Personal injury trust fund to protect means tested benefits

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.

Do I need a personal injury trust to protect my compensation and benefits?

Personal injury trust – questions and answers

Pros and cons of a personal injury trust

If I do not claim benefits do I need a personal injury trust?

What is the cost of a personal injury trust?

How we can help you set up a personal injury trust.

Which personal injury payments can be protected by a personal injury trust?

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 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.

A personal injury trust is a positive thing.

For help without obligation please call 01392 314086

Author: Mark Thompson

Personal injury and accident specialist solicitor

36 thoughts on “Personal injury trust fund to protect means tested benefits”

  1. Hi my daughter had a personal injury awarded by the court and her money was put in her child trust fund . She can get it at 18 would this affect my benefits once she is eighteen.

    1. I do not claim to be a benefits expert and suggest you look here.
      If your daughter is to claim benefits in her own right when she reaches 18 years of age, she will have to set up a trust for the personal injury compensation before she claims benefit.
      The Child Trust Fund is not a genuine trust, the word “Trust” being used for marketing purposes. Even if the money can remain in that investment beyond her 18th birthday, it will not offer protection for a benefits claim.

  2. Hi Mark,

    My mother has held a PI trust since 2016 with a Natwest. However, this year they are closing the service and will send us a cheque which we will need to put into a new PI trust.

    Can she use the trust deed produced in 2016 again and present this in a different bank to open a new account? Also can you suggest any banks to go to?

    Thank you


    1. The answer is to open another bank account for the trust.
      The most consistently helpful banks are Barclays, Metro Bank and Catter Allen. Read all about it here.
      The trust is created by the trust deed. The bank account is simply a place where the trustees hold the trust fund.
      Take a look at the trust deed. I would be surprised if the money has to be held in one account. I write trusts which allow the money to be held in any investment which the compensated person can hold personally. Please note, it is vital the trust holds the investment.

  3. Hi Mark
    I’m in the middle of a pi claim
    I slipped at work n fractured my tailbone they have accepted liability
    I’m a single mum on tax credits child tax credits and child benefits
    The first question I would like to ask
    I know u might not be able to give a definite figure but I was wondering the average settlement I would maybe receive
    Also I’m Worried about my benefits and how this will effect them. And don’t know if ide need to do a trust or just have the fu do into my barclys account.
    After reading alot of your answers to other on here I feel you are the one to ask
    And thank you I really appreciate your time

    1. The value of your injury cannot be assessed until you have a medical report. I must leave that with your solicitor.
      If you receive means tested benefits, or are likely to need such benefits in the future, then a trust may be necessary. It depends on the amount of compensation you are to receive and the personal funds held by you and those you claim benefits with.
      The time to contact me is when you know how much you are to receive as an interim payment or final settlement.

  4. Hello Mark, I have a PIT with £150k in, I’m somewhat worried having it all in one institution, my query is, is it possible to have two PIT and split the money between the 2 accounts without having my benefits affected?

    1. The trust you have will contain the trustee powers. I would be very surprised if the trustees must hold funds in one current account.
      At the moment, the most helpful banks for current accounts for trusts are Barclays, Cater Allen and Metro.
      The most helpful building societies are the Skipton, Bath and Coventry building societies.
      I suspect your trustees can hold a wide range of investments, but make absolutely sure the account or investment is held by the trust.

  5. Hi Mark,
    I was in a car accident a few years ago which caused back issues, and been told I can have a interim payment of a thousand pound, but I’m currently on benefits universal credit and pip, and I think I will need to get a trust at some point, but haven’t done so as yet as not had an offer of any sort yet, other than this thousand pound, but if I was to get a trust can you spend the money in the trust on what u like and when you want? Are there any restrictions with a trust?
    Many thanks.

    1. Provided the £1,000 leaves you well below the £6,0000 figure you can hold, you do not need a trust now. Think about a trust if a further interim payment is offered, or when you reach final settlement.
      People fear the restriction of a trust on how the money can be used. The golden rules is not to use the trust for items for which your benefits are intended. Beyond that, the trust can be used with freedom, but the expenditure must be from the trust. Avoid putting trust funds in your hands or bank account and spend direct from the trust.
      A more detailed explanation of operating a trust bank account can be found here.

  6. Hi, I am currently working on setting up a personal injury Trust fund. Just where can you get one these days. I have tried. Lloyd’s, HSBC, Barclays, Bank of Scotland, Nationwide B/soc, Halifax, to name a few. However the answer is always the same. NO we don’t do them,we do child trust funds! Not much use for 65 year old. If a personal injury Trust fund is not available what else can be done to protect yourself in this matter?

