Protecting what you deserve

If possible, it is important that a personal injury trust is set up before a person receives their compensation.  This will then ensure that funds can be transferred into the trust immediately providing no loss of benefits or care funding entitlement. As mentioned  above, some people may not be entitled to means tested benefits and local authority services at the time they receive their funds, and so a personal injury trust may not seem immediately relevant. However, careful consideration should be given to the possibility that their situation may change in the future, for example:  
• If they move out of the family home to live on their own
• If they move to live in a care home
• If they are discharged from hospital or a care home
• If they divorce or separate from their partner
• If they reach a significant age for benefits purposes; such as 16, 18 or the age when they qualify for  retirement benefits
• If they, or their partner, lose their job or retire
• If they, or their partner, lose their entitlement to another benefit or source of income  
• If they, or their partner, find their health deteriorates and they become entitled to higher rates of disability  benefits, which in turn have a knock-on effect for some means tested benefits.

Whilst it is possible to set up a trust after funds have been received and held by a person for some time, this does not allow the person to retrospectively claim for any benefits that they have missed out on before the trust was set up. There is also a high  risk that the compensation funds may get mixed up, or tainted, with other money, which can cause  complications with the DWP and/or Local Authority. It is therefore advisable to set up a personal injury  trust as soon as possible. In most cases, the decision to set up a personal injury trust is one for the person to make for themselves, with advice from a specialist solicitor. However, if a person is unable to make their own decisions, it will be necessary to get approval to set up a trust for them. 

Our solicitors are specialists in this field, and we  are able to offer you a simple and straightforward service to help you to decide whether a Personal  Injury Trust is in your best interests. We are able to guide you through the process, inclusive of providing a suitable Trust Deed for you and your appointed trustees signature and help you to open a Trust Bank Account. We can thereafter introduce you and your trustees to an appropriate financial advisor who can provide financial guidance to ensure longevity of your  settlement. Our charge to set up a Personal Injury Trust will be £600 plus VAT. However, if you would also like to put in place a simple Will (if you choose to leave your estate to your children / other beneficiaries), we can  assist you with both documents for £1,000 plus VAT. For a Personal Injury Trust with Will that incorporates a trust structure to preserve your surviving spouse’s entitlement to means tested benefits: £1,450 plus VAT. The cost of putting in place a Personal Injury Trust  is usually considered as a good investment as it ensures that your funds are well managed and  protected in the future and are not considered for means tested financial assessment purposes now or in the future. Please note, if a professional trustee is appointed to support the management of the trust, there will  usually be an additional annual fee. An additional charge may also apply if you require a trust structure to be incorporated to your Will. We can advise you if any additional charges are likely to apply during our first meeting. The first meeting will be on a noobligation and without charge basis. 

In order to put in place a personal injury trust, consideration will need to be given to the following: Trustees: It is necessary to appoint trustees. There  should be at least two trustees (up to a maximum  of four trustees). They must each be over 18 years  of age and mentally capable of fulfilling their  responsibilities. The trustees are appointed by a trust deed that all parties (including the injured party and the appointed trustees) must sign.  It is important to choose the right trustees, as they will have full control over the personal injury trust and the funds held within it. The trustees chosen  must be able to work well together and act in the best interests of the person for whom the trust  funds are held. It is often appropriate to appoint a professional trustee, such as a specialist solicitor, in situations where significant funds are held in the  trust, or if no appropriate individuals are known who can be appointed as the trustees. Trust Bank Account: Once the trust deed has been signed, a trust bank account should then be set up, which we can assist with, to hold the trust funds. All cheques and account transactions will be signed  and authorised by the trustees. Legal Advice and Type of Trust: It is important that legal advice is received from a specialist solicitor to ensure that the right type of trust is put in place. The simplest type of trust is called a ‘bare trust’ and this  is often the most appropriate for a personal injury award. This type of trust ensures that the money still legally belongs to the injured person and provides  power to that individual to make changes to the trust if required. There are other types of trust (such as a Discretionary or Life Interest Trust) that may be appropriate, so it is important that the individual’s specific  circumstances are considered. For example, the type of trust may affect how the trust is taxed and  also may affect the distribution of the individual’s estate when they pass away. Trust Deed: Once the necessary decisions are made, a trust deed, setting out all rules and obligations,  will need to be prepared by a specialist solicitor. The trust deed will need to be signed, witnessed, and  dated. The personal injury trust will usually have a name, such as the ‘Josephine Anne Bloggs Trust’. Costs: It is important to consider the costs involved in setting up a personal injury trust. These are usually paid out of the compensation settlement. Further, if a professional trustee, such as a specialist solicitor, is appointed to manage the fund they will usually  charge an annual fee. 

