THE FAMILY TRUST HAS CHANGED

What Kenya’s New Trust Law Really Means for Family Wealth, Succession and Control

On 8 September 2026, the President assented to the Trust Administration Act, No. 28 of 2026, completing the most substantial restructuring of Kenya's statutory trust regime in decades. Kenya Law records the new Act as coming into operation on 25 September 2026, when the Trustee Act and the Trustees (Perpetual Succession) Act are also scheduled to be repealed.

For families, however, the most important question is not whether Kenya has enacted another piece of legislation.

It is this:

What does a family actually achieve when it places its land, shares, businesses and investments into a trust?

For several years, the family trust has increasingly been marketed in Kenya as an almost universal solution to succession disputes, probate delays, matrimonial claims, taxation, creditor exposure and intergenerational fragmentation of property.

Some of those advantages are real.

But a trust is not a legal incantation.

A document headed “Family Trust Deed” does not, merely by existing, remove assets from an individual's estate. Registration does not cure a failure to transfer property. Appointment of relatives as trustees does not make them free to treat trust assets as their personal property. And describing property as “family trust property” does not necessarily determine what a succession or matrimonial court will do when the underlying ownership, contribution or control is contested.

The Trust Administration Act therefore arrives at an important moment.

Its deeper significance is that it pushes Kenyan family trusts away from being viewed primarily as documents used in estate planning and towards being treated as regulated structures through which property must actually be owned, governed, accounted for and administered.

That distinction is fundamental.

1. A family trust is fundamentally a separation of ownership from personal control

The idea behind a trust is simple but legally profound.

A person—the settlor—places identified property into a structure under which trustees hold and administer that property according to legally binding obligations for beneficiaries or specified purposes.

The older statutory framework already recognized a family trust as a trust established for planning or managing a personal estate, including for preservation or creation of wealth for future generations. It expressly permitted the settlor to be among the beneficiaries.

The Trust Administration Act retains family trusts within Kenya's statutory trust architecture while significantly expanding the governance surrounding trusts generally. Contemporary analyses of the enacted legislation identify mandatory registration, beneficial-ownership disclosure, strengthened trustee duties, record keeping, annual filings and regulatory oversight among its major features.

That produces a crucial principle:

**A person cannot meaningfully claim the advantages of separating property into a trust while continuing to treat the property as though no separation occurred.**

If land belongs to the trust, it should be administered as trust property.

If company shares belong to the trust, the shareholding arrangements should reflect that ownership.

If rent belongs to the trust, it should be received and accounted for as trust income.

If trustees make decisions concerning trust property, their decisions should be trustees' decisions—not merely instructions issued informally by the settlor because “the property is still mine.”

A properly established family trust therefore involves more than succession planning.

It involves a deliberate surrender or restructuring of personal ownership and control.

2. The family trust can keep property outside succession—but only if the property actually left the deceased's estate

One of the strongest reasons for establishing a lifetime family trust is continuity after death.

The Law of Succession Act does not administer every asset with which a deceased person had some historical connection. It administers the deceased's estate, which section 3 defines by reference to the deceased's free property: property which the deceased was legally competent freely to dispose of during life and in which his or her interest had not terminated at death.

That creates the legal foundation for the succession advantage of a properly constituted lifetime trust.

Suppose a parent owns:

• several parcels of land;
• shares in a family company;
• rental properties;
• an investment portfolio; and
• other assets.

If those assets remain personally owned when the parent dies, they will ordinarily have to be identified and administered within succession proceedings, subject to the applicable law.

But if during the parent's lifetime the assets were validly transferred and vested in a trust, the legal position is materially different.

The parent may remain a beneficiary.

The parent may even retain certain powers permitted by the trust instrument.

But the relevant property is no longer necessarily the parent's free property available for distribution by a personal representative.

The continuity is therefore not magic.

It arises because death does not cause the trust to die merely because one beneficiary or settlor dies.

The trustees continue administering trust property according to the trust instrument.

That can be extremely valuable where a family owns income-generating land, several buildings, operating businesses or investments which would otherwise become fragmented among successive generations.

3. But establishing a trust after death is not the same thing as planning before death

This distinction was highlighted remarkably clearly by the High Court in In re Estate of Nathaniel Kibitok Sieley (Deceased) [2026] KEHC 2012 (KLR).

The beneficiaries had proposed that the deceased's estate effectively be held through a trust arrangement. The Court declined to treat a trust as a mechanism for avoiding the requirements of succession law.

The Court stressed that, before confirmation of an intestate estate, section 71 of the Law of Succession Act requires identification of the persons beneficially entitled and their respective shares. It criticized an arrangement which placed the estate under centralized control without clearly defining those shares, duration and safeguards for beneficiaries.

