A Personal Injury Trust can be set up when you are claiming compensation as a result of a personal injury, to hold any payments you receive and to protect any means-tested benefits you may be eligible to.
Our specialist solicitors can advise you on setting up a Personal Injury Trust and why that might be of interest to you, as well as helping to manage the Trust as a Trustee.
Creating a Personal Injury Trust is necessary in some cases because any compensation you receive which is not held in a Trust will be added to any other capital you have (such as any savings, investments or additional money in accounts) and may affect your eligibility to means-tested benefits. If the total exceeds £6,000, then the amount of means-tested benefits you receive might be reduced or stopped altogether. However, if your compensation is in a Personal Injury Trust, this will protect the money from counting towards your total capital.
It is not enough to simply give your money to a family member to look after. This could be seen as deliberate deprivation of capital, and your compensation may still be counted towards your entitlement.
A Personal Injury Trust should be arranged when you receive your first payment. However, you have up to one year to pay your compensation into the Trust, before it is counted towards your means-tested benefits entitlement.
You should speak to your solicitor about setting up a Trust in advance, so that any money you receive, whether it is interim payments before your case is settled or your final settlement amount, is protected for any current or future means-tested benefits entitlement.
Your compensation must be held in a specific trust bank or building society account and clearly separate from any personal finances. Our specialist solicitors can help you with this.
Trustees manage any compensation held in a Personal Injury Trust. There must be more than one Trustee who manages an account, and if you wish to access money from the Trust, all Trustees must agree to it.
Trustees are often your spouse or partner, parent or child, or a close friend. However, they may also be a solicitor if this is more appropriate for your circumstances. Having a solicitor as your Trustee can remove the stress and strain from your family and friends. A solicitor may also be able to make independent decisions more easily and be able to explain why any payments are or are not made and the reasons why.
Any Trustees should be chosen by you and should be someone you trust to make decisions in your best interests.
There are specific things a Personal Injury Trust can be used to pay for without affecting your means-tested benefits.
Speak to one of our expert serious injury solicitors to see how we can help you and your family.
With a Bare Trust, income and capital gains are treated as the Beneficiary's for tax purposes. There is no requirement to separately register the Personal Injury Trust with HMRC. An annual tax return might need to be filed however, if the Beneficiaryâs usual personal allowances have been utilised.
There are no immediate or periodic tax charges, which apply to other types of Trust.
Only money in respect of a personal injury can go into a Personal Injury Trust. However, the Trustees generally have wide powers of investment meaning they can purchase property and invest in any type of asset, anywhere in the world.
ISAs and certain National Savings & Investments products are prohibited because they cannot be held in the name of the Trustees.
The law generally allows a person to have up to ÂŁ6,000 in savings at any one time, before their means-tested benefits are affected. Therefore, if a person has ÂŁ4,000 in savings, they can receive another ÂŁ1,999 to ensure they remain below the limit. When the ÂŁ6,000 is exhausted it can be replaced by another ÂŁ6,000 and so on.
Different capital limits apply to Local Authority funding, but the principle remains the same.
Yes. There is no restriction on how the money is spent, providing it is for the benefit of the Beneficiary.
Benefits income ought to continue to be used to meet ordinary day to day expenditure such as shopping, utilities, etc.
No. There is no limit on the number of withdrawals that can be made, but you should avoid setting-up regular payments of the same amount. Anything in excess of the capital limits for means-tested benefits and local authority funding should be paid for directly from the Trust Fund.
Yes. A Beneficiary usually has the right to remove or appoint new Trustees, as well as the power to bring the Personal Injury Trust to an end at any time.
The Trust Fund forms part of a Beneficiary's estate for Inheritance Tax purposes.
Our specialist solicitors can help you and provide all the information you need about setting up a Personal Injury Trust. They can make all the necessary arrangements to set up the Trust for you, as well as acting as a professional Trustee if this is the best option for you and your family.
Contact the team today to discuss how we can help you and your family to achieve your best outcomes and lead fulfilled lives.
A Personal Injury Trust is a way for people who receive money in respect of a personal injury to preserve their entitlement to claim means-tested benefits and local authority funding both now and in the future. This is because the assets in the Trust (the Trust Fund) are exempt from the capital limits for means-tested benefits and local authority funding.
A Personal Injury Trust is a legal document (normally a âBare Trustâ), which transfers control of the money in respect of a personal injury from the person receiving it (âthe Settlorâ) to two or more people or a Trust Corporation (âthe Trusteesâ) with instructions that they hold the Trust Fund for the personâs benefit (as âBeneficiaryâ).
A person has 52 weeks to set-up a Personal Injury Trust from the date of receipt of the first payment they receive in respect of a personal injury. During this time, the money is disregarded. If, after 52 weeks however, their savings remain above the capital limits for means-testing and local authority funding, their entitlement will be affected and possibly stop altogether.
If a person deliberately disposes of money in order to maintain their entitlement to means-tested benefits or local authority funding, they may be in breach of the rules relating to deliberate deprivation of capital.
The Trustees will often be close family members and/or friends. They can also be professionals such as solicitors or accountants, but they will normally charge for their services. Trustees have a duty to act in the best interests of the Beneficiary and ensure that the Trust Fund is used for their benefit.
The Trustees will need to open a separate bank account to administer the Trust Fund. They will be signatories to this account and it is recommended they maintain a record of all transactions.
Yes, but there must always be a minimum of two Trustees or a Trust Corporation.