To create a personal injury trust for compensation, you first need a trust deed. This is a legal document which creates the trust and appoints your trustees.
Once your trust document is complete, the next step is for the trustees to decide how the trust will hold the compensation. Your trust should not limit you to holding all funds in a single current account. The usual starting point is for trustees to open a joint bank or building society account to hold your personal injury trust fund. Your trust is created by a deed and the trustees then open a joint account for the trust fund.
You cannot create a trust just by opening a bank account, you need to first create the trust with a legal document, called a trust deed. People sometimes turn up at a bank with a compensation cheque, but without a deed, which is why confusion is caused. I suggest you waste no time on banks before the trust deed is complete.
There are a small number of banks which will open a joint current account for trustees. I believe most banks are put off by the anti money laundering regulations. I will recommend banks to clients on the basis of recent client experience.
The trust account should require at least two signatures for a financial transaction. It was not long ago that trustee joint accounts had to operate on cheques alone. Thankfully, banks now offer dual authorised online banking, an App or a telephone banking facility.
If you plan to spend some of the compensation, the trustees need a joint current account to make a start and, beyond that, with the trusts I prepare, you can open other accounts and investments. Please note, all trust accounts and investments must be held by the trust.
If you plan to hold the money for some time, you may not need the facilities of a current account. You could open a building society savings account and earn a little interest.
There should be two trustees as a minimum. If the compensated person is a trustee, there should be at least two other trustees. The bank account should be a joint account and should require joint signatures/approvals. The account for a personal injury trust should use the title of the trust. A trust for compensation set up for me in 2024 would be called the Mark Thompson Personal Injury Trust 2024.
In summary, what you need is a joint account for the trustees and the account must have the name of the trust. That makes it clear to benefit agencies that money is held by th etrust, not you personally.
It seems that as soon as the words “personal injury trust” or “trust” are used in a bank, the transaction immediately becomes complicated. If you are lucky you will find a member of the bank staff who has dealt with a personal injury trust before, but where that experience is lacking, opening the account can become complicated. Some refer to head office and some call in the bank’s own trust or legal department. The worst experience of a client was to be told off at a well-known building society for trying to hide money from the government. That is just ignorance of the law. Creating a personal injury trust is perfectly legitimate, allowed by benefit regulations which specifically allow trusts to protect compensation from the means-testing for certain State benefits and entitlements.
Please do not be put off. I will direct you to the banks which are most helpful.
As at september 2024, I do not recommend making enquiry of banks about current accounts for trusts, as there are only two banks which will currently open a current account for a trust. For those determined to make enquiries at bank branches and for accounts other than current accounts, the following should help. Remember, it is current accounts which are rare, but you will find institutions like building societies willing to open savings accounts.
I think the best way to approach a bank or building society branch is:
- Do not ask at the window or counter where staff are dealing with basic transactions.
- Do not contact telephone advice lines as the call handlers are unlikely to be able to help.
- Ask at a branch for an appointment for the trustees to open a joint account.
- Have a copy of the trust document available.
- Trustees must take identification documents – check the bank website for a list of acceptable documents.
- Explain you want to set up a joint account for the trustees.
- Make sure the account has the same name as the trust.
This approach gets the best results. If you turn up at a bank or building society and say you want to set up a personal injury trust, you may be met with a blank expression. What you actually want is to open a joint account for the trustees.
I would like to hear from those who have been compensated for accidents and injuries. Please let me know the bank or building society and branch you use, as there are differences between branches, and let’s discover which bank or building society has got its act together and understands the needs of those with personal injury trusts.
My second request is for information about banks and building societies that pay a decent rate of interest and allow easy access to the trust money.
Related content
Guidance to set up and operate a bank account for a trust
How to set up a personal injury trust
Personal injury trusts and how I can help