    1. To create a trust, you first need a trust deed. This is the legal document which sets up the trust and appoints the trustees.
      Once the trust deed is complete, the trustees must then open a joint bank account. You will find more information here.

  7. I received a lump sum and i had to spend more than half of it in repayment of debts etc. Within two months of receipt, I want to asked for a mandatory reconsideration to put the rest into a trust fund. Do you think this will have a problem as I have spent more than half of the amount?

    1. A mandatory reconsideration is the way in which you ask a beneft agency to review its decision.
      You do not need permission of a benefit agency to set up a trust. You can only hold remaining compensation in trust, so if there are benefit consequences for how you used compensation outside a trust, creating a trust cannot protect you retrospectively. You can certainly set up a trust for the remaining compensation, the sooner the better.

  8. We set up a personal injury trust with HSBC about 7 years ago. It was fir my husbands work accident. It does not get any interest and we do not use it. The idea being that we kept it their for emergencies/retirement. The bank have just sent us a letter telling us they’re going to close the account due to inactivity. We thought we could not put anything into it as it would affect benefits? What should we do?

    1. I think banks do this for inactive accounts, not just trust accounts. You are correct, you cannot pay anything other than personal injury compensation into the account, but you could mak ea small purchase.
      If you want to earn a little interest, there are two helpful building societies, the Bath Building Society and the Skipton Building Society. I think you will have to retain the current account, but at least it will not be inactive.

  9. Good evening Mark.
    Many thanks for providing such detailed and sensible information which is clear for brain injury victims to understand. It is appreciated.
    I am establishing a personal injury trust account to hold my compensation pay-out. My question relates to whether a compensation amount over £85,000 held in a trust account will have FSCS protection? The trust account is with a respected high street bank. Am I worrying over nothing?

    1. I claim no expertise about the Financial Services Compensation Scheme.
      There is some debate about joint accounts and trusts. I would suggest you have no more than £85,000, personal and trust funds, with any institution.

  10. Hi. I’m a single mum on universal credits and I’m awaiting a payment for a small car accident last year. Figures havent been decided yet but I’m guessing it wouldn’t be more than £3000/£3500. What would be the best thing for me to do? I owe about £1000 in different Bill’s and then was hoping to treat my kids as universal credit doesnt really allow for any money left over at the end of the month. Will I be able to just use this over the year as it would be well under £6000 or will I still have to tell the benefits office and get permission?

    1. You can hold up to £6,000 and still receive full Universal Credit.
      If the money you hold, plus the compensation, leaves you safely below the £6,000 limit, you do not need to set up a trust for the compensation.
      You must tell the Department for Work and Pensions about the compensation. If you receive Council Tax Reduction you should also tell your council.
      If you spend the money in a way the DWP does not accept as reasonable, you will still be treated as having that money. That will not be a p[roblem if as I say, your total funds including the compensation, are safely below the £6,000 limit. If you are close to that limit, we should have a chat.

  11. Hello Mark, I am on benefits and have recently had my claim valued. The solicitor company sought advice form an independent barrister for this and was informed the claim will be worth 24-30k however this is before gathering all medical reports. I have a few questions I would really like your help, firstly I do no agree with the prognosis of the report received however my solicitors say this is favourable and I should go ahead with it. Secondly, I am thinking of asking about an interim payment. Would I be able to have say 5k transferred to my bank account which would leave me below the benefits threshold for savings and then once a final settlement had been reached, open a bank account and create a trust for the rest of the money to be deposited? Lastly, if this was not possible and it all had to go into the trust, how would I be able to spend it for cosmetic surgery, new clothes and home improvements for example? If only a cheque book is allowed. Many thanks

    1. If you think the medical opinion is not correct, discuss with your solicitor if another opinion can be obtained and who will pay for that opinion. It is not an easy process, but have the discussion.
      Provided your personal funds are low, you can receive an interim payment which leaves total funds below the £6,000 line. Expenditure will be analysed as to its reasonableness for someone in receipt of benefits. If expenditure is not treated as reasonable, you will still be treated a having the money you spent. This is why repeated interim payments, without a trust in place, are a bad idea. If a second interim payment is offered, set up a trust and have the money paid into the trust. The safety first approach is to set up a trust for the first interim payment.
      The bank account your trustees will set up will allow expenditure by cheque and bank transfer. Bank accounts for trusts are developing, so internet banking may also be available. To pay for medical services, one of those options should be acceptable.

