The Untapped Potential of Trusts in Estate Planning & Management.
As a lawyer who has handled a number of estate cases, I have observed firsthand the heartbreaking disputes that erupt among family members where they go at each other over property after the death of a loved one. Many of these conflicts could have been avoided with proper estate planning.
A will is the most common way that allows one to outline their wishes for property management and distribution upon their death. However, wills lately too have proved to be problematic in a number of ways; can be contested, delayed in probate, or even nullified by courts if improperly drafted. This is why I always advise clients to engage an experienced lawyer when preparing a will.
But today, I want to shade more light on an even more powerful tool for estate management, A trust. My inspiration for this piece comes from a recent consultation with a concerned mum. She has a child with special needs and was deeply worried about her child’s future-school fees, care, and financial security once she is no longer around. Surprisingly, she had never heard of trusts as an option. I know she is not alone. Many parents who have been able to accumulate a number of properties want to Protect their hard-earned assets for future generations, prevent reckless disposal of family property (“I don’t want my children to sell everything!”). This is where a trust comes in.
What Is a Trust?
A trust is a legal relationship created either during a person’s lifetime (inter vivos) or upon death (testamentary) where a settlor (the person creating the trust) transfers assets to a trustee (an individual or organization) to manage for the benefit of beneficiaries or a specified purpose.
In simpler terms, a trust allows you to entrust your property to someone or organization (the trustee) to manage your estate according to your instructions. In Uganda, trusts are recognized and primarily governed by The Trusts Incorporation Act Cap.271.
What are the Benefits of a Trust Over a Will?
- Legal Personality & Limited Liability, once registered, a trust becomes a corporate body (under Sec. 1(3) of the Trusts Incorporation Act). This means It can sue and be sued in its own name, protecting trustees from personal liability.
- Preservation of Family Wealth, unlike a will (which may lead to property sales and disputes), a trust holds and manages assets under a Trust Deed, ensuring long-term stability.
- Protection for Vulnerable Beneficiaries, Ideal for minors, persons with disabilities, and the elderly who may not manage property effectively. Ensures structured support (e.g., education funds, medical care) without risking mismanagement.
- Avoids Family Conflicts & Lengthy Court Battles, Unlike wills, trusts are less prone to legal challenges because assets are already transferred to the trust. Reduces the risk of disputes among heirs.
- Tax Advantages, trusts enjoy tax exemptions, like income tax, making them a cost-effective estate planning tool.
How to Register a Trust?
- Draft a Trust Deed (Highly recommend a lawyer’s assistance) Clearly stating Trustees & beneficiaries and Property among others.
- Register with URSB, pay the registration fees and Submit the Trust Deed.
- Submit the registered Trust Deed and Supporting Documents like National IDs, Certificate of Title, and other relevant documents to the Ministry of Lands & Urban Development.
- Pay Required Fees.
- Issuance of Certificate of Incorporation, once approved, the trust becomes legally operational.
In conclusion, as you plan for the management of your estate – whether during your lifetime or upon death – consider a trust due to its straightforward nature and because it is less prone to lawsuits, given its advantages over traditional wills.