PART II: WEIGHING THE SCALES
In Part I, we established foundational concepts, including the roles of the settlor, trustee, and beneficiary, the purpose of a trust deed, and the main types of trusts recognised in Kenya. We also examined succession in both testate and intestate forms, highlighting the crucial distinction that succession occurs only upon death, whereas a trust can be established and operate long before death.
This distinction raises a practical question: which approach better serves a family seeking to protect property, preserve wealth, and reduce the risk of the next generation inheriting a court case?
The Trouble with Waiting: Succession’s Weak Points
Succession’s greatest strength is also its greatest weakness. For most estates, succession is a well-established, court-supervised process. Whether a person leaves a will or dies intestate, the Law of Succession Act provides the framework through which the deceased’s free property is collected, administered, and eventually distributed.
However, timing poses a significant challenge. Succession does not move directly from death to distribution. Even when a family is in full agreement, the law deliberately deploys several stages before beneficiaries can finally receive their inheritance. Once a petition for a grant of representation is filed, the application must first be published in the Kenya Gazette, as required by the Probate and Administration Rules. This notice, technically referred to as Form 60, invites objections to the proposed grant and must allow at least thirty days from publication. During this time, anyone wishing to contest the grant can come forward.
The thirty-day period is only the first statutory pause. If no objections are raised and the grant is subsequently issued, section 71(1) of the Law of Succession Act typically requires a further six months from the date of the grant before an application for confirmation can be made, unless the court allows for earlier confirmation under section 71(3). Until confirmation is granted, section 55 generally prohibits the distribution of the estate’s capital assets. As a result, the standard statutory process leaves the family in limbo for about seven months, or about 210 days. This duration spans from the gazettement of the grant of representation to the confirmation of the grant, even when the succession is entirely uncontested. This timeline does not account for the duration before gazettement, the court’s processing of the grant and confirmation applications, or the subsequent transfer of land, shares, bank deposits, and other assets to the beneficiaries. In practice, a straightforward succession can take significantly longer before the beneficiaries actually receive their property.
The scale of the problem is considerable. As reported by Nation Africa, Nairobi County has more than 13,000 succession matters pending, illustrating how quickly probate disputes can bog down the justice system once objections, competing claims, and contested distributions are filed. When several beneficiaries assert competing interests in the same estate, inheritance can remain tied up in litigation long before anyone receives their share.
Some estates highlight this issue on an extraordinary scale. For example, in the case of former Cabinet Minister Mbiyu Koinange, who died intestate in 1981, the litigation surrounding his estate lasted nearly four decades. It was not until 2020 that the High Court ordered the distribution of his estate among the beneficiaries. This estate included valuable assets such as land, shares, and commercial properties. Despite this fortune, the lengthy succession process complicated access to it.
That queue also comes with a financial burden. Such disputes can make estate resources inaccessible, thereby undermining the sustainability and maintenance of the deceased person’s family. In re Estate of Allan Lawrence Awuoche Otwack (Deceased) [2024] KEHC 11660 (KLR), the widow of the deceased sought access to estate funds after the estate’s bank accounts were frozen during the succession proceedings. She informed the court she had no adequate source of income to cover her living expenses, substantial medical bills, and school fees for dependants, despite the money available in the estate.
The court acknowledged the practical hardships caused by the continued restriction of these funds, noting that she should not have to suffer medically simply because the estate accounts were frozen. As a result, the court ordered that Kshs. 400,000 in rent owed to the estate be released to her for medical treatment and general living expenses. This case highlights a less obvious consequence of prolonged succession disputes: while parties may contest their claims and the court attempts to safeguard the estate, the income and assets that would normally support the deceased’s family can become inaccessible. This leaves beneficiaries struggling to meet their immediate needs, even when the estate itself has sufficient resources. Therefore, prolonged litigation not only delays legal ownership but can also lock away resources that a family relies on.
Succession can also be costly, with the financial burden often falling directly on the estate. In Ann Kirima (Co-Administratix to the Estate of Gerishon Kamau Kirima) v. Rachier & Amollo Advocates LLP, advocates involved in preserving and administering the Kirima estate submitted a bill of costs amounting to approximately Kshs. 666 million, which included an instruction fee claim of Kshs. 300 million. The High Court determined that, since the legal services were provided for the benefit of the estate through its administrator, the resulting legal fees were appropriately chargeable to the estate, pending taxation.
This case highlights the significant costs associated with prolonged estate administration. Litigation not only delays inheritance but can also result in legal expenses that may be paid from the same pool of assets that would otherwise be distributed to the beneficiaries. In such circumstances, the financial impact on the estate can considerably reduce the inheritance that family members ultimately receive.
Another limitation of succession is that it can fragment wealth. Section 38 of the Law of Succession Act, for example, provides for equal division among children when an intestate individual leaves behind children but no surviving spouse. While this may be fair to the beneficiaries, equal division does not always preserve value. A family farm, investment portfolio, or operating business may be more valuable as a single economic unit than as several inherited portions. Furthermore, succession completely transfers ownership of the entire property to the beneficiary, granting them full autonomy over it. This means the beneficiary can manage the property as they see fit, including the option to sell or subdivide it, which can lead to consequences that may not align with the family’s overall best interests.
