Living Trust and estate Planning
Introduction
In Uganda, proper estate and wealth management are critical to ensuring that your assets benefit your loved ones according to your wishes. A well-drafted or structured trust can be a vital instrument for preserving wealth, avoiding legal complications, and protecting beneficiaries. This essay explains trusts, highlights their advantages and provides practical guidance.
What Is A Trust?
A trust is a fiduciary relationship where the settlor transfers ownership of certain assets to a trustee, who holds andvmanages the assets for the beneficiaries’ benefit. The trustee has a legal duty to act in the best interests of thevbeneficiaries as prescribed by the trust deed and the Trustees Act Cap. 270.
The Trustees Act, Cap. 270, imposes fiduciary duties on trustees to act prudently and in good faith. Failure may leadvto court action by beneficiaries.
The Trustees Incorporation Act, Cap. 271, allows some trustees to incorporate, providing continuity and limitedvliability
Difference Between A Will and A TRUST
A Will requires probate under the Succession Act Cap. 268, which may take months or years, during which assets are inaccessible. For instance, if Mrs. Nabiryo dies leaving a will, her estate could be frozen until the probate process concludes, delaying the inheritance.
A Living Trust permits assets to be retitled under the trust during the settlor’s life, allowing immediate and private management by trustees, bypassing probate delays and costs.
Things To Avoid When Managing Your Assets
• Do not leave assets directly to your children. Instead, create a trust under the Trustees Act, Cap. 270, and transfer the assets to the trust. Name your children as beneficiaries of the trust. The trustee will manage and protect the assets on behalf of your children until they meet the conditions for distribution, ensuring prudent administration and protection from premature dissipation.
• Avoid naming children directly as beneficiaries of life insurance policies. Instead, designate the trust as the beneficiary of the
policy, with your children as beneficiaries of the trust. This allows the trustee to manage the proceeds according to the trust terms and safeguards the inheritance from potential mismanagement or creditors.
• Do not put the title of your home property directly in your children’s names. Use a trust to hold the property title. The trust becomes the legal owner, and your children are the beneficiaries. Property held in trust benefits from easier management, protection under the law, and avoids probating the property which can be costly and lengthy.
• Avoid opening joint bank accounts with your children. Joint accounts can expose your funds to unnecessary liabilities and complications upon your incapacity or death. Instead, open bank accounts in the name of the trust. The trustee can manage these accounts seamlessly, and upon your incapacity or death, the successor trustee can step in without court intervention.
This arrangement provides continuity and legal certainty under the law.
•Do not give your children lump-sum inheritances outright. Use a trust with a spendthrift clause or provision specifying controlled distributions. This protects the inheritance from being squandered and provides a mechanism to manage the timing and amount of funds released, tailored to each beneficiary’s circumstances.
•Prevent probate hassles by creating a fully funded trust. Transfer all your assets like land, bank accounts, investments into the trust while alive. This avoids the costly and often delayed probate process under the law, ensuring your family receives the inheritance smoothly and privately according to your wishes.
How To Create A Trust
• List your assets including land, bank accounts, investments, and insurance policies.
• Choose trustees by selecting trusted individuals or include a corporate trustee.
• Identify beneficiaries and specify clearly who will benefit, avoiding ambiguity.
• Draft a Trust Deed by engaging a qualified lawyer to prepare a clear and legally sound document compliant with the law.
• Sign and witness the Trust Deed, notarization assists in evidencing validity.
Register the Trust, if Applicable. Some trusts require registration per the Trustees Incorporation Act Cap. 271, especially if managed by a trustee company.
• Retitle assets by transferring ownership into the trust’s name (for land, register the change with the Ministry of Lands, Housing and Urban Development).
• Trust administration, trustees manage and distribute assets according to the deed and fiduciary standards prescribed by the law.
Conclusion
Trusts offer families a reliable, flexible, and legally secure method of preserving wealth, protecting assets from unnecessary delays and disputes, and ensuring that beneficiaries receive support exactly as intended. Trusts also minimize probate, safeguard interests against creditors, and provide professional stewardship through trustees. By establishing a trust, you create a lasting legacy that efficiently transcends generations under the law.
