If you’ve been awarded personal injury compensation or received an insurance policy payout, you might want to consider putting the money into a Personal Injury Trust for protection.
Otherwise, it could affect your eligibility for means-tested benefits, such as Universal Credit and Housing Benefit.
You might benefit from a Personal Injury Trust if your compensation or payout exceeds £6,000. This is because if you have more than £6,000 in your savings, the amount you receive in benefits could be reduced, and if you have more than £16,000 in savings, they could be stopped entirely.
If you think you might need a Personal Injury Trust and would like to find out more, get in touch with our Personal Injury Trust Lawyers for expert legal advice.
What is a Personal Injury Trust?
A Personal Injury Trust is used to hold and manage money you’ve received through personal injury compensation. The money held in the trust is managed by appointed Trustees who will handle the money on behalf of the Beneficiary (the person benefitting from the trust).
The Beneficiary will usually be a trustee themselves alongside a partner, unless they’re a child, in which case, their parents are likely to act as their Trustee. A professional can also be appointed. All Trustees must agree to the release of any money from the trust.
Any funds in a Personal Injury Trust won’t be factored into your entitlement to means-tested benefits, including:
- Council Tax benefit
- Child Tax Credit
- Employment and Support Allowance
- Housing Benefit
- Job Seekers Allowance
- Universal Credit
- Working Families Tax Credits
Benefits of a Personal Injury Trust
As well as protecting your means-tested benefits, there are many other advantages to setting up a Personal Injury Trust:
- It helps to ‘ring fence’ the funds you’ve received by keeping them separate from your other financial assets. That way, if you ever do need to claim means tested benefits in the future, your savings won’t be factored in.
- It protects your entitlement to Local Authority funding in the future should you need to move into a residential care home.
- As all transactions within the trust must be approved by the Trustees, this protects vulnerable Beneficiaries from financial abuse.
- If you’ve got knowledgeable Trustees, you can rely on them to act in your best interests and help you with making important decisions about your finances.
Setting up a Personal Injury Trust
It’s best to set up a Personal Injury Trust before you receive your funds, so you don’t risk losing any benefits. The first payment you get after a personal injury won’t affect your entitlement to means-tested benefits and services for the first 52 weeks. After this, any further payments will affect your means-tested benefits, so it’s best to get your Personal Injury Trust set up as soon as possible.
Even if you’re not entitled to means-tested benefits now, circumstances can change, so it can never hurt to be prepared with a Personal Injury Trust. For example, a divorce, separation, job loss or moving into a care home could all affect your entitlement to means-tested benefits.
Can I set up a Personal Injury Trust Myself?
You can set the Personal Injury Trust up yourself or you can choose to instruct a specialist Personal Injury Trust Solicitor to manage the process for you. Our Personal Injury Trusts Team can advise you at every stage, making sure that everything is taken care of and you’re not at risk of losing any money.
We can help and advise you on:
- Choosing your Trustees
- Creating a Trust Document (which will need to be signed by all Trustees, including yourself)
- Choosing a Financial Advisor to help set up your Trustee Bank Account
- Contacting the Benefits Agency about your Trust (we’ll need your National Insurance Number and the address of your Benefits Agency)
- Your Trust Account and tax returns
- Appointing or removing Trustees
- How to manage your Trust to best protect your funds in the future
Get in touch with our Personal Injury Trusts Team today and we’ll be happy to discuss your situation and Personal Injury Trusts with you.
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