A personal injury trust is a positive thing, not a problem

A personal injury trust is a positive way to keep and use your compensation and benefits

A personal injury trust is a positive thing, not a problem.
A trust is created by a legal document, called a deed. Trustees are appointed and hold the trust fund. It is not complicated.
Benefit regulations allow you to keep receiving means tested benefits and hold and use your compensation. What’s not to like?
Use your benefits for the basic expenses, then use your compensation direct from the trust as you wish.
All you have to do is keep the compensation in the trust separate from your own money.
In return for keeping your benefits, this looks fair enough.
There is a lot of nonsense on websites about how to avoid setting up a trust. Using a trust is the only legitimate solution, the other solutions all involve fraud. Your compensation is not private as all compensation paid is notified to the Department of Work and Pensions under the compensation recoupment scheme.
The question I am most asked is, how can the compensation in the trust be used? The trust fund should not be used for the basics for which benefits are intended, beyond which the trust can be spent and/or invested in any way you could do so yourself.
I always advise the trust bank account and investments should be operated on the basis of at least two trustee signatures. That means a cheque book only account, which prompts questions too. Cheques are more useful than you might imagine. There will be purchases which require electronic payment, for which the trustees can authorise the use of a credit card and pay the credit card bill by cheque. That allows the trust to operate in the 21st century.
So, there you are. You have a legitimate way to keep receiving benefits and hold and use your personal injury compensation. The law makers accept a compensated person has not won the lottery, the compensation being paid for injury and financial loss, both past and future, so why should they be penalised. I think it is a generous law, so please don’t mess about with the fraudulent alternatives and take advantage of the generous legitimate route.

Author: Mark Thompson

Personal injury and accident specialist solicitor

8 thoughts on “A personal injury trust is a positive thing, not a problem”

      1. So if one of my trustees has their own personal credit card in their name, I could ask them to pay for an item online for me on my behalf. I would then write a cheque payable to his credit card company using money from trust?

        If however, i was accepted for my own credit card through Capital One for example, would I then be able to purchase items online myself and then once the bill comes, write a cheque payable to the credit card company using money from my trust?

        I don’t know how else im supposed to be able to purchase things in store, or online using funds from my trust? I’m wanting to purchase a new washing machine and fride and some bedroom furniture but I’m confused as to how Im supposed to

        1. The trustees must first agree to the purchase. IF they find the trust does not have the ability to make the purchase, or cannot get the best price with the payment methods available, the trustees can authorise the use of a credit card. The trustees will then pay the sum spent when the credit card bill arrives.
          The compensated person can use their own credit card, but each purcahse must be authorised by the trustees. I suggest you keep a record by email exchange.
          Dual authorised online banking is becoming more available for joint accounts for trustees. Look out for this when setting up an account for a trust.

  1. Firstly thank you for answering a previous question about not sending money to another for them to transfer to me as you said that’s fruad, my question is then I know you said some banks allow for online transactions through the trust I wonder what about the use of prepaid credit cards would this also be considered fraud to transfer money to one of those or can that work. Trying to find a work around the cheques system

    1. Trustees can agree to a particular purchase and find it is not possible by cheque or bank transfer. They can agree a credit card can be used and then write a cheque to pay off the credit card bill.
      Transferring money onto a prepaid credit card is quite different. The money on the credit card is yours, the transfer being no different from transferring money to yourself.
      You should not have personal access to the trust fund, so using a credit card as you like, knowing the trustees will pay the bill, is little different to having access.
      For a balanced view please read more here.

  2. can personal injury trust be a disabled person trust at the same time? If so, can the injured person who is now disabled be one of the trustees? also once the trust is setup, can the trust purchase a property and become the disabled injured person’s landlord?

    1. Take care with the terminology.
      The term “personal injury trust” simply means a trust which holds personal injury compensation.
      A disabled persons trust, sometimes called a vulnerable beneficiary trust, is quite different. Such a trust can get special tax treatment. They are usually set up by a parent or family for a disabled or vulnerable person. There is a useful explanation here.
      You can hold personal injury compensation in a vulnerable beneficiary trust, the choice being based on tax.
      A trust you set up could purchase a property and be your landlord. You would not be able to claim housing benefit for the rent payable to your trust.

Leave a Reply to Mark Thompson Cancel reply

Your email address will not be published. Required fields are marked *


This site uses Akismet to reduce spam. Learn how your comment data is processed.