The first payment received following a personal  injury is disregarded from DWP and Local Authority financial assessment for the first 52 weeks. This  could be the first interim payment from a personal injury claim, a payment from an accident insurance  policy, or even a capital payment from a charity. This disregard does not apply to any later payments. As the rules on the 52 week disregard can be unclear, it is important to seek expert advice as soon as a payment is received. In serious injury cases, it is usually sensible to set up a personal injury trust as soon as possible, regardless of the 52-week rule. Compensation payments for serious injury will usually last longer than 52 weeks, so there is little benefit in delaying. Any funds that are held outside of a personal injury trust after the expiry of 52 weeks can be taken into account in a financial assessment. In the majority of cases, this may result in the loss of an individual’s entitlement to means tested benefits and care services.

The lower threshold for claiming means tested benefits in England and Wales is £6,000. Therefore, any personal injury claim below this amount won’t affect your benefit entitlement as a result, a personal  injury trust won’t be required. However, the DWP will assess you on ‘household capital.’ So if either you or your partner have savings over £6,000 or when your savings are added to your personal injury award and these exceed £6,000 – you may require a personal injury trust to continue claiming or to apply for means tested benefits.

You cannot put more than the total value of your Personal Injury compensation into a Personal Injury  Trust. Depending upon your own circumstances, you may decide to place less than the value of your  compensation into the Personal Injury Trust.

If at any time you decide you no longer need the Personal Injury Trust, provided that your trust is a “bare” trust, you simply instruct your trustees  in writing, to transfer the money over to you. The Personal Injury Trust will then cease, but you may lose your entitlement to any means tested State  and Local Authority benefits.

If one of your trustees were to die, moved abroad or you simply fell out with them, you have the power to  replace them with a new trustee of your choosing.

If you were to die, the value of your Personal Injury Trust would be distributed in accordance with the  terms of your Will. If you die without making a Will, you may not control who would receive your award  money. Your estate would simply be distributed in accordance with a set of legal rules, known as the “Intestacy Rules”. We recommend that you  update / establish a Will as soon as practicable with a specialist solicitor. 

In cases involving a child, a High Court judge will need to approve the establishment of a personal injury trust to manage their funds until they reach 18 years of age. The Court will need to be satisfied that a trust is suitable and is likely to be beneficial  to the child, as well as approving the trustees and the type of trust that is to be used. The assistance of a specialist solicitor will be required.  

A brain injury can impair an individual’s decision making abilities, including the ability to manage their own financial affairs. The criteria for capacity is set out in the Mental Capacity Act 2005 (MCA). If an  individual lacks sufficient mental capacity to manage their own affairs, an application must be made to the  Court of Protection (CoP) for an appropriate person to be appointed as their “Deputy”. A CoP Judge will decide on the most appropriate  person to be appointed as a Deputy and method for management of the person’s financial affairs. A Deputy will usually be appointed by the CoP in  order to manage the individual’s total property and financial affairs. This is usually preferred to the establishment of a personal injury trust, because a  deputy is required to report, on an annual basis, to the Office of the Public Guardian (OPG) in England and Wales, the Office of the Public Guardian (Scotland) in Scotland and the Office of Care and Protection in Northern Ireland. This requirement  provides assurance that the person lacking capacity will have their best interests looked after. Funds held by a Deputy will also be disregarded for the purpose of means tested benefits and local authority supported care, in the same way as funds held in a  personal injury trust.