That decision reveals an important difference between two situations.

Situation A: Lifetime planning

A property owner creates and properly funds a family trust while alive.

The ownership structure changes before death.

Situation B: Post-death restructuring

The owner dies personally possessed of the assets and the administrators subsequently propose placing the estate into a family trust.

The second situation cannot simply erase succession law.

The estate has already crystallized.

Beneficial entitlements arising under succession law must first be properly determined.

A family trust may subsequently become part of the family's wealth-management architecture, but it cannot necessarily be used by administrators to postpone indefinitely the statutory rights of beneficiaries.

That is one reason estate planning must occur before the estate exists.

4. The trust deed is not enough: the trust must actually be funded

This is perhaps the most overlooked question in estate planning:

> What property does the trust actually own?

A settlor may execute an elaborate family trust deed providing for children, grandchildren and future generations.

But if the settlor continues personally holding every title deed, every share and every investment, the existence of the deed should not automatically be confused with transfer of ownership of those assets.

For land, this requires examining the relevant conveyancing and registration steps.

For shares, the applicable company records must be considered.

For bank and investment accounts, ownership and mandate documentation must correspond with the trust structure.

For movable assets and contractual rights, the appropriate transfer or assignment mechanism must be considered.

The older statutory framework itself recognized the importance of this distinction: where a settlor purported to declare a trust over property he or she did not own, the relevant trust rights and obligations did not arise until the settlor became beneficially or legally entitled to that property.

The practical proposition is therefore:

**Creating the trust and transferring assets into the trust are two different legal exercises.**

A family may complete the first and entirely neglect the second.

That can produce an uncomfortable discovery after death: the family possesses a beautifully drafted trust deed while the valuable property remains registered personally in the deceased's name.

At that point, succession proceedings may still be unavoidable.

5. The new Act makes the “informal family trust” substantially harder to maintain

This is where the 2026 legislation becomes particularly important.

The new regime creates a Registrar of Trusts within the Business Registration Service, strengthens registration and statutory-filing requirements and introduces continuing compliance obligations. Professional analyses of the enacted Act identify registration or incorporation as central to validity and enforceability and note restrictions affecting unregistered trust arrangements.

Existing trusts are not simply extinguished. The transitional framework recognises trusts established under the previous statutes while requiring compliance with the new regime within the prescribed transition period, which current analyses identify as 24 months from commencement.

That matters because many Kenyan family trusts have historically operated with relatively little continuing institutional administration after their initial creation.

The new model is substantially different.

A trust should increasingly be thought of as something that must be maintained, not merely incorporated.

6. Beneficial ownership fundamentally changes the privacy conversation

One of the strongest selling points historically associated with private trusts has been confidentiality.

The 2026 Act significantly qualifies that assumption.

The legislation establishes a beneficial-ownership framework requiring trustees to maintain information concerning persons who ultimately own, control or benefit from trust arrangements and to lodge relevant beneficial-ownership information with the Registrar. Current analyses also identify an obligation to notify changes to relevant information within prescribed periods.

This does not mean that every detail of every family trust becomes freely available to every member of the public.

But it does mean that the modern Kenyan trust should not be understood as an opaque structure capable of concealing who ultimately controls or benefits from property.

This reflects a wider global shift in anti-money-laundering regulation.

The policy direction is increasingly clear:

Legal ownership may be separated from beneficial enjoyment, but beneficial ownership should remain capable of being identified by competent authorities.

For wealthy families, this alters the advice that should accompany trust establishment.

A family trust remains capable of producing substantial succession and governance advantages.

But secrecy should not be its principal purpose.

7. The family trust is also not a private bank account

The 2026 framework strengthens trustee fiduciary obligations.

Current analyses identify statutory duties concerning reasonable care and diligence, honesty and good faith, avoidance of conflicts, preservation of trust property, segregation of trust assets from trustees' personal assets and proper record keeping.

This matters particularly in family trusts because the trustee and beneficiary frequently belong to the same family.

Consider a trust where:

• the father is settlor;
• the father, mother and eldest son are trustees;
• the children are beneficiaries; and
• the trust holds rental properties.

A common mistake would be to assume that because “it is all family property,” the trustees may freely withdraw income, allocate houses, sell land or use trust funds without formal trustee decision-making.

That misunderstands the juridical character of the arrangement.

Once trusteeship exists, trustees owe fiduciary obligations.

Family relationships do not replace them.

Indeed, family relationships may make governance more—not less—important because potential conflicts are greater.

