Accepting appointment as a trustee is more than a courtesy to family or colleagues. The role carries enforceable duties and, in some circumstances, personal liability. Anyone asked to act , or considering appointing others , should understand what the position involves.
What duties does a trustee owe in Kenya?
- Act within the powers given by the trust instrument and the Trustee Act.
- Act in the interests of the beneficiaries, and deal impartially between them.
- Exercise the care and prudence of a reasonable person administering property for others.
- Keep accurate accounts and records of trust property and transactions.
- Avoid profiting personally from the trust or placing personal interests in conflict with it.
- Act jointly with co-trustees as the instrument requires, and invest trust funds prudently.
What happens if a trustee breaches a duty?
Beneficiaries who identify a breach can seek an account of the trust property, restoration of property lost through the breach, and in serious cases the removal and replacement of the trustee. A trustee found in breach may be personally liable to make good the loss. Courts supervise trusts and can give directions where trustees are genuinely uncertain how to act, and honest trustees who act reasonably and on advice are in a far stronger position than those who act alone or in secrecy.
How can trustees protect themselves?
Good administration is the answer. Keep minutes of decisions, maintain proper accounts, take professional advice before significant investments or land dealings, and communicate with beneficiaries so that decisions are understood rather than suspected. Where the trust holds investments or transacts with banks, trustees should also expect institutions to require evidence of their authority. Our governance and advisory team advises trustees on their duties and on ongoing administration, and our banking and securities practice assists where trust property involves financial assets or lending. Trustees who wish to retire should follow the instrument’s procedure for appointing a replacement and should hand over accounts and documents rather than simply stepping aside. A trustee who has acted honestly and reasonably, and who has taken advice on difficult decisions, is also far better placed if a beneficiary later questions a transaction. The Trustee Act itself can be read on Kenya Law.
For guidance on your specific situation, contact CS Advocates LLP , call, WhatsApp, or book a confidential consultation at our Westlands, Nairobi office.