Trust Restrictions In Zambia
By Dickson Jere
Yesterday, I wrote about the restrictions imposed on the creation of Trusts in Zambia, which was passed by Parliament in 1970 under the Trust Restrictions Act (Chapter 63 of the Laws of Zambian). I received a lot of questions as to why the government then decided to impose such restrictions.
So, I went down memory lane and found the speech delivered in Parliament by the Minister of Justice and learned Attorney General – Fitzpatrick Chuula (as he then was).
He made the following remarks in justifying the Bill;
“Mr. Speaker, Sir, the primary purpose of this Bill is to prevent property, whether real or personal, being tied up for long periods, which can run into many generations. The policy of government is to ensure maximum utilization of the wealth of the country and thereby stimulate economic growth,” the Minister said.
Here, the Minister clearly stated that property should never be tied up for many generations, which effectively stopped creating trusts that would keep property for future generations.
He continued;
“To achieve this end, it is necessary to restrict the creation of private trusts, settlements and future interests. These devices have throughout history been used to limit the power of alienation of property, with the result that the property has been tied up in perpetuity”.
And here is a classic one!
“We do not wish to see our society a class of persons who make no material contribution to the national output, but live entirely on the income of settled property,” he said.
I laughed when I read this portion. The government wanted everyone to work as opposed to sit at home and enjoy rentals from properties left in a Trust by their grandparents!
Then, he went on to explain that the restrictions will not affect the Wills and Last Testaments in Zambia.
He said; “This Bill will not restrict the right or ability of any individual to make a Will giving his property to his wife or his children, or indeed to any persons to whom he may wish to give it.”
He then concluded; “This Bill only prevents a person tying up his property by way of trust, a settlement or the creation of a future interest, so that the beneficiaries receive only income, but cannot touch the capital.”
The law, however, gives exceptions which include trusts that are created for Charity, Pension Schemes, Bankrupt person or person of unsound mind, minor (below 21 years), or indeed for administration of an estate but that should not offend the same law.
Now, you know the genesis of why Zambians always frown upon those who have inherited wealth from their parents. It was embedded in this thinking that it was wrong to inherit and benefit from your family Trust but rather one must work for his money. More like a poverty mentality thinking.
Or was it humanism?
This law needs to be repealed so that we can allow the creation of Family Trusts that can hold property in perpetuity. This will also prevent the selling of property to foreigners by children who inherit from their deceased parents but rather keep the property in the family for next generation.
In fact, this law directs contradicts the Land (Perpetual Succession) Act, which allows for the creation of Trusts. We need a cleanup of our land laws.