Angela Rayner has sparked controversy in recent days with increasing speculation over her tax affairs. I am not a tax specialist and do not intend to speculate on the legality of her tax affairs. However, during her discussion with Beth Rigby at Sky, she referred to the trust which was set up to manage her son’s damages.
While I have no knowledge of Angela Rayner’s personal circumstances, this sounds very much like the personal injury trusts that I routinely see in cases where large sums of damages have been awarded to a claimant. So why would anyone want to set up such a trust?
When a person suffers significant disabilities as a result of clinical negligence, they will have significant care needs for the rest of their life. These needs are likely to change as the claimant ages, and they may require input from many different specialties to manage their ongoing needs. This is all very costly.
While the sums awarded by way of damages are often portrayed in the media as a “windfall” for the claimant, they are in fact awarded on the basis of meeting the additional needs caused by the claimant’s injuries. Managing these huge sums to ensure that the claimant has sufficient funds left to meet their needs for the rest of their life, means that the funds must be managed very carefully.
What are personal injury trusts?
In a clinical negligence claim, personal injury trusts are frequently set up to assist with managing these large sums of money. The trust is managed by trustees. There are usually two or more trustees appointed under the trust to manage the funds. The trustees are subject to legally binding obligations to manage the funds appropriately and in accordance with the trust deed.
The purpose of a personal injury trust is:
- to protect a claimant’s means-tested benefits. The trust will ring-fence the damages awarded so that they are not considered when calculating eligibility for these types of benefits;
- they also serve to safeguard future care costs, ensuring that funds are managed appropriately so that they are available for long-term care needs;
- they also ensure that the funds are used for their intended purpose.
For these reasons, personal injury trusts can be useful for claimants awarded large sums by way of damages and will often be set up following settlement of clinical negligence claims.
“A court-instructed trust was established in 2020 following a deeply personal and distressing incident involving my son as a premature baby. He was left with life-long disabilities, and the trust was established to manage the award on his behalf – a standard practice in circumstances like ours.
https://news.sky.com/story/angela-rayners-tax-affairs-statement-in-full-13424359