By Harold Atukwatse | Managing Partner | Adalci Advocates | harold@adalci.co.ug 

Download PDF

How to Draft and Register a Trust in Uganda: A Complete Legal Guide

Trusts are one of the most powerful yet underutilised tools in estate planning and asset management in Uganda. Whether you are a high-net-worth individual seeking to protect generational wealth, a family looking to provide for dependants, or a business owner planning for succession, a properly constituted trust offers legal certainty, flexibility, and significant tax and administrative advantages under Ugandan law.

This guide breaks down the legal framework governing trusts in Uganda, the types of trusts available, their comparative advantages, and the step-by-step process for drafting and registering one.

The legal framework for trusts in Uganda

Trusts in Uganda are primarily governed by the Trustees Act, Cap. 270 (Laws of Uganda), which draws heavily from English equity principles and common law jurisprudence. Additional oversight is provided under the Registration of Documents Act, the Stamp Duty Act, and where charitable purposes are involved the Non-Governmental Organisations Act. Court oversight of trusts falls under the Judicature Act and equitable jurisdiction of the High Court of Uganda.

A trust is a legal arrangement in which a settlor (the person creating the trust) transfers property to a trustee (an individual or corporate entity), who holds and manages it for the benefit of one or more beneficiaries according to the terms set out in a trust deed.

Types of trusts under Ugandan law

Ugandan law recognises several categories of trusts, each serving distinct legal and practical purposes:

1. Express Trusts

Created deliberately and explicitly by a settlor, whether during their lifetime (inter vivos) or by will (testamentary). Express trusts are the most common form and require a clear declaration of trust, identifiable beneficiaries, and certainty of subject matter.

2. Resulting Trusts

Arise by operation of law where property is transferred but no effective beneficial interest is declared. Courts impose these to prevent unjust enrichment, for example, where a business partner funds the purchase of property registered solely in the other partner’s name.

3. Constructive Trusts

Imposed by equity regardless of the parties’ intentions, typically in cases of fraud, breach of fiduciary duty, or unconscionable conduct. These are remedial trusts and cannot be registered in advance.

4. Charitable Trusts

Created for purposes that benefit the public; such as education, religious advancement, poverty relief, or community development. Charitable trusts enjoy significant tax exemptions under the Income Tax Act and are subject to oversight by the NGO Bureau.

5. Discretionary Trusts

The trustee is given discretion over when, how, and to whom trust income and capital are distributed among a defined class of beneficiaries. These are highly popular for family estate planning as they allow flexible responses to beneficiaries’ changing circumstances.

6. Fixed Interest Trusts

Each beneficiary has a defined, predetermined entitlement to income or capital. There is no trustee discretion — distributions are made exactly as specified in the deed. These provide predictability but less flexibility.

7. Purpose Trusts

Established for a specific non-charitable purpose, such as maintaining a family property or holding shares in a company. While not as formally codified in Uganda as in offshore jurisdictions, purpose trusts are recognised in equity.

Comparing Trust Types: Which one is right for you?

The table below provides a practical comparison of the most commonly used trust types in Uganda:

Discretionary Trust vs. Fixed Interest Trust

A discretionary trust provides maximum flexibility, ideal for families with multiple beneficiaries and evolving needs. The trustee can respond to changes in circumstance (illness, financial hardship, education needs) without amending the deed. However, it requires a high level of trust in the appointed trustee and can create uncertainty among beneficiaries regarding their entitlements.

A fixed interest trust, by contrast, is more transparent and predictable. It suits situations where the settlor wishes to define exactly what each beneficiary receives, reducing room for dispute. The trade-off is rigidity , amending fixed entitlements requires a formal deed of variation and, in some cases, court approval.

Charitable Trust vs. Private Trust

Charitable trusts are uniquely advantageous from a tax perspective. Under the Income Tax Act (Uganda), income derived by a charitable trust that is applied solely to charitable purposes is exempt from income tax. They also carry reputational and philanthropic benefits. However, the regulatory requirements are more demanding, and the trust’s purposes must genuinely serve the public good to sustain the charitable status.

Private trusts, whether for families or business succession, offer confidentiality and estate planning control but do not attract the same tax exemptions, though they may still achieve stamp duty and probate savings.

 

Key Benefits of Establishing a Trust in Uganda

A properly structured trust offers the following advantages:

• Asset protection from creditors, litigation, and matrimonial claims
• Avoidance of the probate process, ensuring faster and private distribution of your estate
• Continuity of business and investment assets across generations
• Provision for vulnerable beneficiaries (minors, persons with disabilities) without direct asset ownership
• Tax efficiency — particularly for charitable trusts and those holding investment assets
• Confidentiality, as trusts are not publicly filed in the same way as wills admitted to probate
• Flexibility in asset management, especially under discretionary structures

Step-by-step process for drafting and registering a trust in Uganda

Step 1: Determine the purpose and structure of the trust

Before any drafting begins, you must clearly define: the purpose of the trust; the nature and value of assets to be settled; the identity of the settlor, trustee(s), and beneficiaries; the duration of the trust; and the powers and duties of the trustee. Engaging a qualified estate planning lawyer at this stage is critical to ensure the structure aligns with your intentions and is legally sound.

