Introduction
The Trust Administration Act, 2026 (Act No. 28 of 2026) provides the legal framework for the creation, registration, administration and regulation of trusts in Kenya, including family trusts.
A family trust allows property to be placed under the management of trustees for the benefit of beneficiaries. It can therefore be used as part of an estate-planning arrangement, particularly where a family wishes to provide for the management and preservation of assets over generations.
The effectiveness of a family trust depends on its structure; the property transferred into it and the objectives of the settlor.
What is a Family Trust?
Section 10 of the Trust Administration Act, 2026 defines a family trust as a living or testamentary trust, registered or incorporated by one or more persons for the purpose of planning or managing their personal estate.
A family trust must:
- be created for beneficiaries, whether or not they are related to the settlor;
- provide for the preservation or creation of wealth across generations; and
- be a non-trading entity.
The trust therefore provides a structure through which property can be held and managed for the benefit of the beneficiaries in accordance with the trust deed.
Can the Settlor Also Benefit from the Trust?
Yes. Under section 10(3), the settlor of a family trust may also be a beneficiary. The settlor may also act as a trustee or enforcer under section 12(3) but cannot be the sole beneficiary.
The trust deed should clearly identify the beneficiaries. Under section 19(1), beneficiaries must be identified by name or be ascertainable by reference to a class or relationship, such as the settlor’s spouse, children or descendants.
The practical point is that the settlor may retain a beneficial interest in the trust, but the trust must still have other beneficiaries or an ascertainable class of beneficiaries.
Can a Family Trust Be Used as an Alternative Succession Tool?
A family trust can provide an alternative mechanism for passing and managing assets that have been transferred into the trust. This is consistent with section 10, which expressly recognises family trusts as vehicles for planning or managing a personal estate and preserving or creating wealth across generations.
Where the settlor transfers property into the trust during their lifetime, the trustees hold and manage that property for the beneficiaries according to the trust deed. The arrangement can therefore continue after the settlor’s death without the trust property necessarily forming part of the settlor’s personal estate.
However, the trust does not remove the application of succession law to property that remains in the settlor’s name. Such property may form part of the deceased’s estate and be dealt with under the Law of Succession Act.
The Act also recognises testamentary family trusts, meaning that a family trust may be created through a will. A trust may therefore form part of a broader succession plan, depending on how the estate is structured.
Family Trust and Will: What Is the Difference?
A family trust and a will are different estate-planning instruments. A trust can operate during the settlor’s lifetime and continue according to its terms, while a will primarily takes effect upon the death of the testator.
| Family Trust | Will |
| Can be established and operate during the settlor’s lifetime. | Takes effect upon the death of the testator. |
| Property transferred to the trust is held and managed by trustees for the beneficiaries. | Property remains part of the testator’s estate and is administered through succession proceedings after death. |
| Provides a framework for the continuing management of trust property. | Provides instructions for how the deceased’s estate should be distributed. |
| Can provide for beneficiaries over a period of time, including future generations. | Can provide for beneficiaries and make specific gifts from the estate. |
| Requires compliance with the Trust Administration Act, 2026, including applicable registration and continuing obligations. | Must comply with the legal requirements for making a valid will. |
| Only applies to property that has been properly transferred into the trust. | Can cover property forming part of the testator’s estate, including property not placed in a trust. |
The two can operate together. A person may use a family trust to manage assets transferred into the trust while using a will to deal with assets that remain outside the trust.
Advantages and disadvantages of a family trust
A family trust can provide several benefits, but it also comes with responsibilities and costs. A family should consider both before deciding whether a trust is suitable.
| Advantages | Disadvantages |
| Helps preserve family wealth across generations. | Setting up the trust involves professional and registration costs. |
| Provides continuity in the management of family assets after the settlor’s death. | The trust has ongoing compliance and administration requirements. |
| Can provide for children, including minors, and future generations. | Assets must actually be transferred into the trust for the trust to control them. |
| Allows family property to be managed by trustees according to agreed rules. | The settlor may no longer have direct personal control over property transferred to the trust. |
| Can provide a structured way of managing rental property, investments, shares and other assets. | Transferring assets into the trust may have tax, stamp duty or other financial consequences. |
| Can form part of a wider estate-planning strategy alongside a will. | Poorly drafted trust terms can create disputes among trustees and beneficiaries. |
| Can provide long-term arrangements for beneficiaries who may not yet be able to manage property themselves. | Trustees have continuing legal and fiduciary responsibilities. |
| Can help families plan how wealth will be managed rather than leaving decisions entirely to be made after death. | A trust does not automatically cover property that remains in the settlor’s personal name. |
Process of Setting up a Family Trust
Setting up a family trust should begin with proper legal and estate-planning advice. The process generally involves the following steps:
1. Consult a lawyer and establish the purpose of the trust
The first step is to consult a lawyer experienced in trusts and estate planning. The lawyer will help the family identify its objectives, consider whether a trust is appropriate, and determine whether it should operate alongside a will.
