Why you need to do estate planning early

Why you need to do estate planning early (Photo: iStock) In an age where inheritance disputes have become commonplace, estate planning has become a necessity. To demystify this crucial process, we sat down with Frank Oriku, a Nairobi-based advocate with years of experience in succession, trust law and estate management. He sheds light on the complexities of family trusts, the legal framework that governs them and how they compare to other estate planning methods. A family trust is essentially a legal arrangement where a person, known as the settlor, transfers property to a trustee or trustees, who hold and manage it for the benefit of designated beneficiaries. In Kenya, family trusts are governed by several laws, including the Trustees (Perpetual Succession) Act (Cap 164), Trustee Act (Cap 167) and aspects of the Law of Succession Act (Cap 160). It's a private, flexible, and secure method of ensuring wealth passes on according to one's wishes. Establishing a trust differs significantly from the more traditional route of writing a will. A will takes effect only upon death and must go through probate, which is a public and often lengthy legal process. In contrast, a trust can take effect during the settlor's lifetime, allowing it to avoid the probate process altogether. This means assets are transferred seamlessly to beneficiaries with little to no delay. A trust also provides greater control over how and when beneficiaries receive assets. For example, a settlor can dictate that children receive income from an asset only after reaching a certain age or achieving specific milestones, offering considerable flexibility. Like any legal structure, trusts have their challenges. Firstly, setting up a trust correctly requires technical expertise; it must be carefully drafted, assets properly transferred, and trustees must be competent. Secondly, the cost of setting up and maintaining a trust can be higher than writing a will. Finally, misuse by dishonest trustees can undermine the settlor's intentions. However, these risks can be mitigated by using professional trustees and implementing proper oversight mechanisms within the trust deed. The process of establishing a family trust in Kenya involves several key steps. The first is defining the purpose of the trust, whether it's for supporting family members, managing land or preserving intergenerational wealth. Next, you identify the settlor, trustees and beneficiaries. A comprehensive trust deed is then drafted, outlining powers, duties, and terms of asset distribution. Once this is complete, the settlor must legally transfer assets to the trustees. If land is involved, approval will be needed from the National Land Commission or relevant local authorities in line with the Land Control Act (Cap 302). Finally, you apply for registration with the Principal Registrar under the Trustees (Perpetual Succession) Act, after which you receive a Certificate of Incorporation for the trust. From there, the trustees must comply with their fiduciary duties under Section 24 of the Trustee Act. A properly registered trust can significantly reduce the chances of inheritance disputes. It eliminates the need for probate, which is often the battleground for many contested wills. Trusts also ensure privacy; unlike wills, they are not subject to public scrutiny. Moreover, since the trust already holds the property and defines the distribution rules, the courts are rarely involved unless there is misconduct. A notable example is the Estate of Paul Njoroge (2020), where the Court upheld a trust challenged by disinherited relatives, affirming that the settlor's intention must be honoured so long as the trust was validly created. Despite the advantages of trusts, a will can still be preferable in certain situations. A will is straightforward and cost-effective for those with modest estates. It allows individuals to make last-minute changes and bequests, including for personal items or guardianship of minors. Furthermore, if someone doesn't anticipate significant disputes or complex tax implications, a will might suffice. However, for complex estates, blended families, or where asset protection and tax planning are key, trusts generally offer a more robust solution. Dying intestate, without any estate plan, is the worst-case scenario. In such cases, the estate is distributed strictly under the Law of Succession Act, following a rigid formula. This often leads to protracted disputes, especially among polygamous or blended families, further clogging the courts. For example, in the Matter of the Estate of Samuel Githu (2019), competing interests of a first and second wife over land in Kiambu dragged on for years simply because there was no will or trust in place. Frank Oriku advises Kenyans to start early with estate planning, emphasising that it shouldn't wait until illness or old age. It is crucial to consult an advocate with experience in estate planning. Whether through a trust, a will, or a combination of both, the plan should reflect your values and protect your legacy. Ultimately, he concludes, "Trusts are not just for the wealthy; they are for the wise."

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