TSEM6261 | Legal background to trusts and estates: protective trust

Trustee Act 1925 Section 33

A trust document may contain provisions to stop a beneficiary from prejudicing his right to the income of the trust. Prejudicial actions could include surrendering or assigning the interest, or becoming bankrupt.

The safeguard provides for the interest to cease. Instead, the trustees have discretion to apply income to a class of beneficiaries including the original beneficiary. They usually do this by applying Section 33 Trustee Act 1925.

It converts a non-discretionary trust into a discretionary trust.