Formation of family trust

I have been thinking about how best I can protect my family and ensure that my assets are properly managed and distributed after my demise. I have heard of ‘trusts’ as a way of avoiding disputes and ensuring that beneficiaries are taken care of without going through Court processes. I would like to know whether it is legally possible in Tanzania to set up a trust that takes effect upon death and benefit my dependents. How does this work under Tanzanian law?

MM, Mwanza

Your question raises an important aspect of estate planning. In Tanzania. It is legally possible to create arrangements that ensure management and distribution of property for the benefit of intended beneficiaries upon someone’s death. One of the recognized legal mechanisms for this purpose is the use of trusts.

Trusts in Tanzania are governed by the Trustees’ Incorporation Act (the Act) and, in appropriate circumstances, common law principles relating to equity. A trust is a legal arrangement in which a person (a settlor) transfers property to a trustee, who then holds and manages that property for the benefit of designated beneficiaries.

A trust may be created during a person’s lifetime or upon his death. Where properly established, a trustee becomes the legal holder of the property, but is legally obliged to manage and distribute it strictly in accordance with the terms of the trust deed and in the best interests of the beneficiaries. Unlike a will, which generally takes effect after probate is granted, a trust may in certain circumstances allow for more continuous and structured management of assets, particularly where beneficiaries are minors, financially inexperienced, or where the assets require long-term administration. It may also help reduce delays and disputes that sometimes arise in the administration of estates. However, it is worth understanding that creation of a valid trust must comply with legal requirements, including certainty of intention, identifiable trust property, and clearly defined beneficiaries.

Poorly drafted trusts may lead to disputes. For this reason, anyone considering setting up a trust is advised to seek legal advice, including specialist tax advice, to ensure that the structure reflects their intentions and complies with the applicable law. A lawyer can assist in determining whether a trust, a will, or a combination of both is most suitable depending on the nature of the assets and the family circumstances.