When you make a Personal Injury or Medical Negligence claim, you’ll get a pay out of compensation when your claim settles. If you are already claiming means tested state benefits, or your injuries are life changing and you may need to claim benefits in the future, your settlement could mean that you are no longer eligible.
When you make a Personal Injury Trust, your settlement is not included in any means testing for state benefits.
You’ll choose Trustees, who will look after the Trust and manage it for you.
Your Personal Injury Solicitor should talk to you about whether you should set up a Personal Injury Trust before you settle your claim. Our experienced Personal Injury Trust Lawyers can help you get this set up quickly and efficiently.
If you want to talk to one of our expert Solicitors, get in touch today.
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Why Do I need a Personal Injury Trust?
A Personal Injury Trust can help protect any current or future means tested benefits after you get a compensation payment because of a Personal Injury or Medical Negligence claim. Some of the means tested benefits include:
- Income Support
- Housing benefit
- Council Tax benefit
- Working Families Tax Credits
- Disabled persons Tax Credit
- Job Seekers Allowance
- Employment and Support Allowance
- Pension Credit
- Child Tax Credit
- Universal Credit
If you have more than £6,000 in savings your benefits could be reduced and any more than £16,000 in savings could stop your benefits entirely, so you can see why a Personal Injury Trust is so important.
How To Set Up a Personal Injury Trust
Our specialist Personal Injury Trusts Team can help you to set up your Personal Injury Trust. You’ll need to choose your Trustees. These are the people who will manage the Trust for you and it’s really important that you trust them completely.
You can have a minimum of 2 Trustees and a maximum of 4, and you’ll be one of them. As Trustees, you and the others must accept the terms of the Trust Document and carry out those terms within the law, for your benefit.
Once you’ve chosen your Trustees, a Personal Injury Trust Solicitor will make an appointment with you, usually on the phone. We can visit you at home, but there is a small charge.
The Solicitor will talk through your needs and wishes at the meeting and then create the Trust Document, which will be signed by you and the other Trustees.
You’ll need to set up a Trustee Bank Account – you can do this by asking a Financial Advisor to help you or contacting your local bank. We can recommend a Financial Advisor if you want us to.
We can tell the Benefits Agency about the trust for you, but you’ll need to give us your National Insurance Number and the address of your Benefits Agency.
How Much Does It Cost to Set up a Personal Injury Trust?
It will cost from £900 (VAT Included) depending on how complex the Trust is and whether you need a home visit.
Your Personal Injury Solicitor can ask the defendant to include these set up costs in your Personal Injury settlement, along with any associated running costs. These costs will be paid for by them for the life of the Trust.
When To Set Up a Personal Injury Trust
The rules state that the first payment you get after a Personal Injury is disregarded for an entitlement assessment for 52 weeks and this includes any interim payments you get.
It’s always best to have the Personal Injury Trust set up before you get any payments of compensation so that it is disregarded from any eligibility assessments right from the start.
Protecting Your Money From Divorce or Bankruptcy
It’s difficult to protect your settlement from a divorce or from bankruptcy.
You could consider a pre-nuptial or post-nuptial agreement to try to protect your settlement if you get divorced. Whilst the Court now does give these agreement some weight, the needs of the children and less financially secure person will be considered.
But if your Trust is there to help provide for your future care after a serious injury, the Court will consider this carefully in any future disputes.
Personal Injury Trust FAQs
- What Happens to The Money in the Trust?
If you don’t spend the money, it simply stays in the Trustee Bank Account. You may want to talk to a Financial Advisor about any investments and how to manage it in the most tax efficient way.
You can spend the money for anything you want as long as the Trustees agree to sign the withdrawal form or the cheque.
You can’t make regular payments to yourself though, as this could be classed as income. Remember, any amount over £6,000 that you have in your personal bank account could affect your benefits.
- Do I Have To Pay Tax?
All of the money, and any interest belongs to you. You don’t have to formally register the Trust with HM Revenue and Customs, but you should contact them at the end of each tax year to see if you need to submit a self-assessment tax form.
Because we set up a ‘Bare Trust’ there is no need for the Trustees to complete an Income Tax Return. There may be a tax rebate available for Trustees, as the Trust is tax efficient. You should talk to HMRC or your Financial Advisor.
If your Trust is not a Bare Trust, we will tell you as there may be tax implications.
- Can I Change My Trustees?
You can remove Trustees if you don’t think that they are using the money for your benefit or acting in your best interests.
A common disagreement is not being given permission to have money at a certain time, but there may be a good reason for this. It’s always worth talking things through with the Trustees to see if you can resolve the issues rather than removing them.
- Can I End the Personal Injury Trust?
Yes. You can unwind the Trust if your circumstances change and you don’t need it any more.
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