46. Protective Trusts

(1) The terms of a Trust may make the interest of the Beneficiary liable to termination.

(2) Without prejudice to the generality of subsection 46(1), the terms of a Trust may make the interest of a Beneficiary in the Income or capital of the Trust Property subject to:

• (a) a restriction on alienation or disposal; or
• (b) a diminution or termination in the event of the Beneficiary becoming bankrupt or any of his Property becoming liable to sequestration for the benefit of his creditors.

(3) A Trust under which the interest of a Beneficiary is subject to restriction, diminution or termination under subsection 46(2) is a Protective Trust.

(4) A provision in the terms of a Trust requiring the interest of a Beneficiary in Trust Property to be held upon a Protective Trust shall be construed as a requirement that the interest of the Beneficiary be subject to restriction, diminution or termination as mentioned in subsection 46(2).

47. Creditors claims in relation to a Discretionary Trust

(1) In the case of a Discretionary Trust, whether or not such Trust contains a protective provision, a creditor of a Beneficiary may not compel a distribution that is subject to the Trustee’s discretion, even if:

• (a) the discretion is expressed in the form of a standard of distribution; or
• (b) the Trustee has abused the discretion.

(2) To the extent a Trustee has not complied with a standard of distribution or has abused a discretion:

• (a) a distribution may be ordered by the Court to satisfy a judgment or Court order against the Beneficiary for support or maintenance of the Beneficiary’s child, spouse or former spouse; and
• (b) the Court shall direct the Trustee to pay to the child, spouse, or former spouse such amount as is equitable under the circumstances but not more than the amount the Trustee would have been required to distribute to or for the benefit of the Beneficiary had the Trustee complied with the standard or not abused the discretion.