Personal injury trust

You can keep your compensation and still claim means-tested benefits if your compensation is protected by a personal injury trust.

Personal injury trust or special needs trust or compensation protection trust and protection of State means-tested benefits. All names used for a trust to protect personal injury compensation.

A trust will mean personal injury compensation is ignored when your finances are assessed for benefits and care. Here we help you understand protection of compensation with a trust.

When you receive compensation for a personal injury it can take you above the financial limits for means–tested State benefits, and affect your entitlement to local authority support for care. So be aware and look at the benefits you are receiving today, and just as important the benefits you may need in the future. Don’t just look at yourself as benefits are claimed by a family unit.Image shows personal injury trust deed to protect means tested benefits

It is worth repeating that you must also look at your care needs, both now and in the future, as a personal injury trust can protect compensation when local authority care is assessed.

A short-term decision may cost you dear.

The law quite rightly accepts compensation is not a bonus or windfall. Compensation is designed to put right the financial damage, both past and future, caused by an accident or injury. For that reason it is possible to receive compensation for an injury and still receive state benefits which are means tested. This can legitimately be achieved by paying the compensation into a trust, the sole purpose of the trust being to receive personal injury compensation.

These trusts are given a number of names which can confuse. I use the term personal injury trust, but some prefer compensation protection trust or special needs trust. What we are talking about here is a trust set up to hold compensation received after a personal injury.

It might sound complicated but for most cases a simple trust can be drawn up; trustees appointed (one of which can usually be you); a separate bank account opened; and that is it. The most straightforward trust is a bare trust which I can draw one up for you. For large sums, when the compensated person is a child, or if there are mental capacity issues, a more complicated arrangement may be necessary, but not to worry as I will help you through the process.

I have set out some questions and answers which should help you.

Do I Need a Personal Injury Trust?

If you receive a compensation award in respect of a personal injury, your current or future entitlement to certain state benefits and local authority care may be affected. If the amount of compensation will lift you over the financial limits for benefits either now or in the future the answer is simple, you need a personal injury trust. You can only hold a certain amount of capital before means tested benefits are reduced or stopped, so a personal injury trust is the only answer.

When should a Personal Injury Trust be set up?

As soon as possible is the only answer. If you are in receipt of means-tested benefits there is a period of 52 weeks during which the compensation will be ignored, but take care as the 52 week period runs from when you first receive compensation, even if it is a small interim payment. A trust can be set up beyond the 52 weeks but leaving things to the last-minute is asking for trouble. My preference is to set up the personal injury trust before any personal injury compensation payment is received. This applies to an interim payment as well as the final settlement. Having the trust in place to receive all compensation is the best way to avoid problems and prevent means-tested benefits being lost. Learn more about the 52 week period.

Who should I choose to be my Trustees?

A personal injury trust should have at least two trustees. If the simple form of trust is used you can be one of the trustees. but you should then have at least two other trustees. Your trustees must be persons you trust and may include family, friends, a solicitor or a trust company. It is your decision as to who you want to act as your trustees. There are no general restrictions as to who can be your trustees although they must be at least 18 years of age and have full mental capacity. A trustee should also have a good bank and credit rating or there may be problems opening the trust bank or building society account.

What are the responsibilities of my Trustees?

The trustees hold your personal injury compensation and administer the personal injury trust for your benefit. Although your trustees hold and have control over your compensation award, they cannot use it as their own personal property or for their own benefit. If you set up a bare trust the money is essentially yours, you can add and replace trustees and bring the trust to an end whenever you want. You do not have to give away control of your money when you set up a bare trust.

What if something happens to my Trustees?

If, for whatever reason, your chosen trustees are unable or unwilling to continue, then the terms of the trust will tell you how a trustee is to be replaced. I recommend you have the power to add and replace a trustee.

Will my chosen Trustees’ Means Tested State Benefits be affected?

No, the trustee holds your award as a trustee and not as an individual so the trust fund is not counted as part of their own capital.

How do I access my Personal Injury Trust Fund?

