If you are looking at how to set up a trust in Kenya or you want to create a trust, you are on the right page.
This brief guide will help you understand everything you need to know about how to set up a trust fund, the cost, and why it might benefit you.
Trusts are powerful legal tools that can help secure and protect your family’s financial future. By establishing a family trust, you can create a robust strategy for wealth preservation, asset protection, and Estate planning.
Why Create a Trust?
What is a Trust?
A trust is like a special safety box where you can protect your money and belongings for your family’s future.
4 Big Reasons to Create a Trust
Protect Your Money
Think of it like protection for your family’s wealth. When you create a trust, it helps to keep your money safe from people who might want to take it.
It also helps to protect your assets if someone tries to sue you. It prevents strangers or creditors from grabbing your family’s money.
Plan Your Family’s Financial Future
Ensure your money and property are passed smoothly to your children or grandchildren. When you create a trust, it helps you decide exactly how and when your family gets your assets.
It prevents complicated legal battles after you’re gone. It gives clear instructions about your wishes.
Keep Things Private Keeps your financial details secret. It prevents nosy people from knowing about your wealth.
Stops financial information from becoming a public record. Maintains your family’s financial privacy.
Save Money on Taxes
It can help reduce the amount of inheritance tax your family pays. Potentially lowers estate taxes. It helps your family keep more of what you’ve worked hard to build. Provides innovative tax planning strategies.
Who Should Consider Setting up a Trust in Kenya?
- Families with significant assets
- Business owners
- Parents wanting to protect their children’s future
- People with complex financial situations
Types of Trusts According to the Kenyan Law
According to Kenyan law, there are four primary types of trusts recognized:
Family Trusts
A family trust is a flexible financial arrangement designed to help families manage and protect their assets.
In Kenya, you can set up a living trust or establish a will after your death (testamentary trust).
They allow individuals to plan how their estate will be managed and distributed.
Families can create a trust, jointly or individually, and include charitable and non-charitable purposes. The main goal is:
To provide a structured way to protect and transfer family wealth across generations.
- Families set up this trust to manage personal estate
- It can be partly charitable or non-charitable
- Created by individuals, either jointly or individually
Charitable Trusts
Charitable trusts are special financial arrangements focused on serving the public good.
In Kenya, these trusts address essential social and environmental needs. They typically support crucial areas such as:
- Reducing poverty
- Improving education
- Supporting religious activities
- Protecting human rights
- Preserving the environment
These trusts go beyond personal financial gain, aiming to positively impact society by dedicating resources to community welfare and social development.
Non-Charitable Trusts
Non-charitable trusts are purpose-driven financial arrangements with specific objectives.
Unlike charitable trusts, these focus on more specific or personal goals. To be legally valid in Kenya, these trusts must meet three key criteria:
- Have a clear and defined purpose
- Be capable of actually achieving their intended goal
- Maintain legal and ethical standards
These trusts provide a flexible way to manage assets for particular family or individual objectives that don’t necessarily serve broader public interests.
Irrevocable Trusts
Irrevocable trusts are the most permanent type of trust in Kenya. Once you create a trust of this nature, it cannot be easily changed or canceled.
They provide the most potent possible asset protection mechanisms, offering:
- Maximum security for family assets
- Long-term financial planning
- Protection against potential future financial risks
These trusts are ideal for families seeking the most stable and unchangeable asset management and protection method.
How do you set up a trust in Kenya? A Step-by-Step Guide
If you have read a Step-by-Step Guide up to this point, you must ask yourself, how do I set up a trust? This guide will help you learn how to set up a trust in Kenya.
1. Determine Your Trust Goals
Before you create a trust, start with knowing what you want for your family. Think about your most significant financial dreams and worries.
You may want to save money for your children’s education, protect your family land, or ensure your parents are cared for.
Before you create a trust, clearly define what you want to achieve. Are you looking to:
- Protect family assets
- Plan for future generations
- Support charitable causes
- Manage estate distribution
- Provide for specific family members
2. Choose the Right Trust Type
Kenya offers different trust types. Your choice depends on what you want to achieve and how you want to protect your family’s financial future.
Kenya recognizes three main trust types:
- Family Trusts: For personal estate management
- Charitable Trusts: For public benefit purposes
- Non-Charitable Trusts: For specific personal objectives
3. Select Trustworthy Trustees
Trustees are the people who will manage your assets and make sure your wishes are followed.
