The Republic of Rwanda has enacted a new Law n° 063/2021 of 14/10/2021 governing trusts which has repealed Law n° 20/2013 of 25/03/2013 regulating the creation of trusts and trustees.

A trust must be created voluntarily in writing by people having a mutual relationship (i.e. by two or more persons).

A trust is a fund created in writing as a result of mutual undertaking between a trustee (a person obliged to fulfil any obligation under the trust instrument) and a property owner (a person who transfers his/her property to a trustee for the benefit of a beneficiary or beneficiaries) for a specified period or a specific purpose. The trustee must properly manage such property in accordance with the trust instrument concluded with the property owner.

The new law provides for types of trusts, regulates the creation of trusts, trustees and their activities and sets out the requirements for their management.

The different types of trust include:

I)Rwandan trust : Any trust whose creation is based on Rwandan law as its proper law whether or not it was created on the territory of Rwanda or whether it is being operated by residents of Rwanda or not. If a trust arose as a consequence of death, from a court decision or by operation of law, the Rwandan law is their proper law. This exists for a maximum period of ninety-nine (99) years. However, after a period of ninety-nine (99) years, a settler or beneficiaries may create another trust.

II) A purpose trust that holds a property located in Rwanda can exist for a period of more than ninety-nine (99) years.

III) Charitable trust: This promotes a charitable purpose and does not benefit any specific person.

IV) Protective trust: This is created where beneficiaries are unable to sell or give away their equitable interests in the trust property for the purposes of protecting beneficiaries who need legal protection in order to prevent them from frittering away their inheritance.

V)Other types of Rwandan trusts not referred to under the Law of Trusts  may be created by the settlor by means of a trust instrument, and is registered and functions in accordance with the provisions of the Law of Trusts.

A trust has a legal personality separate from its founder, trustees and beneficiaries upon its registration with the Registrar General’s Office.

A trustee is liable for a breach of trust he or she commits or in which the trustee participates. A trustee who breaches the trust is liable for the loss or depreciation in value of the trust property resulting from such breach and for the profit, if any, which would have accrued to the trust property if there had been no such breach. In case there are two (2) or more breaches of trust, a trustee cannot set off a gain from one breach of trust against a loss resulting from another breach of trust. A trustee who resigns in order to facilitate a breach of trust is liable for that breach as if he or she did not resign.

In case two or more trustees are liable in respect of a breach of trust, they are jointly and severally liable.

The following persons are recognized:

• the founder: the party that initiated the trust;

•the beneficiary: a person or a corporation entitled to benefit under a trust or who may possess and exercise discretional favour on distribution of property of the trust;

•the trustee: any person or a corporation established under the law or an entity having legal personality, appointed by the competent authority or by a court to act as a professional trustee; and

•the agent: an executor, his/her representative, the administrator of the testate estate, the administrator of the intestate estate or the administrator appointed by an authority.

For a trust to be valid, it must not:

1° violate the law;

2° purport to confer a right, power or impose an obligation or to execute the obligation contrary to the law;

3° purport to apply directly to immovable property situated in Rwanda without complying with this Law, unless the trust arises as a consequence of death, a court decision or by operation of law;

4° be established by duress, fraud, mistake, undue influence or misrepresentation or in breach of fiduciary duty;

5° be immoral or contrary to public order;