The trust therefore requires rules covering matters such as:

• trustee decision-making;
• conflicts of interest;
• distributions;
• borrowing;
• investments;
• sale of strategic assets;
• replacement of trustees;
• incapacity;
• death;
• beneficiary information rights;
• dispute resolution; and
• succession within the governance structure itself.

The trust deed is effectively a family constitution for property.

Poor drafting can therefore merely move the family dispute from the succession court into a trust dispute.

8. What happens in divorce? The answer is more sophisticated than “the trust protects the asset”

Section 6(2) of the Matrimonial Property Act expressly provides that trust property, including property held in trust under customary law, does not form part of matrimonial property. Kenyan courts continue to recognize that statutory distinction.

That is significant.

But it should not produce reckless advice that a spouse can simply transfer the family wealth into a trust and thereby automatically defeat the other spouse's proprietary rights.

The first question remains:

**Was the property genuinely and lawfully trust property?**

Courts can examine the true nature of ownership arrangements.

In MAOR v HWMR & another [2025] KEHC 19409 (KLR), the Family Division considered claims surrounding property held through a company and examined the underlying beneficial ownership and control rather than stopping at the formal registered title. The Court ultimately recognized beneficial interests notwithstanding the corporate ownership structure.

The lesson for trusts is analogous even though the legal structures differ.

A court faced with allegations of fraud, sham arrangements, resulting trusts, constructive trusts, improper transfers or existing beneficial interests will examine the substance of the dispute.

A family trust is therefore strongest when it is created as genuine long-term family governance, not as emergency litigation engineering immediately before a divorce, insolvency dispute or succession contest.

9. Nor should a trust be treated as an instrument for defeating creditors

Asset preservation is a legitimate component of estate planning.

Defrauding creditors is not.

A person who transfers assets into a properly constituted long-term trust while solvent and before any relevant claims arise stands in a very different position from a debtor who attempts to move assets out of reach once liabilities have crystallized.

The distinction is important because trust law does not operate in isolation.

Depending on the circumstances, the Insolvency Act, anti-money-laundering legislation, principles concerning fraudulent transactions, tracing remedies and other statutory regimes may become relevant.

The correct proposition is therefore not:

“Put your property in a trust and nobody can touch it.”

It is:

Properly separated trust property is legally distinct from the personal property of the settlor, trustees and beneficiaries, subject always to the validity of the trust, the legitimacy of the transfers and other applicable law.

That is a much more defensible proposition.

10. Tax should be treated as a consequence of structure, not the reason for the structure

Kenyan law has historically provided favorable tax treatment for specified family-trust transactions.

The Income Tax Act, for example, contains exemptions relevant to the transfer of property or proceeds into registered family trusts and capital gains arising from specified transfers of immovable property to family trusts. The current statutory framework must nevertheless be read together with later Finance Act amendments; notably, the 2024 amendments altered the treatment of trust income while retaining specific protections relating to the principal sum and certain transfers.

The Stamp Duty Act also contains specific exemptions relevant to family-trust and trust transactions, but their precise application depends upon the nature and purpose of the transfer.

The larger point is more important:

A family trust should not be established merely because someone heard that “trusts don't pay tax.”

That statement is far too broad.

The tax consequences depend upon:

• what is being transferred;
• by whom;
• to whom;
• whether the trust meets the statutory requirements;
• whether income is retained or distributed;
• the source and nature of that income;
• who receives distributions; and
• the tax law in force at the relevant time.

Tax planning must therefore follow careful structural analysis.

11. One of the most powerful uses of the family trust may actually be family-business continuity

The largest advantage of the modern family trust may not be avoiding probate.

It may be preventing fragmentation of productive assets.

Consider a founder who owns 100% of a successful private company and has five children.

Without adequate structuring, the founder's death may eventually produce five separate economic interests.

The next generation may produce fifteen.

The generation after that may produce forty.

Ownership becomes progressively fragmented while strategic decision-making becomes more difficult.

A family trust permits a different approach.

The trust may hold the shares while generations of family members hold defined beneficial interests under a governance structure.

That can separate:

economic benefit from management control.

A child does not necessarily require direct title to 20% of every family asset in order to obtain 20% of the economic benefit derived from the family wealth.

This can be particularly valuable for:

• operating companies;
• commercial buildings;
• agricultural estates;
• development land;
• intellectual property;
• investment portfolios; and
• assets which would lose economic value if physically subdivided.

The trust thus becomes not merely a death-planning mechanism but an intergenerational ownership architecture.

12. But control must be designed deliberately

This raises perhaps the hardest question in family-trust design:

How much control should the founder retain?

