How do I open a personal injury trust bank account, or, I need to open a personal injury trust bank account, is what callers often say to me.
To protect your benefits if you receive personal injury compensation, you actually need two things. First you need to create a trust and then a bank account is set up for the trust.
To protect benefits when you receive compensation, you first need a trust. Often called a personal injury trust, the trust is created by a legal document, called a trust deed. The trust deed states its purpose is to hold personal injury compensation. The trust appoints your trustees. Once the trust is in place, the trustees then open a joint bank account.
You need a trust first, then somewhere to hold the compensation separate from your own money. The second step is to open the trust bank account.
If you receive a payment for an injury to you, which you hold in a trust, it will be ignored for benefiit purposes. This is allowed by the benefit regulations. It is not the trust which protects the compensation, it is the benefit regulations themselves which allow this arrangement.
You are being asked to keep your compensation separate from your personal funds. Once you understand the need for this separation, you will have the answer to most questions as to how the trust should operate.
The first job is to set up the trust, then the trustees can set up a separate bank account. I advise the account be given the same name as the trust, so it is clear to all that the trust holds the money.
With the trusts I write, the compensation can be held in a wide range of accounts and investments. The golden rule is the trust must hold the funds, not you personally.
Please do not waste time making enquiries of banks. As at September 2023, there are very few banks which will open a joint current account for a trust. You cannot open an account without a trust deed, so concentrate on setting up the trust first, then we will help you with banking.