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The Protective Trust is a form of settlement found in England and Wales and several Commonwealth countries. It has marked similarities to asset-protection trusts found in several offshore jurisdictions and US Spendthrift trusts.

In such a trust assets are ordinarily held to pay an income to the beneficiary. The beneficiary may also have access to capital of the trust with the trustee’s permission. The right to receive income from a trust would ordinarily be an asset in the hands of the beneficiary and could be sold, thwarting the intention of the donor to spread the gift over the recipient’s lifetime. Additionally on a bankruptcy the right to the income would be sold by the beneficiary’s trustee in bankruptcy.

To give protection to beneficiaries, a protective trust automatically converts into a discretionary trust, under which the beneficiary has no right to the income, if he or she does anything which breaches a condition specified in the document creating the trust.

The establishment of this discretionary trust is ordinarily exempt from the charge to UK inheritance tax on the establishment of discretionary trusts.

Such protective trusts have a longstanding history. To reduce the verbose definitions that had previously to be recited in the establishing documents of a protective trust, in England and Wales s33 of the Trustee Act 1925 (and equivalent legislation in other jurisdictions) provides that this protection will arise in any trust described as a “protective trust” in its trust deed.

Protective trusts are subject to challenge under creditor protection legislation as are any other forms of asset-protection. However many jurisdictions do not permit a trust to be broken where a debtor who remains a discretionary beneficiary only under a trust and cannot access the fund without the exercise of the trustees’ discretion in his favour.

See also

• Asset protection

• Bankruptcy Information Bankruptcy is not the ideal situation but is sometimes necesary. Know your rights and don't try to do it alone, understand your bankruptcy options and
• United States Bankruptcy Court for the District of Rhode Island General information such as office hours, filing of documents, fees, calendars, local rules, general orders, and answers to frequently asked questions.
• BankruptcyData.Com - Experts in Bankruptcy Research Providing bankruptcy and distressed securities research on distressed organizations in Chapter 11, Chapter 7, reorganization, insolvency, default,
• District of Minnesota Provides administrative and procedural information as well as access to local rules.
• Bankruptcyhelp.org.uk: Uk's leading bankruptcy advice portal Bankruptcyhelp.org.uk: Uk's leading bankruptcy advice portal. Ideal starting point for people thinking about bankruptcy.
• Bankruptcy Lawyers - Free Bankruptcy Consultation - Call 800-290-1000 Legal Helpers is the largest bankruptcy firm in the Country. Learn all about bankruptcy and receive a FREE online consultation.
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• The Truth About Bankruptcy Find out why Dave Ramsey says bankruptcy is not a good way to get out of debt.
• Federal Court of Australia - information for litigants A bankruptcy case may be heard by the Federal Court or the Federal Magistrates Court. Most bankruptcy cases are heard by the Federal Magistrates Court.
• United States Bankruptcy Court - Western District of Tennessee :: TNWB Provides administrative court information as well as access to local rules.
• FindLaw: Legal Subjects: Bankruptcy Law FindLaw Newsletters · Bankruptcy Law Attorneys, Lawyers and Law Firms (Find a Lawyer); Bankruptcy Law Expert Witnesses and Consultants · FindLaw Classifieds
• United States Bankruptcy Court for the Western District of Kentucky The web site for the United States Bankruptcy Court of the Western District of Kentucky offers general court information and case-related information.
• National Association of Bankruptcy Trustees A Chapter 7 Trustee is committed to excellence in the administration of bankruptcy cases and to carry out all duties with the utmost integrity, diligence,
• Bankruptcy Lawyers & Chapter 13 Attorneys Personal bankruptcy resource center. We can help to take the guess work out of the process. Try our New Free Evaluation Tool to help find out if bankruptcy
• US CODE–TITLE 11–BANKRUPTCY 11–BANKRUPTCY. rwb rule. CHAPTER 1–GENERAL PROVISIONS; CHAPTER 3–CASE ADMINISTRATION; CHAPTER 5–CREDITORS, THE DEBTOR, AND THE ESTATE
• United States Bankruptcy Courts Each of the 94 federal judicial districts handles bankruptcy matters, and in almost all districts, bankruptcy cases are filed in the bankruptcy court.