Where Succession Still Has the Edge
Despite its drawbacks, succession can still be viable. For individuals with modest estates, adult beneficiaries, and good family relations, succession may be simpler than establishing and managing a trust. The estate owner retains full control during their lifetime, can alter their will as circumstances change, and does not need to transfer assets to trustees immediately.
Moreover, court supervision provides protection rather than a burden. Administrators are held accountable, unauthorised transactions involving estate property are restricted, and dependants can approach the court if they feel unfairly excluded. For property not transferred into a trust, succession remains essential. The Law of Succession Act specifically limits interference with estate property and regulates distribution before a grant is confirmed.
What Trusts Do Differently
A trust changes the order of operations. Instead of waiting for death, the settlor establishes the trust while still alive. They appoint trustees, identify beneficiaries, set the rules, and can immediately transfer property into the trust. Once property has been validly settled and vested in the trust structure, it is no longer considered personal property of the settlor. Upon death, properly transferred trust property typically does not enter the deceased’s estate for distribution through probate; instead, the trustees continue to manage it according to the terms of the trust deed.
The situation changes in two significant ways. First, it can reduce the number of properties subject to succession disputes. Second, it allows the settlor to determine how wealth is managed across generations. A trust deed can protect a family business as a single asset, allocate income to multiple beneficiaries, cover educational or medical expenses, or limit access to capital based on age rather than giving every beneficiary an immediate fixed share.
A notable Kenyan example is the Njenga Karume Trust. Njenga Karume transferred most of his assets into a trust and appointed trustees to manage them. When some beneficiaries later challenged the trust and its trustees, the High Court, in Albert Kigera Karume & 2 Others v. George Ngugi Waireri & Others, upheld the trust as a valid estate-planning structure. Rather than dismantling the trust and distributing its assets outright, the court emphasised the need for accountability and for replacing trustees under the trust deed. A detailed discussion of the decision is available here.
The appeal of a well-structured trust lies in its ability to endure beyond the settlor’s lifetime and maintain stability even as trustees change, provided its legal framework is sound.
Reform and Its Impact
For many years, family trusts in Kenya were functional but cumbersome. However, the 2021 reforms significantly improved this situation. The Trustees (Perpetual Succession) Act, as amended in 2021, explicitly recognises family trusts and non-charitable purpose trusts. A family trust can be either living or testamentary and is created for estate planning, wealth management, and intergenerational preservation. When trustees are incorporated under the Act, they become a corporate entity with perpetual succession, allowing them to hold property and take legal action in their corporate name. Consequently, a change in individual trustees does not necessitate a complete restructuring of ownership. We cover much of this in Part III of our series.
The Finance Act of 2021 amended the Income Tax Act and the Stamp Duty Act to introduce specific tax exemptions for registered family trusts. The amendments exempt capital gains tax when property, including investment shares, is transferred or sold, provided the property or sale proceeds are placed into a registered family trust. Additionally, capital gains from transferring immovable property to a family trust are specifically exempt from tax. The amendments to the Stamp Duty Act also exempt certain transfers and instruments related to registered family trusts from stamp duty. These exemptions are now included in the respective principal tax statutes, as they have been subsequently amended.
These reforms have made the family trust a more practical option for estate planning in Kenya. When the legal requirements are met, property can be transferred into a registered family trust during the owner’s lifetime while benefiting from tax reliefs outlined in the relevant legislation. As a result, these reforms reduce some of the tax and administrative barriers that previously discouraged lifetime transfers, making it easier for families to organise the holding, management, and succession of their assets before death.
Which Way, Trusts or Succession?
The choice is not as simple as declaring a clear winner in a hotly contested match.
Succession serves as the legal safety net for property left in a deceased person’s estate. It offers court supervision, direct inheritance, and a familiar statutory framework. In simple estates where the family agrees, succession may suffice. A family trust, by contrast, addresses a different issue. It enables planning before death, helps preserve assets as a unit, ensures continuity of management, provides staggered benefits across generations, and, when statutory requirements are met, reduces some of the tax friction associated with transferring property into the trust.
However, a trust is not a guaranteed solution. Its efficacy depends on the quality of its deed, proper funding, and the competence of the appointed trustees. The Njenga Karume litigation demonstrates that trustees can be challenged and removed for failing to fulfil their responsibilities. Poorly documented trusts can lead to their own legal complications.
Therefore, the more pertinent question is not “trust or succession?” but rather: which assets should remain in the owner’s estate, and which should be structured into a trust before death? For many families, the answer may involve both approaches. A well-constructed family trust can hold assets that require continuity, while a will can address property left outside the trust. In this scenario, succession serves as a residual mechanism rather than the entire estate plan.
This discussion continues in Part III, which will explore the legal reforms supporting modern family trusts in greater detail, outline the required documentation, and examine Kenyan court cases that illustrate the consequences of inadequately substantiated trusts.
The key point to remember is this: succession distributes what remains after death, whereas a trust governs wealth both before and after death. The distinction lies not only in the legal framework but also in the difference between reacting to an estate and proactively planning one.
