MasiboLaw LLP

By Tracy Gakii

The Trust Administration Bill, 2025 is a landmark legislative proposal designed to consolidate, modernize, and regulate trust management in Kenya. By repealing the outdated Trustees Act (Cap 167) and the Trustees (Perpetual Succession) Act (Cap 164), this Bill introduces a unified governance framework. It aligns Kenyan trust practices with international Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) standards, while introducing new roles such as the “Enforcer” and “Professional Trustee.”

1. Scope and Mandatory Registration

The Bill applies to all major trust categories, including charitable, non-charitable purpose, and family trusts.

• Validity: For a trust to be legally enforceable, it must be registered or incorporated according to the trust deed and the Act.
• Legal Standing: This removes the ambiguity of “informal” trusts, ensuring every entity is recognized within the formal legal ecosystem.

2. Mandatory Minimum for Trustees

To ensure balanced decision-making and oversight, the Bill sets specific requirements for the number of trustees:

• Charitable & Non-charitable Purpose Trusts: Minimum of three (3) trustees.
• Family Trusts: Minimum of one (1) trustee.

3. Introduction of the “Enforcer” Role

A significant addition to the Kenyan legal landscape is the Enforcer. Unlike traditional parties (Settlor, Trustee, Beneficiary), the Enforcer acts as an independent watchdog.

Key Functions of the Enforcer:

• Compliance: Ensures the trustees adhere strictly to the trust deed.
• Inquiry: Investigates the status of trust implementation.
• Remedial Action: Demands corrections if a breach occurs.
• Legal Action: Can pursue civil or criminal litigation against trustees on behalf of the trust’s purpose or beneficiaries.
• Safeguards: Enforcers cannot profit from their position and are protected from liability unless fraud or wilful misconduct is involved.

4. Regulation of Trust Property and AML Compliance

The Bill tightens the “noose” on how assets are managed to prevent financial crimes.

• Illegal Assets: Property acquired through unlawful means is strictly excluded and subject to recovery under AML laws.
• Preservation: Trustees have a statutory duty to preserve assets and avoid any transactions that could frustrate the trust’s core purpose.
• Dissolution Rules: Provides clear statutory paths for property distribution during revocation or invalidity, minimizing litigation.

5. Codified Duties and Penalties

Moving away from scattered common law doctrines, the Bill explicitly lists trustee obligations:

• Fiduciary Standards: Duty to act with reasonable care, skill, diligence, and good faith.
• Transparency: Duty to keep trust property separate and maintain meticulous records.
• Liability: Breaches now carry substantial civil and criminal penalties, particularly regarding the misuse of trust assets.

6. Beneficial Ownership Disclosure

To combat “opaque” wealth vehicles, the Bill mandates:

1. Register of Beneficial Owners: Every trust must maintain a list of individuals who ultimately control or benefit from the trust.
2. Mandatory Filing: This information must be filed with the Registrar.
3. Strict Timelines: Failure to update beneficial ownership info leads to administrative penalties and potential trustee disqualification.

7. Professionalization and Centralized Oversight

The Bill transitions trust management into a regulated profession.

Professional Trustees & Service Providers

Individuals or entities offering trust services (drafting deeds, administration, etc.) must:

• Hold prescribed qualifications.
• Register and renew licenses annually.
• Submit to oversight and potential license revocation by the Registrar.

Centralized Authority: The Registrar of Companies

The Registrar of Companies (under the Business Registration Service) now holds centralized power to:

• Maintain the National Register of Trusts.
• Direct name changes for misleading trust titles.
• Issue administrative fines and enforce compliance.

Comparison: Old Law vs. Trust Administration Bill 2025

Feature	Old Law (Cap 164/167)	Trust Administration Bill 2025
Framework	Fragmented & Common Law based	Unified & Codified Statute
Oversight	Limited/Fragmented	Centralized (Registrar of Companies)
Enforcer Role	Not statutory (mostly optional)	Formally recognized & regulated
Professionalism	Unregulated service providers	Mandatory licensing & qualifications
Transparency	Minimal disclosure	Mandatory Beneficial Ownership filing

Conclusion

The Trust Administration Bill, 2025 is a transformative shift for Kenya. It legitimizes trusts as credible vehicles for wealth management and philanthropy by replacing privacy with transparency and fragmented rules with a structured framework. While compliance costs may rise, the increased legal certainty and protection for beneficiaries make Kenya a more robust jurisdiction for long-term succession planning.