New South Wales Consolidated Acts

TRUSTEE ACT 1925 - SECT 45

45 Protective trusts

(1) Income may be directed to be held “on protective trusts” for the benefit of any person (in this section called "the principal beneficiary") for the period of the principal beneficiary’s life or for any less period, and where there is such a direction the income shall during the period (in this section called "the trust period"), and without prejudice to any prior interest, be held upon trust as provided in this section.

(2) During the trust period, or until the trust of the income fails or determines during the subsistence of the trust period, the income shall be held upon trust for the principal beneficiary.

(3) The trust of the income shall fail or determine in any of the following cases, as well as on the termination of the trust period, whichever first happens, that is to say, if the principal beneficiary does or attempts to do or suffers any act or thing or if any event happens whereby if the income were payable to the principal beneficiary absolutely, the principal beneficiary would be deprived of the right to receive the same or any part thereof.

(4) The trust of the income shall so fail or determine, whether the principal beneficiary does or attempts to do or suffers the act or thing before or after the termination of any prior interest.

(5) The trust of the income shall not so fail or determine by reason of an advance under any statutory or express power.

(6) If the trust of the income fails or determines during the subsistence of the trust period, the income shall during the residue of that period be held upon trust for the application thereof:

(a) for the maintenance, support, or otherwise for the benefit of all or any one or more exclusively of the others of the principal beneficiary and his or her spouse, if any, and his or her children or more remote issue, if any, as the trustee in the trustee’s absolute discretion thinks fit, or

(b) if there is no spouse or issue of the principal beneficiary in existence, then for the maintenance, support, or otherwise for the benefit of all or any one or more exclusively of the other or others of the principal beneficiary and the persons who would, if the principal beneficiary were actually dead, be entitled to the trust property or the income thereof or of the annuity fund, if any, or arrears of the annuity, as the case may be, as the trustee in the trustee’s absolute discretion thinks fit.

(7) This section extends to an annuity or other periodical income payment directed to be held on protective trusts.

(8) Any trusts implied by this section may be set aside in any case where an express trust to the same effect might be set aside.

(9) This section applies only if and as far as a contrary intention is not expressed in the instrument, if any, creating the trust and shall have effect subject to the terms of that instrument and to the provisions therein contained.

(10) This section applies only to trusts created after the commencement of this Act.

(11) In this section:
"child" includes, in relation to a person who is a party to a domestic relationship within the meaning of the Property (Relationships) Act 1984 , a child who, by virtue of section 5 of that Act, is regarded as a child of the parties to that relationship.
"spouse" means:

(a) a husband or wife, or

(b) the other party to a de facto relationship within the meaning of the Property (Relationships) Act 1984 , in which the parties have cohabited for a period of not less than 2 years,

but where more than one person would so qualify as a spouse, means only the last person so to qualify.

(12) Subsection (11) does not apply in relation to a trust created before the commencement of the amendments made to this Act by the Property (Relationships) Legislation Amendment Act 1999 .