Personal Injury Trusts
It is important for someone who has successfully claimed compensation for a personal injury claim to consider seeing a solicitor for advice to discuss the benefits of setting up a trust to hold this compensation.
What is a Personal Injury Trust?
A Personal Injury Trust is a trust that holds compensation arising from a successful personal injury claim. The funds will be held by Trustees, who are selected by you, for the benefit of yourself.
The most common choice of Trust to use is called a Bare Trust whereby you are the only beneficiary and the Trustees hold your money for your benefit. However, a more complex type of Trust may be suitable for your needs, such as a Life Interest Trust or a Discretionary Trust. Our solicitors can advise you on which Trust will be suitable for your needs.
Why should I set up a Personal Injury Trust?
The payment of compensation could result in you or a member of your household being at risk of losing your means tested benefits as well as any associated care package. When the compensation is placed in a Personal Injury Trust the value is disregarded when assessing your level of savings for means tested benefits.
If you have £6,000 - £16,000 in savings your means tested benefits will be reduced on a sliding scale. If you have more than £16,000 in savings, you will not be able to claim means-tested benefits.
Also, a Personal Injury Trust can help if you have suffered from a debilitating condition, such as brain injury. In this situation, your Trustees can manage your finances accordingly if you are unable or unwilling to manage them yourself.
Other reasons may be:
- Funding care home fees in later life and ring fencing assets away from care fees;
- Protecting assets from divorce or bankruptcy in the future;
- Ring fencing the compensation from friends and relatives; and
- Help with managing large amounts of money.
When should a Personal Injury Trust be set up?
A Personal Injury Trust must be set up within 52 weeks of receiving money in settlement of all or part of your claim. We recommend setting up the Trust as soon as possible. A Personal Injury Trust can also be set up before compensation has been awarded.
How much money can I put in a Personal Injury Trust?
There is no upper limit on the amount of money you can place in a Personal Injury Trust, however, we recommend £6,000 as a minimum because this is where money in savings are taken into consideration for means tested benefits.
If you are due to receive or have received compensation, our solicitors will be happy to discuss and advise on your needs accordingly.