Personal injury trust funds explained


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What is a personal injury trust?

Sometimes referred to as a personal injury trust deed, a personal injury trust is a form of trust fund that gets created for people who are awarded a personal injury compensation payout.

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What are the benefits of a personal injury trust fund?

The major benefit of setting up a personal injury trust is that it will enable you to receive your compensation payout, no matter how large it might be, without affecting any of your means tested benefits. Such means tested benefits include:

  • Housing Benefit
  • Council Tax Benefit
  • Disabled Person’s Tax Credit
  • Jobseeker’s Allowance
  • Income Support
  • Employment & Support Allowance

Those who receive compensation payouts often prefer to have it paid straight into their main bank account. However, if you are currently receiving benefits like those above then it is recommended that you first of all consider using a personal injury trust fund instead.

This is because your means-tested benefits are regularly reviewed and assessed, and if you have more than £6,000 in your bank account then your benefits could potentially be reduced. If you have more than £16,000 in your account then it is possible that your benefits could be stopped altogether.

Therefore if you are expecting to receive quite a large compensation payout in excess of £6,000 then having it paid into a trust fund rather than your bank could be the way to go.

Another useful benefit of using a personal injury trust fund is that if you were taken into residential care at any point, the cost of your care could not be taken out of your trust fund.

What can I do with my money in a personal injury trust fund?

There used to be restrictions in place limiting what you could spend your injury trust fund money on, but that is no longer the case.

You and your designated ‘trustees’ can use the money in the personal injury trust fund however you see fit.

If you are still receiving some form of means-tested benefits then it is recommended that you carry on using this money for what it is intended for: day to day expenses like bills and food, for example.

The money situated in your trust is best used on bigger purchases that your normal benefits wouldn’t normally cover e.g. property deposits, new TV, new car, holidays etc…

What money can I put in my personal injury trust fund?

The only money that should be paid into your personal injury trust fund is the compensation money received from your personal injury claim. It is very important that you don’t put other money into your trust fund.

Who can I chose to be my trustees for my personal injury trust?

For a personal injury trust fund to be set up, it requires at least one person other than you to act as a trustee. This can be anyone you choose over the age of 18. Most people will choose to have a family member as their main trustee.

Choosing trustees is a very important part of setting up a trust fund as they will have a say in how the compensation money in the fund is spent. If you would rather not have a family member as your trustee then most law firms will be able to act as a trustee, although as you would expect, this comes with a fee.

It’s worth mentioning that you do have the power to change your trustees at any time, although they usually have your best interests at heart so it’s better not to abuse this power, rather consider it a last resort if you and your trustees cannot come to an agreement.

Will I need to inform the benefits agency of my personal injury trust?

Yes, you are required to inform the benefits agency, although most law firms will take care of this on your behalf. All you need to do is provide them with your National Insurance number and your local Benefits Agency’s address.

When could I get my money out of the personal injury trust fund?

You can access your compensation money from your personal injury trust fund as soon it is available in the account. However to be able to withdraw the money, any trustees must sign the cheque or cash withdrawal form.

If you have any further questions about personal injury trust funds then you should seek out advice from one of our specialist personal injury solicitors.

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