The Bill proposes express statutory provisions on trust formation, duties of trustees, registration and incorporation, and seeks to introduce new regulatory roles such as professional trustees and trust service providers.

This alert outlines the key reforms proposed and the potential implications for trustees, settlors, legal practitioners, financial service providers, and private clients.

Repeal and consolidation of existing statutes

The Bill will seek to repeal the Trustees (Perpetual Succession) Act, Cap.164, and the Public Trustee Act, Cap. 168 in their entirety, replacing them with a single comprehensive statute. This will bring all forms of trusts, such as charitable, non-charitable, family, testamentary, and private trusts, under one legal and regulatory framework. However, the Bill preserves the duties and powers of trustees that are already in place under the statutes being repealed, ensuring continuity in their application.

Codification of common law principles

The Bill aims to codify long-standing Common Law and equitable principles previously applicable only through case law. These include fiduciary duties and the irreducible core duties of trustees such as acting in good faith, avoiding conflict of interest, duty to exercise reasonable care, skill and diligence, the duty to act within powers, duty of trustees not to profit from trusteeship, duty to preserve the trust property, duty to keep trust property separate. They also include the conditions under which a trust may be declared invalid, such as for illegality, fraud, uncertainty or incapacity.

Incorporation and legal personality

A notable development is the elaboration of incorporated trusts, which upon registration acquire legal personality, enabling them to sue and be sued in their own name, own and transact property, and enjoy perpetual succession. Though currently existing under the Trustees (Perpetual Succession Act), the implication of incorporation is proposed in more detailed and is explicit. Incorporation streamlines asset ownership and liability management, particularly for family trusts, charitable foundations and institutional arrangements. It will also reduce the legal and administrative risks associated with trustee succession or personal incapacity or liability. The Bill maintains the option for unincorporated trusts, which, although not incorporated, must be registered and do not acquire separate legal personality.

The Bill also provides for the process of deregistration and winding up of trusts, which will mirror corporate procedures, including a 90-day public notice period. This change is likely to increase trust structuring, particularly in estate planning, philanthropy and investment holding, as legal certainty and operational efficiency improve.

Professional trustees, corporate trustees and trust service providers

The Bill proposes a licensing regime for professional trustees, requiring them to register and obtain an annual licence from the Registrar of Companies (Registrar). A person qualifies if they act in a professional capacity or serve as a trustee in more than three trusts. They must meet educational, training, and professional body requirements to be prescribed in the regulations. Licensed trustees must maintain a register of all trusts they serve. The Bill also recognises trust service providers, defined as persons or businesses that provide administrative or fiduciary services to trusts.

The Bill expressly recognises corporate trustees, allowing companies and limited liability partnerships to act as trustees, provided they are duly authorised and meet any requirements prescribed under the regulations. This formal recognition aligns with global practice and offers several advantages, including continuity despite changes in individual directors, institutional expertise, and easier regulatory supervision. It is also expected to expand the market for professional trust services, especially among banks, law firms, and specialised fiduciary companies. The introduction of corporate trustees complements the broader move toward professionalisation and standardisation in trust administration under the new regime.

Transparency and beneficial ownership

Every trust will be required to maintain a register of beneficial owners and disclose this information upon registration. In defining “beneficial owner,” the Bill refers to the definition provided by section 3 of the Companies Act, Cap. 486, which defines a beneficial owner as:

“The natural person who ultimately owns or controls a legal person or arrangements or the natural person on whose behalf a transaction is conducted, and includes those persons who exercise ultimate effective control over a legal person or arrangement.”

The requirement for trusts to disclose their beneficial interests aligns with global financial transparency standards, particularly those recommended by the Financial Action Task Force.

Comprehensive Registrar functions

A centralised register of trusts is to be maintained by the Registrar, who shall continue to be the Registrar of Companies and will have wide administrative and enforcement powers. These include keeping a register of trusts, power to issue directives, vet applications, revoke registrations, and deregister non-compliant entities, or on application by the trustees.

Modernisation of trust administration

The Bill sets out comprehensive provisions on trustee duties and powers, including powers of sale, delegation, borrowing and distribution, as well as rules on remuneration, liability and indemnity. Trustees will be required to maintain records for a minimum of seven years following the deregistration of a trust. Additionally, trusts will have to file annual returns with the Registrar. The Bill also provides for dispute resolution mechanisms, which are to be determined by the trust deed. In the absence of such provisions in the trust deed, disputes will be referred to the High Court of Kenya.

Transition and compliance

Trusts currently governed under the Trustees (Perpetual Succession) Act, Cap. 164 and the Public Trustee Act, Cap. 168 will need to transition to the new regime should the Bill be passed into law. They will be deemed as existing trusts and the incorporation status continues under the new regime. However, trusts that have been in existence but not registered will be required to be registered or incorporated within six months of the Bill being assented to. Legal practitioners and corporate trustees should immediately begin reviewing their structures for compliance. We advise clients to begin reviewing their trust structures and prepare for the six-month compliance window, should the Bill be passed into law.

Conclusion

The Trust Administration Bill, 2025 is a significant step towards modernising Kenya’s trust law. By consolidating the existing statutes and codifying key legal principles, the Bill seeks to enhance clarity, accountability, and operational efficiency in trust governance.

Key reforms such as the licensing of professional trustees, mandatory disclosure of beneficial interest, and expanded regulatory oversight are expected to elevate fiduciary standards and improve transparency in the trust sector.

The Bill is currently undergoing public participation as required under Article 118 of the Constitution of Kenya.