Step 2: Appoint Suitable Trustees

Under the Trustees Act, trustees must be legal adults of sound mind. A corporate trustee (such as a trust company or licensed financial institution) may be appointed for professional management. It is advisable to appoint at least two trustees — or a professional corporate trustee — to ensure continuity and independent oversight. The trustee’s duties include acting in the best interests of beneficiaries, maintaining trust accounts, and investing prudently.

Step 3: Draft the Trust Deed

The trust deed is the primary legal document governing the trust. It must be drafted with precision and should include:

• The name and date of the trust
• Full identity of the settlor, trustee(s), and beneficiaries (or class of beneficiaries)
• A clear description of the property or assets being settled into the trust
• The objects and purposes of the trust
• Trustee powers — including investment, sale, leasing, and borrowing powers
• Provisions for trustee succession, removal, and replacement
• Distribution rules — whether fixed or discretionary
• Provisions for the variation or termination of the trust
• Governing law (Uganda) and dispute resolution mechanism

Step 4: Execute the Trust Deed

The trust deed must be executed in writing and signed by the settlor and all appointed trustees in the presence of a witness. Where land or real property is being settled into the trust, the deed must also be executed as a deed poll and comply with the requirements of the Registration of Titles Act and/or the Registration of Documents Act.

Step 5: Pay Stamp Duty

Under the Stamp Duty Act (Uganda), the trust deed is a chargeable instrument. Stamp duty is assessed on the value of assets transferred into the trust. The deed must be presented to the Uganda Revenue Authority (URA) for stamp duty assessment and payment before it can be registered.

Failure to stamp a deed renders it inadmissible as evidence in legal proceedings.

Step 6: Register the Trust Deed

Once stamped, the trust deed should be registered at the Uganda Registration Services Bureau (URSB). Registration is not strictly mandatory for all private trusts, but it is strongly recommended as it:

• Creates a public record of the trust’s existence
• Protects the trust from fraudulent claims or challenges
• Facilitates dealings with third parties (banks, land registries, government agencies)
• Is a prerequisite for holding registered land or immovable property in the trust’s name

Where the trust holds real property, the title deeds must also be transferred at the relevant District Land Registry or Mailo/Leasehold Registry, and the trust deed must be registered as an instrument affecting land.

Step 7: Transfer Assets into the Trust

Legal title to trust assets must be formally transferred from the settlor to the trustee(s). For land, this involves executing a transfer instrument and registering it at the relevant land registry. For shares, transfer forms must be completed and lodged with the company. For bank accounts and investments, account mandates must be updated to reflect trustee ownership.

Step 8: Ongoing Compliance and Trust Administration

Once established, the trust requires active administration. Trustees must maintain proper accounts, file annual returns where required, and comply with any reporting obligations under the Income Tax Act (especially for charitable trusts). Regular legal review of the trust deed is advisable to ensure it remains compliant with any legislative changes.

Common Pitfalls to Avoid

1. Failing to transfer legal title to trust assets, the trust cannot hold what has not been legally vested in it
2. Appointing sole trustees for trusts holding land, this creates succession and accountability risks
3. Using a poorly drafted deed that lacks clarity on trustee powers or distribution terms
4. Overlooking stamp duty obligations, which renders the deed unenforceable
5. Confusing the trust structure with a company or partnership — trusts are creatures of equity and operate on different legal principles

Conclusion

A trust, when properly structured and registered, is one of the most sophisticated estate planning instruments available to individuals and institutions in Uganda. It provides legal certainty, tax efficiency, asset protection, and generational continuity in ways that a simple will or company structure cannot match.

At Adalci Advocates, we advise clients across Uganda on the full spectrum of trust planning, from initial structuring and deed drafting to registration, asset transfer, and ongoing administration. Our multidisciplinary team brings together expertise in estate planning, commercial law, tax law, and property law to deliver comprehensive trust solutions tailored to your unique circumstances.

Contact us today to begin the conversation about protecting and preserving your legacy.

www.adalci.co.ug  |  info@adalci.co.ug

 

Disclaimer: No information provided in this article may in any way be construed as legal advice rendered by Adalci Advocates and/or any of its personnel. Professional advice must be sought from Adalci Advocates before any action is taken based on the information provided in this article. Adalci Advocates disclaims any responsibility for positions taken without due consultation and/or information reproduced without due consent.

Protect your family, business and legacy with a properly structured trust.

Whether you need help drafting a trust deed, registering a trust with URSB, transferring assets, or planning for succession, Adalci Advocates is here to help.

Contact our estate planning team today to schedule a consultation and begin securing your future.