    2. Hi Victoria, I will share with you my personal experience of a similar situation with the initial medical report received which is used to file and justify a case in court. I did not agree with the initial report however I was told it was favourable and did not need to be exact as appropriate medical experts would be hired later. The initial report was needed to get my case filed. I eventually deferred to the advice I was given. Shortly thereafter the case being filed, the defendants accepted liability but what followed was a nightmare in order to get the costs of the case down. The initial medical report was used against me by the defendants to discredit and play down the severity of my injuries. You need to keep in mind that the legal counsel’s job for the defendant is to save their client money and they will do that to the best of their ability regardless of what the truth is. Had I known the initial medical report would be a spanner in my case, I would not have accepted it. This report weakness led them to continue questioning the validity of all my evidence even very solid evidence. There was very bad professional form involved but in the end, all of the legal game playing cost my case in value. While your advisors are not allowed to ask the medical advisor to make changes, they can put forward enquiries as to why something was not included or why something was to get a better understanding. This may get the medical advisor to rethink his report and voluntarily make adjustments especially as the appointments with the injured party are usually very brief. Or you may just want to get another opinion. My advice is to ask what the real risks are at every stage and to realise that all choices have a cost risk. You are in charge of your case and your counsel have to follow your decisions. I hope it goes well for you.
      Best wishes.

  12. Hi Mark,

    I am in the process of a PI claim and am looking to make a trust deed in preparation for opening an account to receive the compensation. My question is regarding spending and what should be considered reasonable, and how can the funds be spent in terms of how purchases will be made? I was hit by a car on a zebra crossing at 5 months pregnant. Thank you

    1. I suggest you set up a trust when you know an interim payment is to be made, or final settlement has been reached.
      The trust holds the compensation separately from your personal money. The trust should not be used for what your benefits are intended to cover and, beyond that, the trust money can be used and/or invested, very much as you wish. Investments must be held by the trust and expenditure must be made direct from the trust.

  13. After receiving a PI payout which is put into a Bare Trust, if one goes back into work, is there a threshold on earnings before the benefit of the trust is lost? I understand that there is a threshold before one loses benefits but does this also apply to the funds safeguarded in the trust as well? Or is the trust always protected from tax?

  14. Hi,
    I recently settled a claim with my former employer through mediation and am due to receive a lump sum shortly. Two thirds of the payment cover personal injury. Am I allowed to put the whole amount in a Personal Injury Trust?

    1. A payment made in consequence of any personal injury can be held in trust and protected for benefit purposes. The injury can be physical or psychological.
      It is the reason for the payment which matters, not the label applied to the compensation, or parts of it.
      Send me an email with full details of the case and I will be able to say yes or no.
      You can read more about the range of compensation payments which can be held in a personal injury trust here.

  15. Hi Mark,

    Can compensation from abuse be put into trust in the same way as PI compensation?

    And is there still a 52 week disregard under Universal Credit?

    1. Compensation for abuse is paid “in consequence of a personal injury” whether the injury be physical or psychological. So yes, such compensation can be held in trust.
      The 52 week disregard applies to Universal Credit claimants, but remember, the 52 week period is a period of grace to set up a trust, not a period in which to spend the money.
      Read more about the 52 week disregard here.

  16. Hi Mark

    A rather complex situation. I am a trustee on my mother’s PI account (she is the other one). I’m currently in severe financial straits. I have spoken to the Citizens Advice Bureau, they have suggested bankruptcy, but they have also said I should get my name removed from the trustee account. How would you go about this? Especially if you consider I DO NOT want mum to find out about my financial position?


    1. Bankruptcy is not my field, but I do not think being bankrupt means you cannot be a trustee, unless the terms of the trust mean you are disqualified.
      You are a trustee, so the trust fund is not yours, so is not at risk in your bankruptcy.
      I would go back to whoever advised you and find out their reason.
      You could retire as a trustee, but you will have to give mum a reason, whether it be true or false. Why not tell her?

  17. If a PI trust is set up and money is drawn to eg buy a car, can that amount be paid back into the trust at a later date. ie can it be in effect considered to be a loan. Thanks

    1. A trust may only make a loan if the trust deed includes that power for the trustees.
      If the trust makes a loan which is repaid, the trust may receive that repayment and any interest. That is no different from the trust cashing in an investment.
      A loan made to the beneficiary of the trust should not be paid to the beneficiary, as once out of the trust the money will be seen as belonging to them for benefit purposes.
      The loan arrangement, which should be documented in writing, is quite different from simply adding personal funds to the trust. If your trust is for personal injury compensation, it may only receive personal injury compensation.

  18. Hello I’m wondering if I could have some more info on the personal injury trusts please.
    Iv been told by my insurance company I’ll need to set one up as recieveing my cheque next week.
    How long does it take to set up? Can it be done via email?
    And what is the cost please?
    Thank you

    1. Once I have the information and documents I need, a trust can be drafted quickly. The delaying factor is in the trustees opening a bank account, as the banks seem to require about three weeks at the moment.
      I will offer a fixed fee for preparing a trust, so please telephone.

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