Compensation protection trust
Compensation protection trust is one of the names given to a trust designed to ensure that personal injury compensation is not taken into account if you claim means-tested benefits or need local authority support for residential care.
The term compensation trust is just a name given to this type of trust, others being personal injury trust and special needs trust. A special needs trust is something quite different but I include it here as it is often thought to be a trust for protecting compensation.
The regulations which contain the rules for benefit payment contain a list of items which are disregarded, or ignored, when working out your entitlement to benefits. There are two disregards for personal injury compensation and they both refer to personal injury compensation held in a “trust.” Only the word “trust” is used, not personal injury trust and not compensation protection trust. These terms are just names given to trusts so you know what they do, but they are names rather than actual types of trust. The regulations use the following phrase : “Where the funds of a trust are derived from a payment made in consequence of any personal injury…” It does not say personal injury trust or compensation protection trust, it just says trust.
Please do not get bogged down in terminology. You need a trust to hold your compensation to protect it should you need to claim benefits or need financial support from a local authority for your care.
To help you decide if you need a trust please use the links below.