Review the Law on Trusts in Uganda

The Commission has commenced the review of Trusts law in Uganda. The review is intended to update the law relating to creation, administration and management of trusts.

A trust is the relationship that arises wherever a person (called a settlor) transfers the management and administration of property to another person (called the trustee) to hold such property for the benefit of some other person(s) (called a beneficiary) for some objects permitted by law, in such a way that the real benefit of the property accrues, not to the trustee, but to the beneficiaries or objects of the trust. A trust may be created as Public trust (charitable trusts) or Private.

Trusts play a crucial role in Uganda’s society either as a social tool by families, public charities or as a vehicle for commercial purposes. In Uganda, the creation, management and administration of trusts is scattered in various pieces of legislation. These include; Trustees Act, Cap 164, Trustees (Incorporation) Act, Cap 165, Public Trustees Act, Cap, 162, Trust Corporation (Probate and Administration Act, Cap 163, Succession Act and Mental Health Act. Trusts may be public (charitable) or private. Most of the laws relating to trusts are based on common law and principles of equity. For trusts to function effectively, efficiently and sensibly, it is necessary to have in place clear and progressive rules on the creation, administration and management of trusts; processes for decision-making; and resolution of disputes that may arise.

The review seeks to address gaps and challenges posed by the current legal framework in the regulation of trusts. Most of the laws under the current legal framework were enacted in the 1950s, and as such they are outdated, inadequate and not in tandem with the current modern trends of trust regulation. For example, the Trustees Act, does not address contemporary issues which would enable trustees to effectively carry out their duties, restricts general powers of a trustee, restricts power to invest and delegation.

Further, the current legal framework is not responsive global trends in trust business management. For example, globalization has widened the scope of doing business across borders. The current framework regulating trust management is restrictive and not responsive to these global challenges. For example, the trustees Act limits the investments capacity of trustees to England, Kenya and Tanzania. Accordingly, the review is intended to address these global challenges.

Finally, the current law lacks clarity and certainty as to the rules governing creation, administration and management of trusts, and mode of appointing trustees. Particularly, this is attributed to the fact that laws relating to trusts are scattered in various pieces of legislation hence the need to harmonise these laws to provide more certainty and clarity.

It is against this background, that the commission is undertaking the review of trust related laws with a view of updating them to match with modern trends in management and administration of trusts; enhance competitiveness; provide clarity and certainty of law; enhance the use of trusts as a vehicle for family wealth preservation.

The overall objective of the review is to reform and update the law of trusts. Specifically, the review will:

The review intends to update the law governing trusts to put in place a system that supports the ease, certainty and clarity in the creation trusts; enhanced and effective administration and management of trusts; and proper functioning of trusts.