Changes effected to Trusts in Kenya by the Trustees (Perpetual Succession) (Amendment) Act, 2021

The Trustees (Perpetual Succession) (Amendment) Act, 2021 (hereinafter “the Amendment Act”) has introduced some key changes to the law of trusts in Kenya helping to clarify the landscape of trust formation and registration in Kenya.

Prior to this Amendment Act being passed, trusts were generally defined in the Trustee Act Chapter 167 of the Laws of Kenya as “implied and constructive trusts , cases where the trustee has a beneficial interest in the trust property, and to the duties incidental to the office of a personal representative”.

With respect to registration and incorporation of trusts, trusts created other than by operation of law were required to first be registered as simple trusts with the (or a) registrar of documents under the Registration of Documents Act, then thereafter, if the creator of the trust desired the trust to be a corporate body with perpetual succession, the creator then had to make a separate application to the Cabinet Secretary in charge of lands under the Trustees (Perpetual Succession) Act Chapter 164 of the Laws of Kenya, for incorporation of the trust.

The Act also did not set out timelines for registration of the trust deed or for incorporation of the trust and accordingly registration of a trust deed could take up to a month or more and incorporation of a trust could take up to 2 years or more.

These, among other factors such as no clear or prescribed rules of governance of trusts and lack of checks and balances for the management of the trust by the trustees, made them an unappealing vehicle for many individuals thinking about legal structures to undertake social, humanitarian or charitable activities.

Furthermore, when addressing the issue of incorporation, section 3 (1) of the Trustees (Perpetual Succession) Act listed only trustees who had been appointed by a body or association of persons established for religious, educational, literary, scientific, social, athletic or charitable purpose, or the trustees of a pension fund or provident fund, as being eligible for incorporation.

The Amendment Act seeks to remedy some of these issues by introducing key changes to the law.

New Definitions

Some additional trusts have now been defined under the law. These trusts are:

  • A charitable trust which is defined in section 3B of the Amendment Act as “a trust formed for the exclusive purpose of the relief of poverty, the advancement of education, religion or human rights and fundamental freedoms, or the protection of the environment or any other purpose beneficial to the general public” and includes a discretionary trust where the trustee has power to defer distribution of the assets of the trust to any charity or other beneficiary of the trust for a period not exceeding the duration of the trust;
  • A discretionary trust which is “a trust where the beneficiaries or the benefits of the trust become ascertainable once the trust deed sets out the criteria, or at the discretion of the trustees”;
  • A family trust which is defined in section 3D of the Amendment Act as “a trust, whether living [that is, set up while a person is still living] or testamentary [set out in a will to take effect after the person dies], partly charitable or non-charitable, that is registered or incorporated by any person or persons, whether jointly or as an individual, for the purposes of planning or managing their personal estate”; and
  • A non-charitable purpose trust which is defined in section 3C of the Amendment Act as a trust created for a specific legal purpose (this purpose may be partly charitable and partly non-charitable or completely non-charitable) which is capable of fulfilment, with or without beneficiaries.

These new definitions create room for trusts to be set up for non-charitable purposes whereas previously, trusts were strictly charitable.

It then also introduces the definition and concept of an ‘enforcer’ whose primary role or responsibility is “to monitor the administration of the trust for the benefit of the beneficiaries”. This enforcer may be:

  • the creator of the trust; or
  • any other person, body or association of persons appointed by the creator of the trust, or if the creator of the trust is absent, appointed by the beneficiaries under the trust.

Registration of Trusts

Section 3 of the Amendment Act then goes on to remedy the issues of registration by:

  • Moving the duties of incorporation of a trust from the Cabinet Secretary in charge of lands to the Principal Registrar of Documents; and
  • Requiring the Principal Registrar to either grant or reject an application for incorporation within 60 days of its submission.

In so doing it consolidates registration of a trust deed and incorporation of the trust into one office and gives clear timelines for the completion of the registration, cutting down the previously 1 to 3 year period to 60 days. Furthermore, all the compliance requirements of an incorporated trust are to be done to the office of the Principal Registrar rather than to the office of the Cabinet Secretary in charge of lands.

Revocability of Trusts

The Amendment Act has also now stated expressly that a trust is deemed to be an irrevocable trust unless there is an express provision for its revocation in the instrument creating it or if the express power of revocation is not exercised by the creator of the trust during his or her lifetime.

Grounds for invalidation of a Trust

The Amendment Act also prescribes factors which may invalidate a trust, which are:

  • Where a trust is created for illegal purposes;
  • Where it does not have an identifiable or ascertainable beneficiary save for non-charitable purpose trusts;
  • Where it is created under duress, fraud, misrepresentation or in breach of a fiduciary duty;
  • Where its terms are so uncertain as to render performance impossible; or
  • Where the creator of the trust has no legal capacity to create the trust e.g. a minor, a person of unsound mind, a person prohibited under any law, etc.

