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General Process:

1. Preparation of the Trust Deed by the advocate;

The Trust deed shall contain the following pertinent information: name and objectives of the Trust, full names and addresses of the Trustees and their powers thereto. Thereafter it must be signed by all the Trustees.

1. Payment of Stamp Duty;

After preparation of the Trust Deep and the document being signed appropriately by the Trustees. The Trust Document is submitted for Stamp duty.

1. Registration under the Registry of Documents Act;

The trustees can commence implementing the objects of the trust as a simple trust i.e. a duly executed trust deed once registration has been finalized at the Registry of Documents at Ardhi House.

1. Incorporation under the Perpetual Successions Act;

After step (c) above, the advocate shall lodge with the Minister of Lands, a Certified copy of the trust deed and a petition for incorporation prepared in the prescribed form. The process takes an average of 7-10 months to procure the Certificate of Incorporation of the trust.

 

Why Go a Further Step to Incorporation a Trust:

Once a Trust is incorporated under the Trustees (Perpetual Succession) Act Chapter 164 of the Laws of Kenya, the trustees shall thereupon become a body corporate by the name described in the certificate, and the Trust shall be able to:

1. have perpetual succession and a common seal;
2. power to sue and be sued in their corporate name; and,
3. subject to the conditions and directions contained in the certificate, to hold and acquire, and by instruments under the common seal to convey, transfer, assign, charge and demise any movable or immovable property or any interest therein now or hereafter belonging to, or held for the benefit of, the trust concerned in the same manner and subject to such restrictions and provisions as trustees might so do without incorporation”.

Another advantage is that the Income Tax Act provides that the income of a registered trust is exempted from taxation.  The Finance Act 2006 further provides that any contributions made from a tax exempt entity shall be exempt from tax – this mainly applies for charitable trusts and one has to apply to the Minister to be exempt from paying taxes.

Further, charitable trusts are exempted from paying land rates payable on its immovable properties and also are exempted on stamp duty when buying land and property;

In addition, since charities are widely recognized as existing for social good this shall attract and aid in fundraising. To note, organizations with charitable status cannot use assets for any purpose other than the pursuit of charitable objectives. The assets of a charity can never be used for private benefit.

 

Cons to Note in the Process of the Incorporation of a Trust:

1. The process is quite lengthy especially the second stage which is the incorporation of the Trust as this may take more than 6 months;
2. The paperwork is tedious;
3. The process is costly compared to say; incorporating a company;
4. Individuals on the board of a charity, often referred to as trustees, must not be paid unless the constitution of a charity, authorizes it;
5. Charities cannot raise equity investment.

 

Costs and Requirements:

Should you be interested to work with us, please contact us on enquiries@jradvocates.com for any further information.