Personal Injury Trust Solicitors

What Is a Personal Injury Trust?

A personal injury trust is a type of trust that holds compensation in the form of damages awarded for a personal injury. This means that money and investments are held in the names of two or more Trustees on behalf of the person who has been injured. There are different types of trust depending on the circumstances. Usually, the only person who can benefit from the funds in the trust is the injured person; they are called the Beneficiary.

Trust funds are held separately from the Beneficiary’s personal assets. This separation is important so that they are not considered when assessing eligibility for means-tested benefits, such as Universal Credit.

Key features of a personal injury trust:

• Protects eligibility for state benefits by ensuring the compensation is not included in financial assessments.
• Helps to preserve long-term financial security by keeping the funds safe for future care, rehabilitation and essential living costs.
• Managed by Trustees, who can be professionals such as a lawyer or an accountant, or who can be a family member.

Who Can Be a Trustee?

A personal injury trust requires at least two trustees to manage the funds. The Beneficiary (the person awarded the compensation) can also act as a trustee, though it is advisable to include others who can provide independent oversight.

Trustees can be family members or friends aged over 18, or professional advisers (such as legal professionals or a trust company).

Trustees manage and authorise spending from the trust, ensuring all decisions align with the beneficiary’s best interests.

If circumstances change, trustees can be added or removed with the appropriate legal steps.

Choosing the right trustees is crucial. They must be trustworthy, reliable, and able to make decisions that protect the beneficiary’s financial well-being.

Further benefits of a Personal Injury Trust

Setting up a personal injury trust can also help with:

• Safeguarding vulnerable individuals: Trustees ensure the funds are used appropriately and prevent financial abuse.
• Managing large sums effectively: Trustees can provide oversight and support for significant financial decisions.
• Making difficult decisions: When an injured person receives a large sum of money, sometimes millions of pounds, in damages as compensation for a life changing serious injury, a lot of pressure can come from friends and even family to pay for things, whether that is always paying for meals out and drinks, or larger items such as holidays, cars and even property. It can be very difficult to say no to these requests. Our sensitive and experienced team are used to managing large amounts of money very carefully and are comfortable with declining requests for payments that are not in the best interests of the injured party. We will have those challenging conversations so that an injured party does not have to.

When Should You Set Up a Personal Injury Trust?

If your loved one is in receipt of means-tested benefits or is entitled to make a claim now or in the future, a personal injury trust must be set up within 52 weeks of receiving the first compensation payment. This grace period allows time to create a trust without affecting ongoing benefit claims.

Even after this period, a personal injury trust can still be established, although any compensation received after the first year may be counted as personal funds for means-testing until the trust is in place.