Do I need a personal injury trust fund?
Will I lose my benefits when personal injury compensation is received? This question is asked by people settling personal injury compensation claims, worried they may lose their means tested benefits.
You will be relieved to know you can legitimately keep your benefits and the compensation. This is allowed by the benefit regulations themselves. What you must do is set up a trust to hold the compensation and keep it separate from your personal funds.
Benefit regulations allow compensation to be held in a trust. Compensation has been paid for injury, financial loss and future needs, so you should not lose your benefits. If you lost your benefits, the compensation would be pointless.
Keep and use the compensation separately from your trust. The compensation will be ignored when assessing your finances for benefits or local authority care. This is a generous allowance and should be used by all compensated people who currently claim means tested benefits, or who are likely to need such benefits in the future. The same applies if you will need local authority care.
A trust is an arrangement to hold and use the compensation. The trust is created by a legal document, called a trust deed, which states the purpose of the trust and appoints trustees to manage the compensation for your benefit. The trustees open a separate bank account, which keeps the compensation separate from your personal funds.
A trust does not have to be complicated. It is no more than a device to hold the compensation. You are simply asking trustees to manage and use the compensation for your benefit. You can be a trustee yourself, ideally with two other trustees.
The trusts we write allow you to keep control. You can end the trust when it suits you. You will also be able to add and replace trustees.
To help you decide if a personal injury trust is right for you, learn more using the links below.
The trust should be set up as soon as possible. You can hold compensation for a period of one year. This is called the 52 week disregard. This is a period of time to allow you to set up a trust, not a period within which you can blow the money. You can read about the 52 week disregard.
Do not be put off by the terminology. Trusts for compensation have various names such as compensation protection trusts or special needs trusts. You are setting up a trust to hold personal injury compensation, so the most often used name is a personal injury trust.
A trust for compensation is a positive legitimate arrangement, not a problem.