A trust is an equitable obligation binding trustees to deal with assets over which they have control (Trust assets) for the benefit of persons (beneficiaries) whom they manage for, and in accordance with the terms of the Trust deed in the manner prescribed.
Trusts in Kenya are created under the Trustees (Perpetual Succession) Act (Cap. 164 of the Laws of Kenya) and are subject to other statutes that affect the operation of Trusts in Kenya such as the Income Tax Act and the Tax Procedures Act.
Benefits of Trusts
· Tax Savings – income of a registered trust is exempted from taxation. Charitable trusts are exempted from paying land rates payable on their immovable properties and are also exempted from paying stamp duty when buying land and property.
· A tool of estate and tax planning – Testamentary and Family trusts are another method of estate transfer, as they forego the need for a probate process and reduce the possibility of a court challenge
· Asset Protection – trusts offer specific parameters for the use of your assets
· Enhanced Certainty – revocable trusts can help during illness or disability – not just death.
A trust is established by way of a trust deed. The trust deed contains the objects of the trust, the name of the trust, the properties held under the trust, the power of the trustees, meetings of the trustees, and the trust’s administration.
Registration of trusts involves:
1. Preparation of a trust deed, a declaration of trust, and other relevant documentation.
2. Payment of stamp duty.
3. Registering trusts involves the following two stages.
· Registration at the Lands Registry under the Registration of Documents Act (Chapter 285 of the Laws of Kenya).
· Incorporation under the Perpetual Succession Act.
The registration and subsequent incorporation under the Act; accords the trust a separate legal status and it can own property in its own name, enter into contracts, and do any other thing in its own name gaining a separate and distinct legal identity.
Types of Trust
· Pension trusts
· Investment trusts
· Regulatory Compliance trusts
· Family Trusts including Testamentary trusts and Living trusts