A trust may also be voided by an order of the Court where it is proven that the trust was set up for fraudulent purposes, including to evade creditors of the creator of the trust.


The Amendment Act also introduces the concept of severability, whereby if a trust has some valid and some invalid purposes, the invalid purposes may be struck off or deleted without affecting the validity of the trust or the other purposes of the trust unless the invalid purposes cannot be separated from the valid ones.


Beneficiaries of a trust are also dealt with under the Amendment Act, with the creator of a trust being able to provide for the addition or exclusion of a person in a class of persons eligible to be beneficiaries of the trust as well as being able to impose an obligation or condition on a beneficiary to the trust.


An enforcer may be appointed in accordance with the terms of the trust. The functions of an enforcer are to:

  • enforce the terms of the trust;
  • inquire into the status of implementation of the trust;
  • require the trustee(s) to take remedial action, where there is breach of the terms of the trust;
  • report to the creator of the trust or the beneficiaries any financial or other breaches by the trustees; and
  • pursue legal action against the trustees, whether criminal or civil.

Where the enforcer has brought any suit against the trustees, the enforcer may step into the shoes of the trustees for purposes of administration of the trust during the duration of the suit.

The enforcer is required to be granted access to any documents, accounts or information necessary for the performance of his or her functions. This includes the accounts of the trust, the trust instrument or deed and any other documents that are used by the trustees.

An enforcer is entitled to be paid a reasonable fee and any reasonable expenses from the trust but is not otherwise to derive a profit from the trust by reason of his appointment or to enter into any dealings with a trustee in relation to trust property.

An enforcer’s appointment and resignation are required to be notified to the Principal Registrar of Documents by the trustees, within 30 days of said appointment or resignation.

Family Trusts

The Amendment Act goes into further detail concerning family trusts, stating that family trusts shall be:

  • made in contemplation of other beneficiaries, whether directly related to the creator of the trust or not and whether living or not. This opens the door for family trusts to cover adopted children, grandchildren, great grandchildren, future generations as far as the creator may want to go, other living relatives as well as dead relatives for the benefit of their heirs. But the wording is also broad enough to include beneficiaries who are not related to the creator;
  • made for the purpose of preservation or creation of wealth for generations; and
  • a non-trading entity.

The creator of the trust can also be a beneficiary under the trust.

Tax Exemptions given to Family Trusts

These amendments go hand in hand with amendments made under the Finance Act Number 8 of 2021 where:

  • property being transferred or sold for the purpose of transferring the title or the proceeds into a registered family trust;
  • the income or principal sum of a registered family trust; and
  • any capital gains relating to the transfer of title of immovable property to a family trust

are exempt from income tax including capital gains tax.

Section 52 of the Stamp Duty Act was also amended by this Finance Act exempting any transfer of property as a voluntary disposition inter vivos to a registered family trust from stamp duty.

Voluntary disposition inter vivos basically means a transfer between living people where the recipient of the property is not a purchaser or a lender or other person acquiring or purchasing in good faith and where the property has not been transferred for valuable consideration e.g. where property is given as a gift.

Section 117 (h) of the Stamp Duty Act was also amended to exempt registered family trusts from stamp duty. While this wording is a bit ambiguous, we assume that this means that instruments of or creating a registered family trust are exempt from stamp duty.

Net Effect of Changes

The effects of these amendments are to formally recognize and make provision for registration of trusts that were previously not recognized by the current laws as well as adding more bulwark to the regime of trusts in Kenya.

Prescribing specific time limits to register a trust is also a very welcome addition as the duration of time taken to register or incorporate these structures previously was a major deterrent to their adoption.

They also put in the groundwork for recognizing a trust in situations where a single individual has been registered as the proprietor of land which he is actually holding on behalf of or for the benefit of a family. These amendments facilitate those members of the family being able to require the creation of or creating or registering a family trust and incorporating that property into the trust.

Furthermore, as the memorandum to the Bill in Parliament stated, the overall intention is to enable accumulation of generational wealth for the benefit of multiple generations.

The amendments to the various tax acts are also welcome in as far as they now allow for free flow or movement of property among family members without fear of prohibitive tax being levied based on the market value of the property.

That said, the conduct, duties and responsibilities of trustees have still been left to the ambit of the instrument creating the trust and the common law principle of fiduciary duty rather than being specifically provided for by law the way, say, duties, obligations and responsibilities of directors of an incorporated company are prescribed by law.

Accordingly, parties creating a trust will have to take special care to ensure that the trust instrument delineates the breadth and width of what the trustees can do and specifically spells out their duties and responsibilities such as the duty to keep proper books of accounts and render reports to the creator of the trust or the beneficiaries on a regular basis or any other oversight that the creator of the trust or the beneficiaries may require.

Should you need any assistance in creating any type of a trust, please do not hesitate to reach out to us on

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