You must set up a separate bank or building society account. You are not limited to one account, so you can have a current and a savings account. Depending on the terms of the trust property and other investments can be held. The golden rule is that all holdings should be owned by the trust, and not by you personally. The trustees will have banking facilities and the correct approach is to use only a cheque book. All Trustees should sign cheques issued on your behalf from the Trust fund. You should pay for items you buy directly from the trust bank account and avoid transferring funds to your personal bank accounts.

How much can I put into a Personal Injury Trust?

You can put the total value of your personal injury compensation into a personal injury trust. You can add income earned on the money held in trust, or profit made on trust assets. The one trust can hold compensation from more than one personal injury if its terms are drafted widely enough.  Depending on your own circumstances, you may decide to place less than the full value of your compensation into the personal injury trust.

Are there limitations on how the money in the trust is used?

The golden rule is not to use the trust for purposes for which state benefits are paid. This means the trust could not be used for the “normal expenses of daily living.”. I always advise that a record of expenditure should be kept, and the rule of not paying the “normal expenses of daily living” should be followed. One practice to avoid is making a regular transfer from the trust to yourself. Do not pay money across from the trust fund to your personal bank account; spend directly from the trust and you will avoid problems.

What happens if my circumstances change in the future?

If you have used the simplest form of trust, known as a bare trust, the money is yours and you can tell the trustees what to do. If at any time you decide you no longer need the personal injury trust you are usually entitled to bring it to an end. The personal injury trust will then cease, but you may lose your entitlement to any means-tested State benefits/support. If you need a more complicated form of trust you will need detailed advice on this point.

What happens if I die?

If you die, the value of your personal injury trust would be paid to the beneficiaries named in the trust, or it may be paid across to your estate. You must choose which course is best so it can be written into the trust.

Are there any tax implications?

The money held in the personal injury trust is usually taxed in exactly the same way as if you held the money yourself. This is the case for a simple bare trust. If the possibility of a discretionary trust is raised do make sure you understand the inheritance tax and income tax issues which apply to such a trust. Getting this wrong can be very expensive.

Call for help without obligation on 01392 314086

About Mark Thompson

Personal injury and accident specialist solicitor
This entry was posted in Personal injury trust and tagged , , , . Bookmark the permalink.

133 Responses to Personal injury trust

  1. Paul says:

    Hi Mark, I have a question I’m struggling to find the answer to; can proceeds from an assurance policy be paid into a PIT? For example, someone who has had a stroke or a and receives money from a critical illness policy. My understanding is monies settled into a PIT can only be those which arise ‘as a consequence of a personal injury’. Proceeds from a policy would seem to fit that criteria but I can’t find any guidance on this.

    • Mark Thompson says:

      The benefit regulations list capital items which are ignored, or disregarded, when assessing benefit entitlement. There are a number of definitions with benefit regulations, but the first and the one other regulations tend to follow states:
      “Where the funds of a trust are derived from a payment made in consequence of any personal injury to the claimant…” – the “claimant” meaning a benefit claimant.
      I think the “any personal injury” means you could include a payment from a permanent health insurance policy or a critical illness policy.

  2. ron adams says:

    Hi Mark,
    I’m planning to purchase a property using 47,000 of the PIT and intend to rent this out. The income will be paid direct into the trust fund and will also be used on any future maintenance costs should they arise. What happens once the original compensation payment of 50,000 has been reached. Can rental payments still be paid into the PTI or do they have to be paid into a separate account?

    • Mark Thompson says:

      The answer lies in the trust document. I include the compensation amount, but write the trust for any compensation you may receive. Provided the money arises from personal injury compensation it can be paid into the trust.
      Make sure the property is owned by the trustees and that rent is paid into the trustee account.
      Hope it goes well.

  3. Christine says:

    Hi Mark,
    Is it possible to get a “buy to let mortgage” using the funds in a personal injury trust as the deposit? (I only have enough in my trust to pay a 40% deposit for the mortgage) Then rent out the property & have the rent paid into the trust? Or would this only work if you were buying the property outright using your personal injury trust funds?

