Personal Injury Trusts are trust funds set up with the compensation paid as a result of a personal injury. One major benefit of choosing a personal injury trust is that claimants can keep their entitlement to most means-tested state benefits and/or local authority support, no matter how large their award might be.
Do I need a Personal Injury Trust?
A Personal Injury Trust ensures that your personal injury award does not affect your benefits. Certain government benefits are means-tested, meaning that if your “assets” and monies are above a certain figure, your benefits could be reduced or taken away from you.
Any use of the award which is not regarded as reasonable in respect of your circumstances can be seen as “deprivation of capital” for benefits purposes, meaning that giving your personal injury award away will not prevent your benefits being reduced or taken away from you. The Benefits Agencies see these acts as a deliberate way to get rid of the money. Without setting up a Trust the Benefits Agency will treat you as having that money whether you have spent it or not, and your entitlement to benefits may alter.
When should I set up a Personal Injury Trust?
A Personal Injury Trust can be set up at any time, but to avoid any issues regarding your means tested benefits, and also to avoid having to reapply to have benefits reinstated, it is usual to set the trust up once compensation is received.
Who can be a Trustee?
It is usual to have at least 2 Trustees for your trust. They will be managing the money in the Trust on your behalf, including investments, if required. They should therefore be people you trust, such as your spouse or partner, close family or friends. You may wish to consider appointing a professional, such as a solicitor. In some circumstances, when large awards are received, the Court will insist that you have one professional trustee as well as any others chosen by you. In such cases, the cost of the professional can be obtained in addition to the compensation you receive, ensuring that you do not need to worry about costs.
What if I change my mind?
You may decide to end the trust at any time. If you write to the Trustees asking that the Trust be closed, they have to adhere to your wishes, and the money will be paid back to you. However, you should be aware that you might run the original pre-trust risk of losing your benefits.
Who gets the monies when I die?
Any monies left within the Trust upon death will form part of your estate, and will be paid in accordance with a Will. It is important therefore to consider making or updating your Will so that your wishes are accurately reflected.
To help you decide if a Personal Injury Trust is the right solution, please feel free to contact us. We have a specialist solicitor to give you advice and support and tailor your personal injury trusts to meet your needs.
Under £50,000.00: £300.00 plus VAT = £360.00
£50,000.00 – £200,000.00: £450.00 plus VAT = £540.00
£200,000.00 – £325,000.00 for Inheritance Tax Threshold: £650.00 plus VAT = £780.00
Over £325,000.00: Estimate because of potential tax advice
PI Grants: £450.00 plus VAT = £540.00
(Unless IHT implications)