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Personal Injury Trusts

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.
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Overview

Setting up a Personal Injury Trust

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.

A Personal Injury Trust can sometimes be needed when someone has received compensation. This is because if the money is not in a Trust then it will be counted towards the capital you've got (such as savings, investments or additional money in accounts) and can affect whether you can receive means-tested benefits. A Personal Injury Trust protects this money so it cannot be counted. 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.

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We can help you to set up a Personal Injury Trust to protect your compensation

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We can also support you as a Professional Trustee, taking the stress and strain away from your family

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About Personal Injury Trusts

When should I set up a Personal Injury Trust?

A Personal Injury Trust should be put in place as soon as you receive the first bit of your compensation. You do have one year to pay your compensation into a Trust before it's counted towards your means-tested benefits, but you should set up a Trust ahead of time to make sure everything is in place. It's not just your final settlement that counts, but also any interim payments you receive before your case has settled. Your compensation must be held in a specific trust bank or building society account and clearly separate from any personal finances. 

David-Hilton

Personal injury trusts

What can I use my Personal injury trust for?

There are specific things a Personal Injury Trust can be used to pay for without affecting your means-tested benefits.

These include:

  • Any care or support you need as a result of your injuries
  • The cost of a holiday
  • Purchase of a car and the cost of running it
  • Going to restaurants and eating out
  • Improvements or adaptations to a property
  • Any hobbies you enjoy or paying for the cost of a pet
  • Extra utilities, such as increased heating costs if this is required as part of your condition

The Trust should not be used for things such as:

  • Usual food shopping bills
  • Clothing and shoes
  • Ongoing utility bills
  • For rent, if you receive housing benefit (unless it is a top-up amount for more expensive rent)
  • To pay council tax if you receive council tax benefit

FAQs

Frequently asked questions

Here are the answers to a few of the questions we get asked regularly. But if you have any other questions, please get in touch. We're here to help.

See all FAQ's

When should I set-up a Personal Injury Trust?

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.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

Who can be a Trustee?

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.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

Can I be a Trustee?

Yes, but there must always be a minimum of two Trustees or a Trust Corporation.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

How is a Personal Injury Trust taxed?

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 Beneficiary's usual personal allowances have been utilised.

There are no immediate or periodic tax charges, which apply to other types of Trust.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

What can go into a Personal Injury 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.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

How can I set up a Personal Injury Trust?

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.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

Why do I need a Personal Injury Trust?

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.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

Can I change my Trustee?

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.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

What is a Personal Injury Trust?

A Personal Injury Trust is a legal document (normally a 'Bare Trust'), which transfers control of the money in respect of a personal injury from the person receiving it ('the Settlor') to two or more people or a Trust Corporation ('the Trustees') with instructions that they hold the Trust Fund for the person's benefit (as 'Beneficiary').

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

How much can I have from my Personal Injury Trust?

The law generally allows a person to have up to £6,000 in savings at any one time, before their means-tested benefits are affected. Therefore, if a person has £4,000 in savings, they can receive another £1,999 to ensure they remain below the limit. When the £6,000 is exhausted it can be replaced by another £6,000 and so on.

Different capital limits apply to Local Authority funding, but the principle remains the same.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

Is there a limit on how often I can receive money from my Personal Injury Trust?

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.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

Can I spend money from my Personal Injury Trust on what I want?

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.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

What happens when I die?

The Trust Fund forms part of a Beneficiary's estate for Inheritance Tax purposes.

Contact us for advice: 0800 612 8196 advice@cfglaw.co.uk

Get in touch

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or call 0800 612 8196

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