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Personal injury trusts

What is a personal injury compensation trust?

A personal injury trust is a legal document which allows any compensation you receive as a result of an accident or injury to be disregarded when you are assessed for means tested benefits. It may also protect your compensation from being used to pay any care fees if you believe you may need to go into residential care in the future.

If you consider the implications at the outset and set up a personal injury trust it may be possible to retain your compensation and maximise the state support that is available to you.

How does a personal injury trust work?

Instead of receiving your compensation directly, a trust is established and your money is held by your chosen trustees on your behalf. Once a trust is set up a bank account is opened by your trustees which is run on your behalf by your trustees.

The trust document appoints at least two trustees (you can be one and the other could be a family member or friend) and sets out guidance on how the money is to be managed by your trustees.

To remain eligible for state benefits your compensation should be placed in a specially designated trust, bank or building society account set up by your trustees and held separately from your personal finances. There is no question then as to what money falls outside the means testing process.

What is the role of my trustees?

Although the trustees hold and have control over your compensation award they cannot use it as their own personal property or for their own benefit. The money remains in your control and by creating a trust, you can access the money at any time; it is yours and the trustees do not have to be persuaded to release it.

Your trustees have to act in your best interests and it is important to choose people you trust. There may be very good reasons why they do not want you to have money at a particular time. However, if you are unhappy you have the power to remove a trustee and appoint someone else. The money is to be used for your benefit. You can obtain the money at any time provided that all of the trustees sign the cash withdrawal form or cheque, although there are some rules about how you should spend the money.

When does the personal injury trust need to be set up?

The benefits agency will usually give you a period of 52 weeks from when you first receive either an interim or final settlement although it is often best practice to set up a trust as soon as possible. The 52 week period only applies to the first payment so if you receive a further payment within the 52 weeks you will need a personal injury trust to stop that payment affecting your means tested benefits/community care contributions.

How can I use the money in my trust?

It is up to you how the money in the trust is used but typical examples which would not affect your benefit entitlement are the purchase of personal possessions, for example, a TV/DVD player, holidays, cars, mortgage capital repayment, school fees, TV license and the cost of care and other needs.

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Contact a personal injury solicitor

To find out more about setting up a persona injury trust, call us on 0800 316 8892 or enquire online.