Kenya has introduced a new law that changes how trusts are created, registered, managed and monitored. We have done a…

Kenya has introduced a new law that changes how trusts are created, registered, managed and monitored. We have done a deeper analysis of the new law. Read and save the thread below.

Now, before we look at the new law, it is important to understand how trusts worked in Kenya. Kenya's trust system was mainly governed by two old laws:

One dealt with how trustees managed trust property, their powers, investments and how trustees could be appointed or replaced. The other allowed trustees to become a legal entity that could continue operating even when individual trustees changed.

Now, let’s look at what the new law changes. The Trust Administration Act, 2026 brings the rules on creating, registering, managing and overseeing trusts under one law. It also introduces a new Registrar of Trusts to oversee the registration and records of trusts.

First, let's look at how trusts are created. Before, trusts could be created through trust deeds and other legal arrangements under existing trust law. Under the new law, a trust is created when property is placed under the control of a trustee to benefit certain people or serve a lawful purpose.

For example, a parent can place money or property in a trust for their children, with a trustee managing it for their benefit. The new law recognises both written and implied trusts. [However, a written trust must be registered or incorporated to be enforceable under the new rules].

Next, let's look at the types of trusts. Before, family trusts had already been recognised in Kenya, alongside charitable trusts and other trust arrangements. The new law brings family trusts, charitable trusts and non-charitable purpose trusts into one framework.

A family trust can be used to manage and preserve family assets. A charitable trust can be created for public-benefit purposes such as education or helping people in need. (A purpose trust can be created for a specific lawful purpose).

Now, let's look at registration and incorporation. Before, registering a trust deed and incorporating trustees were separate processes. Under the new law, registration gives a trust formal recognition and a certificate.

But registration does not make the trust a separate legal entity. Incorporation gives the trust legal status and allows it to own property, sue and be sued in its own name.

For example, if a family puts a Sh20 million house into a trust, registration alone does not make the trust a separate legal entity. Incorporation gives the trust that legal status.

Now, let's look at beneficial ownership. Before, trusts did not have a general requirement to keep and submit a beneficial ownership register to a dedicated trust registrar. Under the new law, trustees must keep records showing the people who ultimately own, control or benefit from the trust

For example, if a family trust owns a Sh50 million property, the trust must identify the people who ultimately benefit from or control that trust. Any changes to this information must be reported to the Registrar within 21 days.

Now, let's look at the duties of trustees. Before, trustee duties were mainly guided by the older trust laws, common law and legal principles. Under the new law, trustees have clearer responsibilities. They must act honestly, avoid conflicts of interest and protect trust property. They must also keep proper records of the trust's assets, beneficiaries, income, expenses and transactions.

For example, if a trust owns a Sh30 million property and earns Sh2 million in rent, the trustee must keep proper records of the property and the rental income.

Now, let's look at the enforcer. Before, an enforcer could be included in some trusts, but the role was not as developed as it is under the new law. Under the new law, an enforcer can monitor whether trustees are following the trust deed.

For example, if a trustee uses trust money for something outside the purpose of the trust, the enforcer can demand action and, where necessary, take legal action against the trustee.

Now, what happens to existing trusts Trusts that were created under the old system do not simply disappear. They will continue to exist, but they must comply with the new requirements.

Now, let's look at disputes involving trusts. Before, how a dispute was handled depended largely on the trust deed and existing court rules.

Under the new law, the trust deed comes first. For example, if a trust deed says disputes must be resolved through arbitration, the parties would follow that process. If the deed does not provide a way to resolve the dispute, the matter can go to the High Court

That’s the end of our thread. If you have any queries, feel free to reach out via WhatsApp on 0769000111.