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Law of trusts in Kenya summarized
Sources: The Law of Trusts in Kenya is primarily governed by the common law principles as received from England, supplemented by specific statutory provisions and judicial pronouncements. Key sources include:
The Trustee Act (Cap. 159) Laws of Kenya: This Act provides a framework for the regulation of trusts, outlining the duties and powers of trustees.
The Succession Act (Cap. 160) Laws of Kenya: This Act deals with the devolution of property upon death, including situations where trusts are involved.
The Land Registration Act (Cap. 300) Laws of Kenya: This Act is relevant to trusts involving land, particularly regarding registration and transfer of title.
Various Court Decisions: Kenyan courts have interpreted and applied trust law principles in numerous cases, shaping the understanding and application of trust law within the Kenyan context.
Table of Contents
Introduction to Trusts in Kenya
Creation of a Trust 2.1 Essential Elements of a Valid Trust 2.2 Types of Trusts
Duties and Responsibilities of Trustees
Rights of Beneficiaries
Termination of a Trust
Remedies for Breach of Trust
Conclusion
1. Introduction to Trusts in Kenya
Trusts are fundamental to Kenyan law, providing a mechanism for managing property for the benefit of others. A trust involves a three-party relationship: the settlor (the person creating the trust), the trustee (the person managing the trust property), and the beneficiary (the person who benefits from the trust). The settlor transfers property to the trustee, who holds it on trust for the benefit of the beneficiary. The trustee's powers and duties are governed by the trust instrument (the document creating the trust) and the general principles of trust law. The common law principles of trusts, as received from England, form the bedrock of Kenyan trust law, supplemented by statutory provisions and judicial precedent. (Source: Common Law Principles as received in Kenya, supplemented by the Trustee Act (Cap. 159) Laws of Kenya).
2. Creation of a Trust
2.1 Essential Elements of a Valid Trust: A valid trust requires several essential elements:
Certainty of Intention: The settlor must clearly demonstrate an intention to create a trust. This intention can be expressed explicitly or implied from the circumstances. (Source: Common Law Principles)
Certainty of Subject Matter: The trust property must be clearly defined and identifiable. Ambiguity regarding the property will invalidate the trust. (Source: Common Law Principles)
Certainty of Objects: The beneficiaries of the trust must be clearly identified or ascertainable. Uncertainty regarding the beneficiaries will render the trust void. (Source: Common Law Principles)
Constitution of the Trust: The trust property must be vested in the trustee. This usually involves the transfer of legal title to the trustee. (Source: Common Law Principles)
2.2 Types of Trusts: Kenyan law recognizes various types of trusts, including:
Express Trusts: These are trusts created intentionally by the settlor, either through a written instrument or orally (though oral trusts are subject to stricter evidentiary requirements). (Source: Common Law Principles)
Implied Trusts: These trusts arise by operation of law, rather than by the express intention of the settlor. Examples include resulting trusts (where property is transferred but the beneficial interest remains with the transferor) and constructive trusts (imposed by the court to prevent unjust enrichment). (Source: Common Law Principles)
Private Trusts: These trusts benefit specific individuals or groups. (Source: Common Law Principles)
Public Trusts (Charitable Trusts): These trusts benefit the public or a section of the public. They are subject to specific rules and regulations. (Source: Common Law Principles)
Testamentary Trusts: These trusts are created through a will and take effect upon the death of the testator. (Source: Succession Act (Cap. 160) Laws of Kenya)
Inter Vivos Trusts: These trusts are created during the lifetime of the settlor. (Source: Common Law Principles)
3. Duties and Responsibilities of Trustees
Trustees in Kenya owe fiduciary duties to the beneficiaries. These duties are stringent and require the trustee to act in the best interests of the beneficiaries at all times. Key duties include:
Duty of Loyalty: Trustees must act solely in the best interests of the beneficiaries and avoid any conflict of interest. (Source: Common Law Principles)
Duty of Prudence: Trustees must manage the trust property with reasonable care and skill, as a prudent person would in managing their own affairs. (Source: Trustee Act (Cap. 159) Laws of Kenya)
Duty of Investment: Trustees must invest the trust property prudently, seeking to maximize returns while minimizing risk. (Source: Trustee Act (Cap. 159) Laws of Kenya)
Duty of Information: Trustees must keep the beneficiaries informed about the trust's affairs. (Source: Common Law Principles)
Duty to Account: Trustees must maintain accurate records of the trust's finances and provide regular accounts to the beneficiaries. (Source: Common Law Principles)
4. Rights of Beneficiaries
Beneficiaries have several rights in relation to the trust, including:
Right to Information: Beneficiaries have the right to receive information about the trust's affairs from the trustee. (Source: Common Law Principles)
Right to Account: Beneficiaries have the right to receive an account of the trust's finances from the trustee. (Source: Common Law Principles)
Right to Enforcement: Beneficiaries can enforce the trust through legal action if the trustee breaches their duties. (Source: Common Law Principles)
Right to Distribution: Beneficiaries have the right to receive the trust property according to the terms of the trust. (Source: Common Law Principles)
5. Termination of a Trust
A trust can be terminated in several ways:
By the terms of the trust instrument: The trust may specify the conditions under which it will terminate. (Source: Common Law Principles)
By consent of all beneficiaries: If all beneficiaries are of full age and capacity, they can agree to terminate the trust. (Source: Common Law Principles)
By court order: The court may order the termination of a trust in certain circumstances, such as where the trust has become impractical or impossible to administer. (Source: Common Law Principles)
6. Remedies for Breach of Trust
If a trustee breaches their duties, the beneficiaries can seek various remedies, including:
Compensation: The trustee may be required to compensate the beneficiaries for any losses suffered as a result of the breach. (Source: Common Law Principles)
Account: The trustee may be required to account for their actions and provide a detailed statement of the trust's finances. (Source: Common Law Principles)
Removal: The court may remove a trustee who has breached their duties. (Source: Common Law Principles)
Equitable Compensation: This aims to restore the beneficiaries to the position they would have been in had the breach not occurred. (Source: Common Law Principles)
7. Conclusion
The law of trusts in Kenya is a complex area of law, drawing upon common law principles, statutory provisions, and judicial precedent. Understanding the essential elements of a valid trust, the duties of trustees, and the rights of beneficiaries is crucial for anyone involved in creating, administering, or benefiting from a trust. The principles of equity play a significant role in shaping the application and interpretation of trust law in Kenya, ensuring fairness and justice for all parties involved. The specific application of these principles will depend on the facts of each case and the interpretation of the relevant legal provisions.
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