perpetual Succession) (Amendment) Act, 2021 (the “Amendment Act), which was signed into law on 23rd December, 2021 has made some amendments to the Trustees (Perpetual Succession) Act (Chapter 164 of the Laws of Kenya) (the Act”) in relation to registration of non-charitable trust and family trust in Kenya. Before this change, there was no comprehensive law that provided for registration of family trusts – through these were still being registered as simple trusts or as family companies. The Amendment Act was preceded by certain changes in tax laws through the Finance Act, 2021 which, inter alia, exempted transfers of property to a registered family trust from stamp duty and capital gain taxes. As stated in the preamble to the Amendment Act, the new legal regime for registration of family trusts in aimed at promoting the usage of family trusts for purposes of preservation of inter-generational wealth. In the new regime, like charitable and non-charitable trusts, family trusts will now be registered or incorporated under the Act. Upon such incorporation or registration, the family trust will:

• become a body corporate by the name described in the certificate;
• have perpetual succession and a common seal;
• have power to hold and acquire property in its own name and by instruments under the common seal to convey, transfer, assign, charge and demise any movable or immovable property or any interest therein;
• have power to sue and be sued in its corporate name.

Features of a Family Trust

As indicated before, a family trust is a legal entity into which one can transfer assets to be managed or administered by trustees on behalf one or multiple family members.

Advantages of Family Trust

Discretionary trusts – the family trust can be restructured as a discretionary trust in which case the trustees will decide when payouts are paid out, how frequently, and any other rules to prevent reckless spending by beneficiaries and generally for the preservation of the family wealth.Please click here to download the alert.

How can we help?

The Wealth and Private Clients team at CM Advocates LLP prides itself in having a wide variety of resources, skills and experience on matters estate planning spanning, trust management and trust administration spanning across the East African Region. It offers an edge to its clients based on its legacy of having structured, re-structured, amended, incorporated several forms of trusts and therefore well capable of guiding you through the process of creating a valid blind trust. Should you have any questions regarding the subject of establishing a blind trust or a family trust, or related topic, please do not hesitate to contact  us on law@cmadvocates.com or dgichuru@cmadvocates.com

Disclaimer

This alert is for informational purposes only and should not be construed as legal advice.