
Death and tax are consequences of living. When these inevitable things happen, what will become of your hard-earned estate?
Estate planning is crucial for ensuring that your assets are well managed and allocated according to your wishes, thereby minimizing legal disputes.
Creating a family trust can be an effective tool in estate planning for several reasons, particularly when considering legal and tax benefits.
A family trust can be set up during the individual lifetime, allowing both the current management and posthumous operation to ensure that your intention is honored even after you are gone.
Parties to a Trust
Grantor or settlor
This is the individual who creates the trust by transferring assets into it and decides the terms of the trust, including when and how the assets are distributed.
Trustee
The trustee manages the trust assets according to the terms the settlor or grantor sets out. The person must have the best interests of the beneficiaries in mind. Trustees can be individuals, corporations, or both individuals and corporations (co-trustees).
Beneficiaries
These are the individuals or entities for whose benefit the trust is created.
Validity of a Family Trust

There are several legal requirements and considerations to establish a valid trust
1. Clear intention to create a trust
This is the person who makes the trust (known as the settlor or grantor) to demonstrate in a very clear way that they want a trust to be established. One of the ways they do this is by drafting a particular legal document called a trust deed. This document explains in detail what the trust is, who the trustees are, and who the beneficiaries are. The intent has to be very clear so that there is no misunderstanding that a trust has been created.
2. Assets
The trust must have a specific property or asset assigned to it that is well-identified and must be transferred to the trust.
3. Beneficiaries
The beneficiaries must be clearly identified. Some trusts might have charitable purposes where the beneficiaries are not individuals but causes or organisations like charities.
4. Trustee:
A trustee must be appointed to manage the trust. The trustee has legal title to the trust property and must manage it to benefit the beneficiaries according to its terms.
5. Formalities
- Written Documentation: drafting and registering the draft deed.
- Signature: signing the trust document by the settlor or witnesses.
- Delivery of Assets: transferring the assets to the trust.
6. Capacity of the Settlor
The settlor must have the legal capacity to create a trust, meaning they must be of sound mind and not under undue influence or duress, or even a minor.
7. Registration (in some jurisdictions)
While not required in all places, some jurisdictions might require certain trusts to be registered, especially if they involve real estate or are irrevocable.
Some of the other key provisions to include in a trust deed
Distribution terms
Details how and when assets or income will be distributed to the beneficiaries, including any conditions that must be met.
Amendment and revocation provisions
The deed needs to provide the terms on how the trust can be amended or revoked and who has the authority to make changes.
Succession
The trust deed should provide a detailed explanation on the procedures of selecting new trustees in case the existing ones resign, are terminated or deceased. The document should not only be for these kinds of contingencies but also contain safety measures for unpredicted events such as the death of a beneficiary, to ensure that the trust continues to function efficiently.
Dispute resolution mechanism
One of the necessary things for a trust deed to have is well-defined procedures for resolving disputes, as conflicts then could be handled by the parties involved without the need for the intervention of the law.
Writing up a family trust deed is a good idea to not only have things understandable and safeguarded, but also to benefit from an orderly management and distribution of properties following the leastor’s desires.
The truth is that getting an expert estate planning lawyer is important to prepare the trust deed so that it has all the necessary regulations and is compliant with the law.
Legal Benefits of a Family Trust

Control Over Assets
A trust lets you control the distribution of your assets after your death or during your lifetime if it’s a living trust. You can set conditions (like age or life events) for when beneficiaries receive their inheritance. This can protect assets from being mismanaged or squandered.
Protection from Creditors
Assets in an irrevocable trust are usually safe from creditors. They are not part of the grantor’s or beneficiary’s estate. This offers some asset protection. It helps protect beneficiaries’ assets from divorce settlements, lawsuits, or bankruptcy proceedings.
Avoidance of Probate
Trusts can bypass the probate process (inheritance), which is often public, time-consuming, and costly. By avoiding probate, the distribution of assets can be quicker and more private, potentially saving on legal fees and court costs.
Tax Benefits
Estate Tax Reduction– For estates that might be subject to estate taxes, transferring wealth into a trust can reduce the size of the taxable estate.
Income Tax Advantages– Trusts can be structured to offer income tax advantages. For example, certain trusts can benefit from lower capital gains tax rates if assets are sold within the trust.
Charitable Giving– Trusts like Charitable Remainder Trusts can provide income to beneficiaries for a term, with the remainder going to charity, which can offer tax benefits during the grantor’s lifetime and at death.
What to Consider When Setting up a Family Trust

Costs
Setting up and managing a trust involves legal and administrative fees. There may be ongoing management fees, too. The complexity requires careful planning and possibly the need for professional advice.
Tax Law Changes
Changes in the law can affect tax benefits. What is good today may not be tomorrow. So, the trust’s structure should be reviewed periodically.
Irrevocability
If the trust is irrevocable, assets can’t be returned after transfer. This could be a big decision, depending on one’s future finances.
When considering a family trust, weigh the benefits against the costs and complexities. It’s best to consult with estate planning attorneys or tax advisors.
They can help tailor the trust to your financial goals, family situation, and legal needs. When setting up a family trust, think long-term.
Consider how it will meet your family’s future needs, not just the current benefits. Tailoring the trust to your specific situation with professional guidance ensures that it serves its intended purpose effectively.
You should communicate with your family members about the trust and inform them of the intentions and expectations.
At Chepchieng & Company Advocates, we know estate planning is more than just distributing assets. It’s about safeguarding your family’s future. Here’s why setting up a Family Trust could be crucial for you:
- Minimize Legal Hassles: Protect your assets from disputes and lengthy probate processes.
- Maximize Tax Benefits: Use legal structures to cut estate taxes and improve income distribution.
- Control and Protection: Ensure your assets are managed and distributed as you wish, even after you’re gone. Also, protect them from creditors and legal judgments.
Why Choose Us?
Our skilled attorneys design custom Family Trusts for your needs.
- Expert Guidance: We offer advice on trust creation. We ensure your trust meets legal standards and serves your intentions.
- Tailored Solutions: Every family is different, and so are their needs.
Take Action Now
Don’t leave your legacy to chance. talk to us today to discuss how a Family Trust can secure your estate for future generations.
Let’s ensure your assets are managed according to your wishes, with the least tax impact and maximum protection for your loved ones. Protect your estate, define your legacy.