Protective Trusts for Vulnerable Beneficiaries

A protective trust is a trust set up to protect a beneficiary whose circumstances make direct inheritance risky. The assets are held by a trustee who distributes them at their discretion, usually for purposes like housing, education, medical care, and maintenance.

When a beneficiary has addiction, significant debt, a history of bankruptcy, a difficult or abusive partner, or vulnerability to coercion. Also for beneficiaries who are simply not yet ready to manage a significant inheritance responsibly.

A testamentary trust is the general category. A protective trust is a specific type designed for beneficiary protection. Most protective trusts are built as testamentary trusts inside a will, with protective clauses layered on top.

Not the beneficiary. For protective trusts to work, the trustee must be independent - a professional trustee, a trusted family member, or a hybrid structure with a family member and a professional working together.

Beneficiaries can still bring family provision claims if they feel they haven't been adequately provided for. The protective trust itself, once established, is robust - but the underlying will can still be challenged. Sam designs around this where appropriate.

A Will with protective trust provisions falls under the complex Will category - $1,000 single / $1,300 couple (ex-GST) for a standalone Will, or $1,300/$1,800 as a Will + EPA + ACD package. More elaborate protective trust structures are quoted individually.