Setting up a trust is the easy part. Running it well, year after year, is where trusts succeed or fail. Trust administration in Kenya is the ongoing work of managing the assets, serving the beneficiaries and meeting a trustee’s strict legal duties. This guide explains what those duties are, what administration involves, and when to use a professional trustee.
This guide is for trustees, settlors choosing trustees, and beneficiaries who want to understand how a trust should be run. It sits under our guide to trusts in Kenya, and it pairs with our guide to setting up a family trust and our guide to probate and administration of estates. Where administration goes wrong, see our guide to trust disputes.
A trustee holds other people’s wealth, and the law holds them to a high standard. Under the Trustee Act (Cap 167) and the rules of equity, the central duties are these:
In practice, beyond the duties, administration is a stream of practical tasks. The trustees hold and safeguard the assets, invest and review the investments, make distributions to beneficiaries in line with the deed, keep accounts and minutes of their decisions, and deal with the trust’s tax and any reporting obligations. In addition, they must act jointly, so decisions are made together, and they must act personally, giving the trust their own judgment rather than simply doing as one person directs. Good administration is careful, recorded and consistent, because a trustee may have to justify every decision later.
A recurring decision is who should be a trustee. On one hand, family members know the family and cost nothing, but they may lack the time, expertise or independence a trust needs, and family trustees are often where disputes begin. By contrast, a professional trustee brings independence, continuity and expertise, and takes the administrative burden off the family, at a cost. Many trusts use a mix, pairing a family trustee who knows the beneficiaries with a professional who runs the administration. The right choice depends on the size and complexity of the trust and the harmony of the family.
Good administration is not box-ticking. It protects the beneficiaries, it protects the trustees, and it protects the trust itself. A trust that is well run, with clear accounts and recorded decisions, delivers what the settlor intended and is hard to attack. A trust that is neglected, with no accounts, idle assets and undocumented decisions, is where breaches happen and disputes grow. In our view the quality of administration is what separates a trust that lasts from one that ends up in court, which we cover in our guide to trust disputes in Kenya.
What does a trustee actually do? Holds and manages the trust assets, invests them, makes distributions, keeps accounts, and complies with the trustee’s duties and the trust deed.
Can a trustee be paid or benefit from the trust? A trustee must not profit personally from the trust unless the deed or the law allows it, and must avoid conflicts of interest.
Do trustees have to keep accounts? Yes. Keeping proper records and accounts, and informing beneficiaries, is a core duty.
Should we use a professional trustee? Often, yes, especially for larger or complex trusts, or where family trustees lack the time, expertise or independence.
What happens if a trustee gets it wrong? It can be a breach of trust, for which the trustee may be personally liable and can be removed.
For example, the common failures are trustees who do not read or follow the deed; who keep no proper accounts; who let assets sit idle or invest recklessly; who favour one beneficiary over others; and who let their own interests conflict with the trust. Each of these is both bad administration and a potential breach of trust.
Our private clients team advises and supports trustees on the full run of trust administration: understanding and meeting their duties, keeping the trust compliant, making and documenting decisions, and dealing with beneficiaries. We also act as or alongside professional trustees. To set up trustee support or review how a trust is run, contact John Maina, Partner, at OLM Law Advocates LLP.
This article is a general guide only and is not legal advice. Please seek advice on your specific circumstances.
OLM Law Advocates LLP advises families and individuals on wills, probate, family trusts and succession planning.
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