When a trust goes wrong, a great deal is usually at stake, both money and family relationships. Trust disputes in Kenya arise where a trustee breaches their duties, where beneficiaries lose confidence in a trustee, or where the family cannot agree. This guide explains the main disputes, how a trustee can be removed, and how the court approaches them.
This guide is for beneficiaries who are concerned about a trust, trustees facing a claim, and families in conflict over a trust. It sits under our guide to trusts in Kenya, and it pairs with our guides to setting up a family trust, trust administration and to probate and administration of estates. Where the dispute is about land or a family business held in a trust, our real estate and corporate teams act alongside.
Most trust disputes fall into a few patterns. There are breach-of-trust claims, where a trustee has failed in their duties or misapplied trust assets. There are removal disputes, where the beneficiaries or co-trustees want a trustee out. There are disagreements over how the trust should be run, including over distributions and investments. And there are disputes over what the trust deed means. Family trusts are especially prone to these, because money and family feeling combine.
A breach of trust is where a trustee fails to comply with their duties or the terms of the trust, for example by misapplying assets, self-dealing, failing to account, or investing recklessly. The consequences are serious. A trustee in breach can be ordered to restore the trust fund and to make good any loss personally, to account for any profit they made, and to face an injunction to stop continuing misconduct. In a serious case, breach is also a ground for removing the trustee. The trustee’s personal exposure is the reason trustees should take their duties, and advice, seriously, as we explain in our guide to trust administration.
A trustee can be removed in more than one way. The trust deed itself often contains a power to remove and appoint trustees, and using that power, where it exists and applies, is the cleanest route. Where it does not, the Trustee Act (Cap 167) and the court’s inherent jurisdiction allow the court to remove a trustee and appoint a replacement.
The guiding principle is well settled: when the court decides whether to remove a trustee, the welfare of the beneficiaries is the paramount consideration. The court is not there to punish a trustee, but to protect the trust. So removal is ordered where the trustee’s continuance would be detrimental to the beneficiaries, which can arise from breach, from a conflict of interest, from incapacity, or from hostility between trustee and beneficiaries that endangers the proper administration of the trust.
| Route to remove a trustee | When it applies |
|---|---|
| Power in the trust deed | Where the deed gives someone the power to remove and appoint trustees |
| Application to the court | Where there is no usable deed power, or the parties are in conflict |
| Court’s guiding test | Removal where continuance is detrimental to the beneficiaries |
Beneficiaries are not powerless spectators. They are entitled to the due administration of the trust, to proper accounts and information about the trust and its assets, and to have the trustees act within the deed and their duties. Where those rights are ignored, a beneficiary can go to court to compel proper administration, to obtain accounts, to recover misapplied assets, and to remove a trustee. Knowing these rights is often what shifts a stalled trust back into proper order.
What is a breach of trust? A trustee’s failure to comply with their duties or the terms of the trust, such as misapplying assets or failing to account.
Can I have a trustee removed? Yes, under a power in the trust deed or by application to the court.
How does the court decide? By asking what the welfare of the beneficiaries requires, not by punishing the trustee.
Is a trustee personally liable for a breach? Yes. A trustee in breach can be ordered to restore the trust fund and make good the loss personally.
What rights do beneficiaries have? To proper accounts and information, to due administration, and to go to court to enforce the trust.
The recurring problems are beneficiaries who do not act on a trustee’s failures until the assets are gone; trustees who assume family goodwill excuses poor administration; and parties who fight over a trustee personally instead of focusing on what the beneficiaries need, which is the test the court actually applies. Others overlook that the trust deed may already provide a clean route to remove and replace a trustee.
Our private clients and dispute resolution teams act in trust disputes for beneficiaries and trustees: breach-of-trust claims, the removal and replacement of trustees, enforcing beneficiaries’ rights to accounts and information, and resolving family trust conflicts, in court and through negotiation. To protect a trust or defend a claim, 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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