    • Mark Thompson says:

      There is a benefit in a trust holding all or part of a property. Current benefit assessment does not take property ownership into account, but this could change. Home ownership is certainly a factor for care.
      Your question should be directed to a mortgage broker. A trust could pay the deposit, but i am not sure if a mortgage lender would make a loan on a property part owned by a trust. See what the mortgage broker says.
      An alternative would be for the trust to make you a loan to pay the deposit, with the loan to be repaid on sale of the property. You will have to check if the trust allows a loan to be made to you. It is not as good as the trust being registered as a part owner, but at least on a property sale the trust’s proportion of the sale price could be paid back to the trust.

  4. Kelly hoskins says:

    I received Marks Services when he created a trust fund for my mother who had been in a serious accident. I cannot comment enough on how professional and easy he made the entire process. He saved me a lot of time and trouble using easy to understand communicatuon and was always available to help with my countless questions.
    I would honestly recommend him to everyone needing a trust fund.
    Thank you once again you made my mother very happy.

  5. I am severely disabled due to a RTA, & have had a Personal Injury Trust set up, with myself and my daughter as Trustees. My compensation has been paid into the Trust Bank account.
    Making important purchases, I use my Barclaycard Visa, keeping receipts, then paying by a Trust cheque, having added up the purchases, when I receive my monthly Barclaycard Statement, but then also paying the remaining Statement of other purchases separately. Am I OK doing it this way?
    Also my son would like a £15000, ten -year pay back loan from the Trust Fund, to use towards the deposit for his girl-friend getting on the property ladder, with a mortgage in her name, but both living together. They are not married, but he assures me that the relationship is long-term., & solid. Could this in any way affect my PIP or ESA?

    Would be very grateful for your advice!

    • Mark Thompson says:

      Trustees usually have the power to agree to a purchase. If the trustees are limited by only having a cheque book, they can agree to a purchase by some other means, such as a credit card.
      Do take care to avoid paying for the basics of life with the trust fund. Your benefits are intended to cover the ordinary expenses of daily living such as food, clothing, footwear, gas, water, electricity bills, rent and mortgage interest.
      The trustees may make a loan to your son, provided the trust document grants them the power to make such a loan. It may be the loan must be secured on the property, which a commercial lender may not like, so check the trust document as to powers available. Also, make sure the loan arrangement is written and signed by the trustees and your son, as you may have to proof the arrangement to explain the repayment to the trust.

  6. Doreen says:

    My husband is dissatisfied with the firm of solicitors who act as trustees for his Compensation Protection Fund – a Bare Trust – he also receives a PPI annually. The house is part of the Trust Fund.
    Is it possible to transfer this Trust Fund to another firm of solicitor to act as trustees and what is involved?

    • Mark Thompson says:

      It depends on the wording of the trust document. I suspect your husband will have the power add or remove trustees, but read the trust document for the answer.

  7. Phil says:

    Hi Mark, I plan to establish a personal injury trust and then invest the money received in compensation. However, will income from any investments affect my pension credit and Housing Benefit? I have read that it doesn’t affect benefits such as Income Support but cannot find much information on Pension Credit or Housing Benefit.

    • Mark Thompson says:

      Income and interest earned on assets held in a personal injury trust and received by the trust, will not reduce your Pension Credit or Housing Benefit.

  8. Fran says:

    Hi Mark I would like to buy a static caravan out of my personal injury trust money I know it needs to be owned by the trust but I would like to rent it out and have the profits paid bk into the trust is this possible and would anything change with benefits would it be classed as a income and do I have to declare for tax purposes. Thankyou

    • Mark Thompson says:

      You will have to check the terms of your trust, but I would be surprised if the trust could not purchase a static caravan as an investment. Any rent should be paid into the trust account and will be ignored for benefit purposes.
      Taxation depends on the type of trust you have. If you have a bare trust, you are personally liable for income tax on trust income. Your own personal allowances for tax will apply.

