What is a Personal Injury Trust?

If you receive compensation as a result of a Personal Injury Claim which puts your savings or capital above a certain limit, you may lose entitlement to be certain state benefits now or in the future. A Personal Injury Trust is designed to protect you from losing that entitlement to state benefits or local authority care.

The objective of the Personal Injury Trust is to protect any current or future entitlement to any Means Tested State Benefits/Support that you receive.

Instead of receiving your compensation directly into your own bank/building society account, a Trust is established and your money is held by your chosen Trustees on your behalf.

Do I need a Personal Injury Trust?

If you receive a compensation award in respect of a personal injury claim, your current or future entitlement to certain state benefits may be affected.  This could mean that your state benefit income may be reduced or even stopped if you have above a certain amount of capital held in your own name.

Why do I need a Personal Injury Trust when I am not in receipt of benefits?

You may not be in receipt of benefits or need local authority care now but life changes and should you need to claim in later years, any compensation monies that you have saved would prevent a benefit claim or be taken into account for a local authority care assessment. A Personal Injury Trust will protect that compensation today and tomorrow.

When does a Personal Injury trust need to be set up?

Although the Benefits Agency will usually give you a period of 52 weeks from when you first receive either an interim or final settlement, it is often best practice to set up a Trust as soon as possible.

Who should I choose to be my Trustees?

Your Trustees ought to be people that you trust and may include family, friends, a solicitor or a trust company.  It is your decision as to who you want to act as your Trustees.  There are no general restrictions as to who can be your Trustees, although they must be over 18.  You can be a Trustee and if you choose to involve friends or family, it is preferable to have at least two other Trustees. This way you may feel more comfortable about putting money into a Trust with the other Trustees rather than feeling that you have” handed your compensation over”

Will I lose control of my money?

No the money is yours. The Trustees are there to administer the money but it is not their personal money and they cannot use it for themselves. You can replace and add Trustees and bring the Trust to an end whenever you want. You can tell the Trustees what to do. You ultimately maintain control of your money.

What are the responsibilities of my Trustees?

Your chosen Trustees hold your Personal Injury award and look after the award in accordance with your wishes and a set of rules, which are designed to protect you.

For your Trustees’ peace of mind, your award does not count as part of your Trustees’ capital if they are on means tested benefits.

What if something happens to my Trustees?

If, for whatever reason, your chosen Trustees are unable or unwilling to continue, you have the power to replace them.

How do I access my Personal Injury Trust Fund?

You set up a separate bank or building society account. You can have more than one account and investments and they will be in the name of the Personal Injury Trust Trustees. Trustee banking facilities, which include a Trust cheque book, are available to the Trustees.  Payments have to be by cheque and all Trustees have to sign.

How will payments from my Personal Injury Trust affect my benefits?

It is best if your Trustees pay you varying amounts at irregular intervals from your Trust.  Under the Means Tested State Benefit regulations, you are allowed certain amounts of capital in your own name.  Provided that capital payments to you from your Trust do not exceed the relevant capital limit, your Means Tested State Benefits/Support will remain unaffected.

If you require money to pay for more expensive items or to repay debts, we generally suggest that you ask your Trustees to pay these directly from the Personal Injury Trust, so that no large amounts of capital are in your personal bank account. The money can be used for whatever you want and when you want but it is wise to keep a record of what you spend and to avoid transferring money to your Personal Account. The Trust Funds and your own personal account should stay separate.

How much can I put into a Personal Injury Trust?

You cannot put more than the total value of your Personal Injury compensation into a Personal Injury Trust.  Depending upon your own circumstances, you may decide to place less than the value of your compensation into the Personal Injury Trust.

Can my Personal Injury award be invested?

You can have sufficient monies in the Trust account for easy access and you can place the rest in investments in the names of the Personal Injury Trust.

What happens if my circumstances change in the future? 

If at any time you decide that you no longer need the Personal Injury Trust, you simply instruct your Trustees in writing to transfer the money over to you.  The Personal Injury Trust will then cease, but you may lose your entitlement to any Means Tested State Benefits/Support.

What happens if I die?

If you were to die, the value of your Personal Injury Trust would be distributed in accordance with the terms of your Will or it is paid into your estate. So it is vital that you make a Will when you set up your Personal Injury Trust so that you have peace of mind that those you leave behind and your estate will be taken care of and that the compensation money you received can pass to those you chose

Are there any tax implications?

The money held in the Personal Injury Trust is usually taxed in exactly the same way as if you held the money yourself.

Other things you should know

If you deliberately deprive yourself of money in order to claim or increase your Means Tested State Benefits/Support, the Benefits Agency may treat you as if you still had the money in your possession and control.  In those circumstances, not only will you have given your money away, but you would also be likely to lose your entitlement to Means Tested State Benefits.

How can Geoffrey Leaver Solicitors LLP help? 

We offer a simple and straightforward service to help you decide whether a Personal Injury Trust is in your best interests.  We are able to guide you through the process, including providing a suitable Personal Injury Trust document and helping your Trustees to set up a Trustee bank account.  We can also advise your local Benefits Agency that a Personal Injury Trust has been established. Please call our specialist lawyer Dagmara on 01908 689317.