2. Identify the assets, beneficiaries and trustees
The family should identify the assets intended for the trust, which may include land, rental property, shares, investments or other valuable assets. The intended beneficiaries should also be identified.
The trustees who will manage the trust must then be selected. Under section 11(2), a family trust may have one trustee, while at least one trustee must be a Kenyan citizen or resident under section 11(3). The settlor may also be a trustee, beneficiary or enforcer, but cannot be the sole beneficiary under section 12(3).
3. Prepare and execute the trust deed
The lawyer prepares the trust deed based on the family’s objectives. The deed sets out the trustees, beneficiaries, trust property, management arrangements, benefits to beneficiaries, trustee powers, appointment and replacement of trustees, and how the trust will come to an end.
The settlor should also decide whether the trust will be revocable. Under section 7, a trust is generally irrevocable unless the deed provides otherwise.
Once the parties are satisfied with the terms, the deed is signed and witnessed in accordance with section 23(2).
4. Register the trust
The registration application is lodged with the Registrar by the trustees, lawyer or trust agent, as applicable. Section 22 sets out the documents and information that must accompany the application.
Once the requirements are satisfied, the Registrar issues a certificate of registration under section 24.
5. Transfer the assets into the trust
Registration alone does not transfer the settlor’s assets to the trust. The assets must be formally transferred in accordance with the law applicable to each asset.
For example, land may require transfer instruments and relevant consents, while transfer of company shares may require compliance with the company’s procedures.
This is an important step because only assets properly transferred into the trust will form part of the trust property.
6. Consider incorporation where appropriate
The family may choose to incorporate the trust under Part IV of the Act. An incorporated trust becomes a body corporate with perpetual succession and may hold property in its own name under section 32.
Incorporation is not necessarily required and should be considered based on the family’s objectives and the structure of the trust.
7. Manage and maintain the trust
A family trust is a continuing arrangement. After registration, the trustees must manage the trust property in accordance with the deed and comply with the Act, including maintaining records and beneficial ownership information, filing annual returns and notifying the Registrar of relevant changes. A trust agent may also assist with these obligations under section 76.
Documents, Compliance and Other Considerations
Setting up a family trust involves more than registering the trust itself. The trustees must prepare the required documents, comply with ongoing obligations and ensure that the assets intended to form part of the trust are properly transferred.
| Area | Key requirements and considerations |
| Registration documents | Section 22 requires the prescribed application, signed and attested trust deed, prescribed fee, register of beneficial owners, statement of initial trust property and, where applicable, details and written acceptance of the initial enforcers. A court order is required where the trust was created by a court. |
| Trust agent | Where a trust agent lodges the application, the agent’s details and written acceptance to act should be provided in accordance with section 22(4). |
| Incorporation | Where incorporation is sought, additional requirements include reservation of the trust’s name under section 28, the prescribed application and supporting documents under section 29, and the applicable fee. A registered trust subsequently seeking incorporation must also provide the information required under section 33. |
| Supporting documents | Depending on the circumstances, trustees may also require identification and KRA PIN details, documents relating to corporate trustees, title documents and transfer instruments, company approvals for transfer of shares, statutory consents, trustee consents and birth certificates for minor beneficiaries. |
| Transfer of assets | Registration does not, by itself, transfer the settlor’s assets to the trust. Land, shares, investments and other assets must be transferred in accordance with the applicable law and any required registration, company approvals or statutory consents. |
| Trust deed registration | The registered trust deed becomes a registrable document under the Registration of Documents Act pursuant to section 97. |
| Costs | The overall cost may include statutory registration or incorporation fees, professional fees, asset transfer costs and applicable taxes or duties. The current fee schedule should be confirmed before filing. |
| Ongoing compliance | Trustees must comply with continuing filing, record-keeping, beneficial ownership and notification requirements. Failure to comply with certain obligations may attract penalties, including the annual return penalty under section 75(3) and other penalties provided under the Act. |
| Tax considerations | The Act does not create a general tax exemption for family trusts. Before transferring assets, the settlor should consider applicable stamp duty, capital gains tax, income tax, tax on distributions and the tax consequences of terminating the trust. Any KRA PIN and tax filing requirements should also be considered. |
| Suitability | A family trust may not be appropriate for every family. The decision should take into account the family’s assets, objectives, intended beneficiaries, trustee structure, desired level of control, tax implications, costs, compliance obligations and whether the trust should operate alongside a will. |
The key consideration is therefore not simply whether a trust can be registered, but whether it is properly structured, its assets are effectively transferred, and its ongoing obligations can be maintained.