  9. Patricia says:

    You state regarding limitations that legally it is allowed for trust money to be used for living expenses whilst in receipt of benefits, could you please explain why you cannot have regular payment dates and amounts, and possible limits? Also potential consequences of this please?

    • Mark Thompson says:

      You should use your benefits for the basics, like food, gas, electric, mortgage interest, rent and council tax. But if you get a larger than expected domestic bill the trust can pay. The trust can pay for telephone and television costs, a car. a holiday and furniture. On a larger scale a trust can purchase a property for you, or as an investment.
      You should operate the trust separately from your own personal bank accounts and spent directly from the trust.
      Regular payments from the trust to you are fatal to the trust, as it is not operating separately from your personal accounts.

  10. anton says:

    Hi Mark,

    I’m looking to have a ‘ Bare Trust’ set up, for my compensation as i am reciving benifits. I would like to help a family member onto the property ladder by way of lending them the money to do so in the same way in which a bank would provide a loan or mortgage, with them paying the loan back with interest to the the trust fund. Is it possible to do this and if so, how?

    many thanks

    • Mark Thompson says:

      You should set up a trust and ensure the trustees have the power to make such a loan. I always include such a clause in the trusts I write as it is good to have flexibility.
      You can see how I can help you here.

  11. Kj says:

    Hi Mark, I was wondering if you could answer a question on behalf of my mum. She currently has a bare trust with one trustee. She has been looking into gifting each of her children a small amount of money out of the bare trust but cannot find out how she would go about it if she would be allowed to do so. Would this be something she would be able to do as her trustee has told her that she needs to find out more information on this before she gives her the money she’s asking for.

    • Mark Thompson says:

      The first thing to do is appoint a second trustee. The trust will tell you how this should be done.
      If the trust is a bare trust, the funds are held for your mother’s benefit. The term benefit can be given a broad meaning, so if she has mental capacity and wants to make a gift, then a trustee can go along with that wish.
      I can understand why trustees become responsible for the funds they manage. This is the correct approach. On the other hand a bare trust is the simplest mechanism to hold compensation. I suspect your mother has the ability to end the trust and to add and replace trustees. The trust therefore holds your mother’s money, the only fear for the trustee being they will be criticised for making such payments. The only person who can complain about the trustee is the beneficiary, that is your mother.
      Subject to there being a definite need to spend the money for your mother’s personal benefit, I think a trustee can agree to the request.

  12. Sam thompson says:

    Hi mark would like some info about a pi trust. After reading lots of articles I’m totally confused.
    Please help


  13. Kat says:

    Thank you Mark

  14. Kat says:

    I am the disabled wife of the injured party who is soon be compensated. Of course a PIT will be set up in his name. We are concerned what would happen should my husband pass before me. I can’t work and rely on MTB. If my husband passes before me what is left of his compensation will pass to me as part of his estate which means that any MTB I had been entitled to will cease and any compensation left will very soon dwindle. Can it be wriien into my husbands PIT and Will that his estate be used to set up a disability trust bare trust for myself to protect my MTB

  15. George Griffiths says:

    Hi Mark

    I was disabled by a car accident and have a trust set up. However, i may be able to claim my NHS pension early due to ill health, the accident, and wonder as i wouldnt be claiming it at this age, im 50, if it hadnt been for that accident, can its income or capital or both go into and be held in my Personal injury bare trust?

    • Mark Thompson says:

      The first place to look is the trust itself. It is bound to define what funds can be held in the trust and it is likely to say something like the funds of a trust are derived from a payment made in
      consequence of a personal injury. I do not know the details of your pension fund, but unless there is a specific payment which is made because of the injury, I do not think the payments can be routed through the trust.
      Contrast your situation with a payment made under a permanent health insurance policy or accident insurance where the payment is made specifically because of the injury. The pension was in place for your retirement, so without specific provision to take account of disability, you are simply retiring early.

  16. Dave says:

    Thanks mark
    I totaly understand what you say and have heard same reply from so many people. However barclays offer this as an option. Stating they’ve done it for many clients and it falls within what a trust fund is. This might serve as a warning to others.

