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The introduction of family trusts will help keep wealth in Kenya

Kenya has established a new legal framework for family and non-charitable trusts to accumulate and preserve wealth for multiple generations. This means that individuals now have an opportunity to keep wealth in Kenya as opposed to establishing overseas trusts which are costly to establish and maintain.

Historically, individuals have preferred to set up family trusts in offshore jurisdictions such as Jersey, Isle of Man and the British Virgin Islands, which have well-established trust laws.

The Trustee (Perpetual Succession) (Amendment) Act, 2021 received presidential assent on 7 December 2021. The Amendment Act introduces some changes to the Trustee (Perpetual Succession) Act (“TPSA”) which mainly dealt with the registration of trusts that were mainly established for religious, educational, literary, scientific, social, athletic or charitable purposes.

The key changes to the TPSA Act are as follows:

Types of Trusts

The Amendment Act introduces new types of trusts which include:

  • charitable trusts
  • discretionary trusts
  • non-charitable purpose trusts
  • family trusts

Family trusts are now legally recognised and can be registered or incorporated by any person or persons (the founder or settlor), whether jointly or as an individual, for the purposes of planning or managing personal estates. The Amendment Act stipulates that a family trust is a non-trading entity and made for the purpose of preservation or creation of wealth for future generations.

Apart from preserving wealth, a family trust is a useful succession planning tool in that once the settlor transfers their assets to the trustees, they cease to be the owners of the assets. The trustees are deemed to be the legal owners and the beneficiaries the beneficial owners.

As such, upon the demise of a settlor, the trustees continue administering the trust without the need of going to court and obtaining probate which can be a time-consuming and costly process.


The Amendment Act provides that beneficiaries of a family trust need not be related to the settlor or living.

This gives opportunity to settlors to include corporate bodies or charities as beneficiaries. In addition, the settlor may also be a beneficiary of a trust. Through the trust deed, the settlor may provide for the addition or exclusion of persons eligible to be beneficiaries of the trust and also impose obligations or conditions on the beneficiaries. For example, the trust deed may provide that upon reaching a certain age, the beneficiaries can start receiving income from the trust.

Trust property

Any property from the settlor or any person or entity may be added to trust. These include land, securities, cash, shares, artwork, vehicles etc.

A settlor, during and after the registration of a trust, can also add property to which they are beneficially entitled, meaning that the settlor is not limited to adding property to the trust that is legally in their name.


The Amendment Act introduces the concept of an enforcer who can be an individual or corporate entity appointed by the settlor or the beneficiaries. The role of the enforcer is to monitor the administration of the trust for the benefit of the beneficiaries. An enforcer cannot however also be a trustee.

An enforcer has a duty to report to the settlor or trustees any financial breaches and in such an event can either require trustees to take remedial action or pursue legal action against the trustees.

Though it is not mandatory for a trust to have an enforcer, the introduction of this concept helps to guarantee transparency and accountability with regard to the management of a trust.

Registration process

Finally, the Amendment Act provides for trusts to be registered with the Principal Registrar of Documents rather than the Cabinet Secretary, a move aimed at reducing the bureaucracy in the process of registering trusts. The timeline for registration and issuance of a certificate of incorporation by the Principal Register is anticipated to be within 60 days whereas it can typically take currently take two to five years for registration to be concluded.


The Amendment Act gives context and ties in with the changes introduced in the Finance Act 2021 which was enacted earlier in the same year. The Finance Act brought in material changes to the taxation of registered family trusts, principally, introducing various tax exemptions relating to transactions involving registered family trusts.

These include exemptions from stamp duties and capital gains taxes on the transfer of properties into a registered family trust as well as exemptions from income or capital gains taxes on incomes earned by the registered family trust.

In addition, to the extent that income paid out of a registered family trust to any beneficiary does not exceed KES10-million in a year, or where it is used exclusively for the purpose of education, medical treatment or early adulthood housing, such income is not subjected to tax on the beneficiary.

These changes are a welcome move as they allow people to preserve their assets when undertaking estate and succession planning. There is, however, a need to tidy up the drafting of the tax amendments by providing better clarity on the mechanics of their operation in order to achieve the desired results which will, in turn, bolster greater confidence in the use of local trusts.

Ultimately, these changes are set to have a positive impact on estate planning going forward. The expected outcome is that individuals will have an opportunity to safeguard wealth for future generations in a tax-efficient manner and within a more elaborate legal framework.

Please do not hesitate to contact us should you require further information or assistance with setting up a trust.

Reviewed by Nigel Shaw, Managing Partner of ENSafrica in Kenya.  

Anne Odhiambo

ENSafrica | Kenya | Senior Associate

George Muthee

ENSafrica | Kenya | Principal Associate

Jean Makaka

ENSafrica | Kenya | Trainee Advocate