A protective trust is a trust that protects the trustor or grantor during her lifetime in the event of bankruptcy, divorce or tax protection. When a bankruptcy or other event occurs, depending on the trust language, all assets contained in the trust come under the complete discretion of the trustee for the benefit of the beneficiaries.

This type of trust, also known as asset-protection trust, covers a great variety of trust documents. Any type of trust, both irrevocable living or revocable, can also be a protective trust, as well as a portion of a trust. Protective trusts are a common tool of estate planning in the UK under a commonwealth model. Use a protective trust to:

1. Protect the assets of the protective trust for the beneficiaries.

2. Plan for events such as bankruptcy and divorce.

3. Provide certain tax protections for yourself and your loved ones.

Action Steps
The best contacts and resources to help you get it done

Find protective trust information from protective trust specialists

A protective trust is a complex estate planning tool and especially subject to challenge especially if the trustee stands to benefit at all from the trust. To get the most benefit from this type of trust requires the right trust language. Getting the right protective trust advice means more protection for you and your loved ones.

I recommend: Use NOLO by keying in the words "Trust and Estate" in the legal issue field and then your state to find trust experts near you. Try Attorneylocate.com by clicking on "Trusts and Estates" for areas of practice and the state in which you live.

Create protective trust documents with online tools and resources

Because a protective trust can be both an irrevocable living trust or revocable, depending on what type of trust you have, they are relatively easy to produce with the right online tools and forms. Do it yourself trusts are a great resource when time is an issue and a trip to the attorneys office isn't possible.

I recommend: Both Easy Legal Forms and Public Legal Forms offer a variety of single trust documents and estate planning packages for a fee. When you create your living trust, you can create a protective trust using these documents.

Work with a protective trust expert to determine if a protective trust is right for you

During life's most difficult moments, getting the right answers before you need them is priceless. Protective trust management can be confusing without the right expert services on your side. Choosing a qualified trust and estate attorney takes the worry out of making the right choices for your particular situation.

I recommend: Shearman & Sterling and Cravath, Swaine & Moore are both global law firms with large estate planning and trust divisions to meet all your trust planning needs.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Any type of trust requires a higher level of capacity than that of 'sound mind' applicable to wills. The required capacity is similar to contractual capacity such as that needed to sign a deed.
• •  Notarize any type of trust, including a protective trust, in case it needs recording with the Register of Deeds.