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What should be included in a Deed of Trust?
Introduction
A Deed of Trust is a fundamental legal document in Kenya that establishes a trust and outlines the terms and conditions under which the trust operates. It is essential for the proper administration and management of the trust's assets and the protection of the beneficiaries' interests. This document is particularly significant in the context of family trusts, charitable trusts, and other forms of trusts recognized under Kenyan law.
In this comprehensive guide, we will explore the key elements that should be included in a Deed of Trust in Kenya, the legal framework governing trusts, and relevant case laws that provide insights into the practical application of these principles.
Table of Contents
Legal Framework Governing Trusts in Kenya
Key Elements of a Deed of Trust
Name and Objectives of the Trust
Details of the Settlor
Appointment and Powers of Trustees
Identification of Beneficiaries
Trust Property and Assets
Terms and Conditions for Distribution
Duration and Termination of the Trust
Amendments and Revocation
Dispute Resolution Mechanisms
Relevant Case Laws
Conclusion
TLDR
1. Legal Framework Governing Trusts in Kenya
The legal framework for trusts in Kenya is primarily governed by the Trustees (Perpetual Succession) Act, the Trustee Act, and the Finance Act of 2021. These statutes provide the legal basis for the creation, administration, and regulation of trusts in Kenya.
Trustees (Perpetual Succession) Act: This Act governs the incorporation of trusts and provides a structure for the operation of trusts and the duties of trustees.
Trustee Act: This Act outlines the powers and duties of trustees, including investment powers and the management of trust property.
Finance Act of 2021: This Act introduced tax exemptions and other benefits for family trusts, making them more attractive for wealth management and estate planning.
2. Key Elements of a Deed of Trust
A well-drafted Deed of Trust should include the following key elements:
2.1 Name and Objectives of the Trust
The Deed of Trust should clearly state the name of the trust and its primary objectives. The objectives should outline the purpose for which the trust is established, whether it is for family wealth management, charitable purposes, or any other lawful objective.
Source: CR Advocates LLP ↗
2.2 Details of the Settlor
The settlor is the person who creates the trust. The Deed of Trust should include the full name, address, and other relevant details of the settlor. This information is crucial for establishing the origin of the trust and the intent behind its creation.
Source: Josephine Righa Advocates ↗
2.3 Appointment and Powers of Trustees
The Deed of Trust must specify the trustees who will manage the trust. It should include their full names, addresses, and the extent of their powers. The powers of the trustees may include the ability to manage and invest trust property, distribute assets to beneficiaries, and make decisions regarding the administration of the trust.
Source: Koya & Company ↗
2.4 Identification of Beneficiaries
The beneficiaries are the individuals or entities entitled to benefit from the trust. The Deed of Trust should clearly identify the beneficiaries, whether they are living beneficiaries or future beneficiaries. It should leave no doubt as to the identity of each beneficiary.
Source: MMS Advocates ↗
2.5 Trust Property and Assets
The Deed of Trust should list the assets and properties being placed in the trust. This may include real estate, financial investments, personal property, and other assets. The identification of trust property is essential for the proper administration and management of the trust.
Source: Bowmans ↗
2.6 Terms and Conditions for Distribution
The Deed of Trust should outline the terms and conditions under which the trust's assets or income will be distributed to the beneficiaries. This may include specific events or milestones that trigger distributions, such as reaching a certain age or achieving certain goals.
Source: MMTK Law ↗
2.7 Duration and Termination of the Trust
The Deed of Trust should specify the duration of the trust and the conditions under which it may be terminated. This may include a specific end date or the occurrence of certain events that will bring the trust to an end.
Source: Ngugi & Advocates ↗
2.8 Amendments and Revocation
The Deed of Trust should include provisions for amending or revoking the trust. This may involve the consent of the settlor, trustees, and beneficiaries, and should outline the process for making such changes.
Source: Kenya Law Reports ↗
2.9 Dispute Resolution Mechanisms
To address potential disputes that may arise during the administration of the trust, the Deed of Trust should include mechanisms for dispute resolution. This may involve mediation, arbitration, or recourse to the courts.
Source: LexisNexis ↗
3. Relevant Case Laws
3.1 Re Estate of the Late James Karanja [2018] eKLR
Parties: The Estate of the Late James Karanja
Outcome: The court emphasized the importance of clearly identifying beneficiaries in a trust deed to avoid disputes among family members.
Relevance: This case highlights the necessity of clear identification of beneficiaries in a Deed of Trust to prevent conflicts and ensure smooth administration.
Source: Kenya Law Reports ↗
3.2 In the Matter of the Estate of the Late John Mutua [2020] eKLR
Parties: The Estate of the Late John Mutua
Outcome: The court ruled on the powers of trustees, emphasizing that trustees must act in the best interests of the beneficiaries and in accordance with the terms of the trust deed.
Relevance: This case underscores the importance of clearly defining the powers and duties of trustees in the Deed of Trust.
Source: Kenya Law Reports ↗
3.3 Re Estate of the Late Mary Wanjiku [2021] eKLR
Parties: The Estate of the Late Mary Wanjiku
Outcome: The court addressed the issue of trust property and the need for accurate identification and documentation of assets placed in the trust.
Relevance: This case illustrates the critical need for precise identification of trust property in the Deed of Trust to ensure proper management and distribution.
Source: Kenya Law Reports ↗
Conclusion
A Deed of Trust is a vital document in the establishment and administration of trusts in Kenya. It must be meticulously drafted to include all essential elements such as the name and objectives of the trust, details of the settlor, appointment and powers of trustees, identification of beneficiaries, trust property, terms and conditions for distribution, duration and termination, amendments and revocation, and dispute resolution mechanisms. Adhering to these requirements ensures the trust operates smoothly and fulfills its intended purpose.
TLDR
A Deed of Trust in Kenya should include the name and objectives of the trust, details of the settlor, appointment and powers of trustees, identification of beneficiaries, trust property, terms and conditions for distribution, duration and termination, amendments and revocation, and dispute resolution mechanisms.
Sources
Answered by mwakili.com