Personal Injury Trusts

If you or a loved one have received compensation from a claim, putting it into a Trust can give you peace of mind for the future.

Money may be awarded for a specific purpose, such as to cover the costs of rehabilitation, care, therapies and property adaptations. They can also compensate future lost income.

It’s important to consider whether a Personal Injury Trust could be used to make sure a suitable structure is in place to manage funds in the future. It can also make sure that you’re able to claim all of the state benefits and care funding you’re entitled to.

Means-tested benefits

Depending on your injury, you might be eligible to claim a number of benefits and support services. If your compensation’s been paid directly to you, it’ll be included as part of the assessment when calculating your entitlement to means-tested benefits. This means you could lose some of your benefits.

Means-tested state benefits include:

  • Income Support
  • Jobseekers Allowance
  • Housing Benefit
  • Council Tax Benefit
  • Income Based Employment Support Allowance
  • Universal Credit.

If your compensation’s being paid into a Personal Injury Trust, you can still claim any benefits you’re entitled to. A Trust can protect your money from being used in the wrong way, especially if the Trust’s for a child or a vulnerable adult.

Trusts are also useful when protecting assets from a claim against your estate, this may be as a result of divorce or bankruptcy.

What is a Personal Injury Trust

Someone appointed to look after the Trust is called a “Trustee”.

A Trustee can make decisions on behalf of the beneficiary, but they must comply with the Trust Deed, which sets out rules and obligations of the Trust. The Trustees will set up a Trust bank or building society account, so compensation is separate from any personal finances.

Money within the Trust can be invested with the support of a financial advisor, and up to £6,000 can be held in your own personal accounts, without it affecting your benefits. Personal accounts can then be topped up with money held in the Trust, if needed.

If the beneficiary passes away, their Will would determine what happens to their Trust money and estate. But if a Will hasn’t been created, the estate would be dealt with by the rules of intestacy in accordance with the law.

How and when do I set up a Trust?

If you’ve received compensation, we can draft a Trust Deed to establish the Trust. But, it’s best to set up the Trust before receiving your compensation.

Setting up a Trust within 52 weeks of your first payment is advised. Your benefits could be put at risk if you don’t set it up within this time period.

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Who can be a Trustee and what’s their role?

You must choose at least two people to be Trustees. They can be anyone over the age of 18, but choosing reliable and responsible Trustees is very important.

Typically, the Trustees might be the person who’s suffered the injury and another close family member or friend. We can also act as a Trustee, if you wish.

The Trustees are responsible for managing the money in the Trust account according to the terms that’ve been established. This could include:

  • Running a bank account
  • Making investments
  • Buying or selling property
  • Arranging care, therapy and equipment costs
  • Preparing annual Trust accounts & tax returns.

What funds can go in a Trust?

Any funds as a result of a personal injury aren’t assessed as part of means-tested benefits.

Any compensation received from a personal injury claim, charitable or public donations following an accident and pay outs from travel insurance can be paid into a Personal Injury Trust.

How do I use money from the Trust?

The Trustees will set up a Trust or building society account, so any compensation is separate from your personal finances. The account should be set up in the name of the beneficiary, such as “The Joe Bloggs Trust”.

Money can be released for the beneficiary, but all Trustees should sign any cheques and transactions.

You can ask the Trustees for a cheque from the Trust account. If you can’t pay by cheque, you can pay for the item yourself and ask the Trustees to reimburse you from the Trust account.

Some banks are also able to offer bank transfers for Trusts.

Who else can a Trust be set up for?

Usually, the person receiving compensation will decide whether to set up a Personal Injury Trust. But, if a person’s unable to make their own decisions, approval’s required before setting up a Trust.

Children – A High Court Judge will need to approve whether to create a Trust to manage funds on behalf of a child, until they reach the age of 18. The Court will decide whether a Trust is suitable. They’ll also approve the Trustees and which type of Trust is used.

People who lack capacity – In order to make decisions for someone who lacks capacity, an application must be made to the Court of Protection. A judge will then decide on the most appropriate way of managing that person’s finances. Most of the time a Deputy will be appointed, but there are instances where a specific type of Trust may be put in place.

How we can help

As the largest personal injury firm in the country, we've helped thousands of people manage and invest their money after a life-changing injury.

Our solicitors have considerable experience setting up Personal Injury Trusts. They’ll work closely with other professionals and financial advisors to create a bespoke plan tailored to you and your needs.

Find out how else we can help on our website.