Personal Injury Trust
If you receive compensation as a result of an accident or injury, you may wish to consider creating a Personal Injury Trust to hold these monies.
If you receive your compensation directly, this will form part of your estate and may have a negative impact on your care fee position and also, on any means tested benefits you receive, such as income-related ESA or Housing Benefit. A Personal Injury Trust may help you to retain your means tested benefits.
Trusts are also very useful for holding compensation on behalf of vulnerable people or minor children, who may otherwise be unable to manage the compensation received themselves.
What is a Personal Injury Trust?
A Trust is created when a person passes assets to another person to hold onto and manage for the benefit of another person or persons. The people who are in control of the Trust are known as Trustees.
The Trustees are responsible for holding and investing the Trust monies for the person who is set to benefit from the Trust (known as the beneficiary). They need to be in agreement to release monies from the Trust to the beneficiary.
A Personal Injury Trust will be a written, legally binding agreement which sets out the rules for holding and managing the compensation which is placed into it. Your Trust monies are therefore “ring-fenced” and held separately from your other assets.
Who can be my Trustees?
Trustees can be anyone over the age of 18 who is mentally capable of fulfilling the role. It is important that you choose people who are appropriate to act for you and who you trust to manage your Trust fund in the appropriate way. It is also important that the people you choose are capable of acting together in this role. There must be at least two Trustees and a maximum of four.
Usually, in a Personal Injury Trust, you will be one of the Trustees and so you will retain control over the monies invested into your Personal Injury Trust fund. Other options often include family, close friends and legal professionals who have extensive experience in managing trust matters.
When should I set up my Personal Injury Trust?
You can create your Personal Injury Trust at any time after receiving compensation however, it is advisable to get this sorted out at the earliest opportunity to avoid any potential loss of benefits. There is a disregard of the first payment of a Personal Injury Award for the first 52 weeks, after which time this will be considered for the purpose of assessing means-tested benefits.
Talk to Tollers
For further information on creating a Personal Injury Trust for a fixed fee, contact our Elderly and Vulnerable Client Team today.