Introduction

 

A Trust is a legal relationship in which the owner of property, mostly land or any transferable right, gives it to another to manage  and use solely for the benefit of a designated person(s). The person upon whom such rights have been conferred upon is known as a Trustee. A Trustee is given legal title to the property which is referred to as Trust property and while the Trustee is given legal title to the Trust property, in accepting title the Trustee owes a number of fiduciary duties to the beneficiaries. A beneficiary is a person(s) for whose benefit the property is entrusted. The primary duties owed by a Trustee to beneficiaries are those of loyalty, prudence and impartiality. A Trustee can be a natural person, business entity or public body. 

 

A trust is governed by the terms under which it was created, in most jurisdictions this requires a contractual trust agreement or deed. A trust deed establishes a trust and outlines the terms and conditions under which the property or assets are managed and handled for the benefit of the beneficiaries by a trustee. The trust deed transfers the ownership of the assets or property to the trustee who in turn manages them in accordance to the instructions stipulated in the trust deed. The trust deed specifies, amongst others the Trustee’s powers and duties, the termination of the trust, amendment of the trust, the rights of the beneficiaries and how the assets or property are to be distributed. The trust deed will also instruct on the conditions of such distribution ensuring all distributions are protected and done as intended, for example, for family members or charitable purposes. 

 

Regulatory Regime

1. The creation of trusts in the Zambian jurisdiction is regulated by the Trust Restrictions Act, Chapter 63 of the Laws of Zambia and the Land (Perpetual Succession) (Amendment) Act No. 11 of 2020. The Trust Restrictions Act was enacted to restrict the creation of settlements, trusts and future interests. The Land (Perpetual Succession) (Amendment) Act was enacted to provide for the perpetual succession to land. In terms of  Section 4 of the Trust Restrictions Act a trust can only be created for the following:

 

2. The benefit of a minor on his attainment of a specified age not exceeding twenty-one years; 

 

3. For a widow, either for her life or for some other period, with a gift in favour of children; 

 

4. For of a charity; 

 

5. In favour of or for the benefit of a person of unsound mind or a minor; 

 

6. For the purpose of administering an estate of a deceased person, only when that will does not go against this Act; 

 

7. To administer the property of a person declared bankrupt or a body corporate in liquidation or a person who has entered into a deed of arrangement for the benefit of his creditors; 

8. For the purpose of the administration of enemy property; 

 

9. For the purpose of the operation of a pension, superannuation or similar scheme; 

 

10. A trust that can be terminated by the beneficiary.

 

 

Documentation required to set up a Trust

1. The following documents are required to be submitted to the Ministry of Lands in order to create a Trust: 

 

2.  A Trust Deed; 

 

3. A petition detailing the nature of the Trust; 

 

4. A statement with the details of the names and physical addresses of the trustees; 

 

5. Certified copies of the official identity documents of the trustees; 

 

6. The proposed name of the Trust, which should have the words “trust” and “registered” as part of the name; 

 

7. The device of the common seal that is proposed to be used as well as the rules on  the custody and use of the common seal; 

 

8. A statement of beneficial ownership in respect of each beneficial owner which shall state;

 

9. The full names; 

 

10. the date of birth; 

 

11. The nationality; 

 

12. The country of residence; 

 

13. The residential address; and 

14. Any other prescribed particulars; 

15. A declaration that the required particulars have been submitted to the Registrar of the individual/s to whom the particulars relate; and 

 

16. A declaration stating that the requirements of the Act relating to registration have been complied with. 

What Information is needed to register a Trust

 

4.1 In order to prepare the required documents, the executor should provide information related to the following:

1. The name of the  Trust?

e.g ABC Registered  Trustees.

1. The objective of the Trust
2. The beneficiaries of the Trust

*the intended beneficiaries must be below the age of 21 and at the attainment of this age, the Trust must settle, meaning, the properties must be transferred to the Beneficiaries.

1. The assets/properties that will form part of the Trust 
2. The executor of the Trust must provide proof of ownership of the property such 

             as the Certificate(s) of Title, Offer Letter(s) among others 

1. The names of persons or a company to be appoint as Trustees
2. any restrictions or conditions to be imposed on the trustees and/ or the      

             beneficiaries.

1. If the trust property includes properties that the executor derives income from, 

             what should happen to the income generated when the trust settles? Will the 

             executor want to have access to the funds for their lifetime? 

 

2. If the trust assets include a property where the executor live as a family, will they require to have life interests in it before the trust can settle to the beneficiary (ies)? Because once the trust settles in the absence of a life interest, the beneficiaries will have sole control over the trust assets and the executpr will require their consent to continue living in or getting an income from the trust assets in the absence of life interests. 

 

Registration fees 

 

Registration of the Trust Deed at the High Court and the Ministry of Lands is currently totalling K1,675.47 .