Good trustees might be experienced family members, professional financial advisors, or trusted friends who have your family’s best interests at heart.
As you create a trust, choose individuals or entities who:
- Understand your financial goals
- Have financial management skills
- Are legally competent
- Can be trusted to manage assets responsibly
4. Draft a Comprehensive Trust Deed
This step is like writing a detailed instruction manual for your money. With help from a lawyer in Kenya, you’ll create a document that explains everything about your trust.
It will list all your assets and describe who gets what and when they get it. You can include special conditions or instructions.
This document is crucial because it ensures your wishes are clearly understood and followed, even when you’re not around to explain them yourself.
Work with a qualified lawyer to create a trust deed that:
- Clearly defines trust objectives
- Lists all assets
- Specifies trustee powers
- Identifies beneficiaries
- Outlines distribution rules
5. Register the Trust
In Kenya, you can register your trust in two ways. A simple registration is faster and cheaper, taking just a few weeks.
Complete registration creates a more formal legal entity but takes longer. This step makes your trust official, giving it legal protection and ensuring it meets all government requirements.
Two registration options exist:
Simple Registration (1-3 weeks)
- Registered under the Registration of Documents Act
- Does not create a legal corporate entity
Full Incorporation (12-36 months)
- Registered under the Trustees (Perpetual Succession) Act
- Creates a legal corporate entity
5. Transfer Assets
Now comes the practical part – officially moving your assets into the trust. This means changing the ownership of things like land titles, bank accounts, and investments.
It’s like driving your valuable belongings into a secure, protected space where they’ll be carefully managed according to your wishes. Each asset requires specific paperwork and legal steps.
Officially transfer ownership of:
- Land titles
- Bank accounts
- Investments
- Other valuable assets
6. Regular Review and Update
Trust isn’t something you create and forget. Like a garden, it needs regular care and attention.
Review your trust yearly, update your asset list, and adjust to any family changes. Check your financial plan’s performance and ensure it meets your family’s needs.
This ongoing management ensures your trust continues to provide the protection and support you intended.
Periodically review your trust to:
- Adjust to changing family circumstances
- Update asset lists
- Modify beneficiary arrangements
- Ensure continued legal compliance
Documentation Requirements
When you want to set up a trust in Kenya, you’ll need to prepare several important documents:
- Key Documents
- Trust deed (legally registered)
- Petition for incorporation (commissioned by a Commissioner of Oaths)
- Certified copies of trustees’ identification
- KRA PIN certificates
- Passport-sized photographs of trustees
- Current financial statements
- Bank statements
- Title deeds of assets
How much does it cost to set up a trust?
The amount you need varies depending on the professional lawyer in Kenya. Here is an average estimation of what it may cost you:
Incorporation fee: 10,050 Kenyan Shillings
Additional legal consultation costs vary
Why Legal Help is Crucial When You Want to Create a Trust
A qualified lawyer understands the intricate legal requirements that can confuse and overwhelm most people.
They ensure your trust is legally valid, properly structured, and meets all government regulations.
Without professional guidance, you might make costly mistakes that could invalidate your trust, create tax problems, or fail to protect your family’s assets as intended.
Lawyers help you avoid potential legal pitfalls, interpret complex legal language, and customize the trust to match your family’s unique financial needs precisely.
Talk to a qualified lawyer in Kenya, or book a consultation with a trusted lawyer in Nakuru to get started.
Conclusion
When you set up a trust in Kenya, you’re doing more than just managing money—you’re building a financial safety net that can support your loved ones for generations.
To create a trust, you’ll need to carefully plan your financial goals, choose the right type of trust, and work with trusted professionals who understand Kenyan law.
Setting up a trust involves understanding your family’s unique needs, selecting responsible trustees, and preparing detailed legal documents.
By taking these steps, you’re not just protecting assets but creating a structured approach to wealth management that can provide education opportunities, healthcare support, and financial stability for your children and grandchildren.
Remember, a well-designed trust is like a financial guardian who continues caring for your family even when you can no longer do so yourself.
The key is to be patient, seek expert advice, and approach trust creation as a long-term investment in your family’s prosperity and security.