Key Clauses in a Family Trust Deed
The trust deed is the document that sets out how the family trust will operate. Under section 23 of the Trust Administration Act, 2026, the deed must contain the information required by the Act. In addition, the following matters should be clearly addressed:
| Key clause | What it should cover |
| Purpose of the trust | The objectives of establishing the trust and how it is intended to preserve or manage family wealth. |
| Trust property | The assets being placed in the trust and how additional property may be added. |
| Beneficiaries | The persons or class of persons who may benefit from the trust, including any provisions for future generations. |
| Trustees | The appointment, powers, duties, replacement and removal of trustees. |
| Benefits and distributions | How and when beneficiaries may receive income, property or other benefits from the trust. |
| Management and investment | How trust property may be managed, invested or otherwise dealt with by the trustees. |
| Settlor’s powers | Any powers retained by the settlor, subject to the limitations imposed by the Act. |
| Revocation and amendment | Whether the trust is revocable and the circumstances or procedure for amending its terms. Under section 7, a trust is generally irrevocable unless the deed provides otherwise. |
| Duration and termination | When and how the trust may come to an end and how the trust property is to be dealt with upon termination. |
| Dispute resolution | How disputes involving trustees or beneficiaries are to be addressed. |
The deed should be tailored to the family’s objectives, assets and intended beneficiaries rather than relying on a standard form.
Conclusion
The Trust Administration Act, 2026 provides an important statutory framework for families seeking to plan and manage wealth across generations.
A properly structured family trust can provide continuity in the management of family assets, facilitate intergenerational wealth planning, provide for minors and other beneficiaries, and reduce the need for the same trust assets to be redistributed through succession proceedings each time a generation dies.
At the same time, a family trust is not a shortcut around succession law. Its effectiveness depends on the proper creation and administration of the trust and, importantly, the actual transfer of assets into it.
The settlor must also appreciate that a trust creates an ongoing legal and administrative structure. Registration, beneficial ownership disclosure, record keeping, annual returns and other compliance requirements continue throughout the life of the trust. The trust may also involve establishment, professional and asset-transfer costs, and its tax consequences must be considered under the applicable tax laws.
Most importantly, a family trust should not automatically be regarded as a replacement for a will. A trust may govern assets transferred into it, while a will can address property that remains outside the trust. The two can therefore form complementary components of a broader estate-planning strategy.
The success of a family trust ultimately depends on whether its structure reflects the family’s actual objectives and whether the trustees properly administer it in accordance with the trust deed and the law.
This is where professional advice becomes particularly important. The Trust Administration Act recognises the role of trust agents, including advocates of the High Court of Kenya. Section 76(3) further recognises that documents which the Advocates Act reserves to advocates should not be prepared by unqualified persons.
How MMS Advocates can assist
MMS Advocates can assist clients considering a family trust with:
- advising on whether a registered or incorporated trust is appropriate;
- advising on the structure and objectives of the trust;
- drafting the trust deed, including beneficiary, trustee and revocability provisions;
- preparing and lodging registration or incorporation applications;
- advising on the transfer of assets into the trust;
- advising on tax considerations and coordinating with tax advisers where necessary;
- reviewing existing trusts in light of the Trust Administration Act, 2026 and its transitional provisions; and
- assisting with ongoing compliance, including annual returns and notifications to the Registrar.
A well-structured family trust can provide families with greater clarity on who manages their assets, who benefits from them and how those assets are to be managed as circumstances change.
The key is not simply to establish a trust, but to establish the right trust, with the right structure, for the family’s particular objectives.
References
- Trust Administration Act, 2026 (Act No. 28 of 2026).
- Registration of Documents Act, Cap. 285, Laws of Kenya.
- Land Registration Act, No. 3 of 2012, where land is transferred into the trust.
- Companies Act, No. 17 of 2015, where company shares are transferred into the trust.
