Annual exempt amount: settlements: disabled persons: protective Trusts
A protective trust under Section 33 Trustee Act 1925 is one whereby an individual has an interest in possession in the settled property until a particular event occurs such as bankruptcy. The interest in possession is replaced by discretionary trusts for the individual’s immediate family. In such a case the reference to the beneficiary’s lifetime in CG18060 should be treated as a reference to the period during which the interest in possession continues. Thus, if there is a protective trust for A for life, with remainder to his daughter D, the settlement qualifies for the main exemption until an event of the specified kind occurs. Thereafter it does not qualify because less than half of the income may be paid to A.