Living Trust Agreement

A Living Trust Agreement in Kenya establishes a trust, transferring property to a trustee who administers it according to its stated terms.

A living trust differs from a testamentary trust in that it is created and takes effect during the settlor's lifetime. A revocable living trust allows the settlor to amend, add assets to, or entirely revoke the trust at any time before death or incapacity. An irrevocable living trust cannot generally be amended after creation without the consent of the beneficiaries and, in some cases, the approval of the High Court of Kenya under section 34 of the Trusts Act No. 11 of 2020.

Kenyan living trusts are typically used as estate planning tools to manage assets such as immovable property registered under the Land Registration Act No. 3 of 2012, shares in companies incorporated under the Companies Act No. 17 of 2015, bank accounts, listed securities held through a Central Depository and Settlement Corporation (CDSC) account, and personal property of significant value. The Trusts Act No. 11 of 2020, which replaced the previous Trustee Act Cap. 167, modernised the Kenyan trust law framework by expanding the investment powers of trustees, introducing protective trust provisions, and clarifying the duties of professional trustees.

The Kenya Revenue Authority administers income tax on trust income under the Income Tax Act Cap. 470, which treats trusts as taxable entities separate from the settlor and beneficiaries in certain circumstances. The Finance Act 2022 introduced provisions requiring beneficial ownership disclosure for trusts, and trustees are required to file returns with the Registrar of Documents under the Registration of Documents Act Cap. 285 where the trust holds registrable property.

A Living Trust Agreement at forms-legal.com is prepared in accordance with the Trusts Act No. 11 of 2020 and caters for both single-trustee family trusts and multi-trustee arrangements commonly used by Kenyan high-net-worth individuals and family businesses seeking structured succession planning.

The legal framework governing the Living Trust Agreement in Kenya draws on several key statutes and regulatory bodies. Under the Law of Succession Act (Cap. 160), the High Court of Kenya has jurisdiction over probate and administration. Section 5 of the Law of Succession Act sets formal requirements for wills. The Powers of Attorney Act (Cap. 56) governs appointment of attorneys. The Public Trustee (established under the Public Trustee Act Cap. 168) administers small estates. The Stamp Duty Act (Cap. 480) applies to certain estate instruments. Parties executing a Living Trust Agreement in Kenya should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Trusts Act No. 11 of 2020 s.5 sets the foundational requirements.

A Living Trust Agreement is needed in Kenya in any of the following circumstances.

Where a property owner wishes to confirm that their assets pass directly to beneficiaries upon death without the delay and cost of obtaining a grant of probate or letters of administration from the High Court of Kenya under the Law of Succession Act Cap. 160. Assets held in a living trust do not form part of the deceased's estate for probate purposes and can be distributed by the trustee promptly after death.

Where a person anticipates potential incapacity due to age, illness, or disability and wishes to confirm uninterrupted management of their assets by a trusted individual or professional trustee. A revocable living trust can function alongside a Power of Attorney registered under the Powers of Attorney Act Cap. 531 to provide thorough incapacity planning.

Where a settlor wishes to provide for minor children or dependants with special needs, placing assets in trust allows distributions to be made according to the trustee's discretion rather than all at once on the child reaching majority. Section 19 of the Trusts Act No. 11 of 2020 sets out the powers of trustees to accumulate income and make discretionary distributions.

Where a family has business assets — including shares, real property, or intellectual property — that should be managed collectively across generations, a family living trust provides a governance structure that a simple will cannot. The trust can continue indefinitely within the rule against perpetuities applicable under Kenyan law.

Where a settlor owns property in multiple counties or wishes to avoid the complications of intestacy under the Law of Succession Act Cap. 160, particularly with respect to community property claims or customary succession rules, a living trust provides clarity and legal certainty.

Parties in Kenya should prepare a Living Trust Agreement proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under the Law of Succession Act (Cap. 160), the High Court of Kenya has jurisdiction over probate and administration. Section 5 of the Law of Succession Act sets formal requirements for wills. The Powers of Attorney Act (Cap. 56) governs appointment of attorneys. The Public Trustee (established under the Public Trustee Act Cap. 168) administers small estates. The Stamp Duty Act (Cap. 480) applies to certain estate instruments. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A valid and effective Living Trust Agreement in Kenya under the Trusts Act No. 11 of 2020 must include the following key elements.

**Parties.** The agreement must identify the settlor (the person creating the trust), the trustee or trustees (who hold legal title and manage assets), and the beneficiaries (who benefit from the trust). The settlor may also serve as the initial trustee of a revocable living trust, retaining full management and control during their lifetime. Professional trustees regulated by the Capital Markets Authority or licensed under section 76 of the Trusts Act No. 11 of 2020 may be appointed for complex trusts.

**Trust Property Schedule.** The agreement must clearly identify and describe the assets being transferred into the trust (the trust corpus). For immovable property, the land reference or title number under the Land Registration Act No. 3 of 2012 must be stated. For company shares, the company name and number of shares must be specified. For bank accounts, the bank, branch, and account number should be referenced.

**Declaration of Trust and Certainties.** The agreement must satisfy the three certainties under section 5 of the Trusts Act No. 11 of 2020: certainty of intention (the settlor's clear intention to create a trust), certainty of subject matter (identified assets), and certainty of objects (identified or identifiable beneficiaries).

**Trustee Powers and Duties.** The agreement should set out the trustee's investment powers under Part IV of the Trusts Act No. 11 of 2020, the duty to act in the best interests of beneficiaries under section 27, the duty to account and provide information to beneficiaries, and any restrictions on trustee powers imposed by the settlor.

**Revocability.** The agreement must state clearly whether the trust is revocable or irrevocable. For a revocable trust, the procedure for amendment or revocation should be specified. An irrevocable trust may only be varied by the High Court of Kenya under section 34 of the Trusts Act No. 11 of 2020 in limited circumstances.

**Succession of Trustees.** The agreement must provide a mechanism for appointing a replacement trustee where the original trustee dies, resigns, or is removed. Section 37 of the Trusts Act No. 11 of 2020 governs the appointment and removal of trustees. A trust cannot be without a trustee and the court may appoint one if necessary.

**Distribution Provisions.** The agreement must specify how and when income and capital distributions are to be made to beneficiaries, including whether the trustee has discretionary power to accumulate income or distribute it at regular intervals. For trusts intended to benefit minor children, the conditions for distribution on attaining majority must be clear.

**Governing Law and Dispute Resolution.** The agreement should state that it is governed by the laws of Kenya, including the Trusts Act No. 11 of 2020 and the Law of Succession Act Cap. 160. Disputes between trustees and beneficiaries are within the jurisdiction of the High Court of Kenya. The agreement may provide for alternative dispute resolution under the Arbitration Act No. 4 of 1995.

**Execution Formalities.** The agreement should be executed as a deed, signed by the settlor and trustee before at least two witnesses. Where the trust includes immovable property, the instrument of transfer must be registered with the relevant Land Registry under the Land Registration Act No. 3 of 2012. Registration of the trust deed itself with the Registrar of Documents under the Registration of Documents Act Cap. 285 is advisable for enforceability. This template is available to download at forms-legal.com.