Registration of a charitable trust or foundation in Kenya

Registration of a Charitable Trust or Foundation in Kenya

Black Law dictionary defines a Charitable Trust as One in which property held by a trustee must be used for charitable purposes (advancement of health, religion, etc.). Fiduciary relationship with respect to property arising as a result of a manifestation of an intention to create it, and subjecting the person by whom the property is held to equitable duties to deal with the property for a charitable purpose.

Procedure for Registration of a Charitable Trust in Kenya.

1. Preparation of trust deed

A trust deed must be prepared. It contains the name of the trust, the objectives of the trust, the names in full and addresses of the trustees including powers of the trustees to change and appoint other trustees.

• Payment of Stamp duty

The trust document duly signed by trustees is submitted for stamp duty.

• Registration

Registration may involve two stages

• Registration under the Registry of Documents Act.
• Incorporation under the Perpetual Successions Act.

Registration under the Registration of Documents Act in Kenya

The process may take 1-3 weeks. Registration under the RDA does not make a trust into a body corporate trust yet. However, the trust can commence implementing the objects of the trust as a simple trust.

Incorporation under the Trustees (Perpetual Succession) Act

After registration under the registry of documents, a certified copy of trust deed and a petition for incorporation is lodged with the Business Registration Service for incorporation of trust. The Trust may be incorporated under the TPSA, making it a body corporate. In the petition, it must be stated that the trustees require incorporation of a trust and provide a representation of the common seal of the trust, which is round with the name of the trust inscribed.

Advantages of establishing a charitable trust

• Tax Savings. By transferring assets to a charitable trust, you can often minimise income tax, capital gains, and estate taxes that would otherwise need to be paid by you or your estate.
• Asset Protection. Since assets that you transfer to a trust are no longer considered your property, establishing a trust can help shield your charitable gift from the risk of loss, should you face a lawsuit or incur another substantial liability.
• Enhanced Certainty. Most forms of trusts are recognized by state and federal courts around the country, and you can use your trust documents to establish clear rules around your charitable donation. As a result, when you use a trust for your charitable giving, you can feel confident that your final wishes will be carried through.

Disadvantages/Limitations of Charitable Trusts

• When establishing a trust for charitable purposes, the trust will often need to be irrevocable. This means that you will not be able to pull assets back out of the trust should you need to do so in the future.
• Cost implications- There are costs involved with establishing a trust as well, though these costs will often be offset by the tax benefits involved. 

The process takes an average of 12-18 months to the issuance of a certificate of Incorporation.

Please click here to read FAQ’s of registering a trust in Kenya.