Part 7: Part 7: Protective Trusts and Creditors' Claims
Article 30 – Protective Trusts(1) The
Terms of the Trustmay make the interest of the Beneficiaryliable to termination.(2) Without prejudice to the generality of Article 30(1), the Terms of the Trustmay make the interest of a Beneficiaryin the Incomeor capital of the Trust Propertysubject to:(A) a restriction on alienation or disposal in whole or in part; or(B) a diminution or termination in the event of the Beneficiarybecoming bankrupt or any of its Propertybecoming liable to sequestration for the benefit of its creditors.(3) A Trustunder which the interest of a Beneficiaryis subject to restriction, diminution or termination under Article 30(2) is a Protective Trust.(4) A provision in the Terms of the Trustrequiring the interest of a Beneficiaryin the Trust Propertyto be held upon a Protective Trustmust be construed as a requirement that the interest of the Beneficiarybe subject to restriction, diminution or termination as mentioned in Article 30(2). Amended (as from 24th December 2017).
Article 31 – Creditors' claims in relation to a Discretionary Trust(1) In the case of a
Discretionary Trust, whether or not such Trustcontains a protective provision, a creditor of a Beneficiarymay not compel a distribution that is subject to the Trustee'sdiscretion, even if:(A) the discretion is expressed in the form of a standard of distribution; or(B) the Trusteehas abused the discretion.(2) To the extent a Trusteehas not complied with a standard of distribution or has abused a discretion:(A) a distribution may be ordered by the QFC Courtto satisfy a judgment or QFC Courtorder against the Beneficiaryfor support or maintenance of that Beneficiary'schild, spouse or former spouse; and(B) the QFC Courtmust direct the Trusteeto pay to the child, spouse, or former spouse such amount as is equitable under the circumstances but not more than the amount the Trusteewould have been required to distribute to or for the benefit of the Beneficiaryhad the Trusteecomplied with the standard of distribution or not abused the discretion. Amended (as from 24th December 2017).