Too little control may leave the founder uncomfortable with transferring valuable assets.

Too much control may undermine the conceptual separation the trust is intended to create.

The 2026 framework permits a settlor to occupy other roles within a trust subject to statutory limitations, and the previous framework expressly recognized that a settlor could also be a beneficiary.

But good trust architecture should ask much more than whether something is technically permissible.

For example:

Should the founder be able to remove trustees at will?

Should major land be sold without family consent?

Should independent trustees be required?

Should one generation be able to amend the rights of another?

Should the founder retain a veto over investments?

What happens if the founder becomes mentally incapacitated?

What happens when siblings become trustees and subsequently disagree?

What happens if a beneficiary divorces?

What happens if a trustee dies?

What happens if the family business requires new capital?

These are governance questions.

And ultimately governance, not registration, determines whether a family trust survives three generations or becomes the subject of litigation in the second.

13. The new statutory “trust agent” model is consequently significant

The Trust Administration Act also recognizes the role of a trust agent.

Section 76 has been identified as permitting specified professionals—including advocates, certified secretaries and certified accountants—to provide defined trust-administration services, while preserving work reserved to advocates under the Advocates Act.

That is a major conceptual development.

It recognizes that trust administration is not necessarily a one-time conveyancing exercise.

Families may require continuing assistance with:

• statutory filings;
• changes in trustees;
• beneficial-ownership records;
• annual returns;
• resolutions;
• record keeping;
• distributions;
• asset transfers;
• changes to the trust deed;
• governance; and
• regulatory compliance.

The professional relationship can therefore move from:

“We incorporated your trust.”

to:

“We help administer your family's wealth structure.”

That is a substantially more mature model of estate planning.

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14. Existing family trusts should now be audited, not merely assumed to be compliant

The families most immediately affected by the new law are not necessarily those intending to create trusts after 25 September 2026.

They are families who already have one.

The new legislation provides a transition into the new regulatory architecture, with existing structures required to comply within the applicable transitional period. Current analysis identifies a 24-month transition period, particularly in relation to the new beneficial-ownership requirements.

But a meaningful review should go beyond filing another form.

An existing trust should now be interrogated:

Does the trust actually own the assets everyone assumes it owns?

Are the titles and company records consistent with the trust deed?

Are all trustees still alive, competent and willing to act?

Are trustees making decisions in the manner required by the deed?

Is trust money segregated?

Can the trustees account for income and expenditure?

Are beneficiaries correctly identified?

Does the deed deal adequately with incapacity and generational transition?

Who ultimately exercises effective control?

Do the tax assumptions upon which the trust was established remain correct?

What happens when the settlor dies?

What happens when the current trustees die?

How are disputes resolved?

A trust that cannot answer those questions is not necessarily an estate plan.

It may simply be a deferred dispute.

# Conclusion: A family trust is not about hiding ownership. It is about designing ownership.

The Trust Administration Act, 2026 should change the way Kenyan families think about estate planning.

The traditional question was:

Who should inherit my property when I die?

The more sophisticated question is:

How should this wealth be owned, governed and enjoyed across generations, including while I am still alive?

A will answers the first question extremely well.

A properly designed family trust can answer the second.

That difference explains why the trust can be exceptionally powerful.

But it also explains why it must be approached carefully.

A family trust cannot reliably achieve succession continuity unless the relevant assets are actually transferred into it.

It cannot preserve family wealth if trustees can administer that wealth as though it were their personal property.

It cannot eliminate family disputes if the trust deed simply postpones unresolved questions about control.

It cannot create legitimate asset protection through fraudulent transfers.

And under Kenya's new trust regime, it should no longer be assumed that a family can obtain the advantages of a sophisticated legal ownership structure without the corresponding duties of registration, disclosure, accounting and governance.

The most important shift introduced by the new law may therefore be philosophical rather than administrative.

The family trust is no longer best understood as a document placed in a lawyer's cabinet awaiting the settlor's death.

It is a living governance structure.

And from 25 September 2026, Kenyan families using trusts will operate within a substantially more formal legal environment in which the distinction between personal property and trust property, between ownership and control, and between family informality and fiduciary responsibility will matter more than ever.

For families considering intergenerational succession, the correct starting point is therefore not:

“How do I register a family trust?”

It is:

“What should my family continue owning together, who should control it, who should benefit from it, and what legal structure will still work when I am no longer here?”

That is the real estate-planning question.

*This article is provided for general legal information only and does not constitute legal or tax advice. Family-trust structures should be designed having regard to the particular assets, family circumstances, tax position, matrimonial considerations and succession objectives involved.*