Family Trusts & Trust Formation

An inter-vivos (living) trust is created during the settlor's lifetime and takes effect immediately. Assets are transferred into the trust while you are alive, placing them outside your personal estate. A testamentary trust is created through a will and only comes into effect upon the death of the testator. The key distinction is timing: inter-vivos trusts offer immediate asset protection and can help avoid the probate process, while testamentary trusts are part of the succession process and must go through probate before the trust is established. Each type has distinct advantages depending on your estate planning objectives.

A family trust provides several important benefits. It offers asset protection by placing property beyond the reach of personal creditors and succession disputes. It enables structured, professional management of family wealth across generations. Trusts are particularly valuable for protecting minors' interests, as children under 18 cannot hold property in their own names in Kenya. Trusts also provide privacy since trust assets do not go through the public probate process. Additionally, trusts allow you to set conditions on when and how beneficiaries receive their inheritance, ensuring responsible wealth transfer.

Under Kenyan law, minors (persons under 18) cannot hold property in their own names. A trust provides a legal mechanism to hold and manage assets for the benefit of minor children until they reach the age of majority or a specified age set by the settlor. The trustee manages the trust assets, makes distributions for the minor's education, healthcare, and maintenance, and preserves the capital until the child is mature enough to manage the assets independently. This protects minors from exploitation, mismanagement by guardians, and ensures their inheritance is preserved intact. Settlors can also specify staged distributions, for example releasing a portion at age 21 and the remainder at age 25.