The CPF Trust Fund has two main
categories of settlors; Category I: The
appointed next of kin who become
automatic settlors upon death of a
principal member of a pension which has
established a relationship with the Trust
Fund and who at the point of death had
children who are minors. Category II:
Settlors who while alive elect to set up a
trust to ensure that the legacy/wishes will
be upheld posthumous.
Could you please detail to us
the benefits members of the
Trust Fund can expect?
The CPF Trust Fund avails numerous
benefits to beneficiaries; one of which
is anonymity. The African social fabric
has broken down bringing on board a
lot of blended families which become
problematic upon the demise of the
principal provider. The CPF Trust Fund
is a perfect instrument to make provisions
for such children who would otherwise be
discriminated against for circumstances
that are not of their choosing.
CPF Imara offers flexibility in how assets
are distributed by the grantor setting out
in detail how the estate is to be distributed
to beneficiaries. For beneficiaries who
are unable to effectively manage money
(minors or the mentally challenged) or are
unable to make sound financial decisions,
the Trust Fund gives the grantor the option
of disbursing funds to the beneficiary in
smaller, regular amounts instead of one
large lump sum, so the beneficiary cannot
spend all the money at once. The grantor
can also specify how the funds can be spent,
for example on rent, food, healthcare, and
other necessary or unexpected expenses.
left their dependents destitute, squabbling
or the laughing stock of the country
or village (depending on the publicity
generated by family feuds) just because
they failed to plan how their property
and assets will be managed once they are
gone. The Unclaimed Financial Assets
Authority (UFAA) in November 2018
indicated that it is holding Kshs13 billion
in cash and Kshs 555.5 million in shares
that no one has claimed.
The authority indicates that 97.5 percent
of owners and beneficiaries have not
claimed the cash and securities. Moreover,
various institutions were yet to remit an
estimated Kshs 100 billion to the State
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agency; partly owing to the fact that
beneficiary records cannot be traced. The
CPF Trust Fund therefore exists to solve
this problem.
What is the current profile
of the CPF Trust Fund?
The total membership of the Trust Fund
as at 31st December 2018 is 301 members
(settlors) with a beneficiary listing of about
500. The Fund Value as at 31st December
2018 stood at Kshs. 437,781,894.18 while
the total pay outs towards the various
needs of the beneficiaries amounted to
Kshs. 5,894,524.
Moreover, CPF Imara is also a tax exempt
entity which is another avenue that
ensures protection of funds from depletion
occasioned by taxation as well as inflation.
The CPF Trust Fund provides a way to
avoid/reduce estate taxes because assets
and property placed into a trust are not
subject to these taxes. For example, with a
children's trust, a grantor can make tax free
monetary gifts from an estate to children
or grandchildren. By making these gifts,
the donor is reducing the overall taxable
amount of the estate, and thus lowering tax
liability. However, there are limits to how
much you can give without incurring taxes
where a tax expert should be able to advice
appropriately.