    • Mark Thompson says:

      You should not rely on your bank as to the proper operation of your trust. The bank are operating a bank account, not a trust. I suggest you resort to using cheques only with at least two signatures, as your current arrangement means you do not have a trust.

  17. Dave says:

    Hi mark
    Have some information regarding my trust setup. Would like your thoughts on this, as it seems different to what is advised on this great informative site.
    A trust deed was set up by my solicitor early enough. I was in receipt of intrim payments before final settlement. I was told it would be ok to place funds from trust to bank ac to pay mortgage ect to make up the deficit between benifits and wage I stopped receiving.
    I could make these transfers easily by online banking. I was able to bank online because barclays stated that due to a clause in the trust deed, I could delegate myself as a delegated sole trustee signature. When this procedure was challenged by myself. Barclays explained this is a common procedure for them to do and a trust fund is set from the trust deed not how many trustees.
    Hope this makes sense

    • Mark Thompson says:

      The problem with your arrangement is you have personal access to the trust fund. Personal access to the trust fund is fatal to the existence of the trust. If the DWP became aware they would not accept you have a valid trust.
      This is quite different from the compensated person being a trustee and one of at least two signatories of a trust account. There is no personal access to the trust fund, so such an arrangement is fine, but yours is not.

  18. James powell says:

    So could I just make a one off transfer off say £1000 to my Barclays current account straight from my pit and not breach the benefits rule,
    Thanks Jamrd

    • Mark Thompson says:

      Provided you remain below the money you are entitled to hold. But only do it once. The catch is that how you spend the money may not be considered reasonable by a benefit agency, so you will be treated as having that £1,000 even though you have spent it.
      Rather than chose a round sum of money, decide what you actually need and only transfer it if you cannot buy direct with the trust account.

  19. James powell says:

    Hi Mark,
    I have just settled my claim, can I just transfer a small amount of money from my personal injury trust to my Barclays current account

    • Mark Thompson says:

      Seems as if you have received compensation and paid all the compensation into the trust account. Well done, that is a good start.
      The golden rule is to make any payments direct from the trust account, NOT through your personal account. Any payments from your personal account will be assessed as to their reasonableness for someone in receipt of benefits. If expenditure is not considered reasonable, you will be treated as still having the money. The danger is you can creep up to that £6,000 line, but have little or nothing in your bank account.
      Provided you keep a good way below the £6,000 line, make one transfer to make life a little easier, but do not be tempted to repeat it. You will suffer at the hands of the reasonableness test and regular payments to you from the trust are fatal to the trust, as you will be treated as having personal access to the trust which will fail.
      Think hard about what can be paid direct from the trust.

  20. Jennifer says:

    Hi Mark,

    I received a large personal injury payout in 2010 and set up a bare trust mainly to protect my benefit allowances and if I would need residential care in the future. Since then the trustees have invested some of the money in property. On a recent sale of one of said properties, the solicitor suggested a discretionary trust. After doing some research I have decided that a bare trust best suits my needs due to the fact I can avail of my personal allowances for tax purposes, I can end the trust when I see fit etc. However I was surprised that it was possible to change the trust and set up a discretionary trust (with different terms and obviously rules that go with full trusts)?
    Is it possible to do this? Would this simply involve me ending one trust and drawing up a new deed 7 years after receiving my compensation? Thanks

    • Mark Thompson says:

      The benefit regulations state personal injury compensation will be disregarded if held in trust. The type or number of trusts are not specified, so setting up another trust is possible.
      All I would say is that you need very good reasons to set up a trust other than a bare trust. Most clients like the control available to them with a bare trust, the simplicity of tax and administration. Being very general, the more complicated forms of trust are often used for tax-planning. If you are planning ahead make sure you see a projection of tax payable before deciding which is most suitable for you.

  21. George says:

    I have a Personal Inury Trust already set up with interim payment in Metrobank and the account is in the trusts name not my personal name. I am a trustee of the bare trust with two other trusteees.My question is this… When i get final settlement can the trust invest in, for instance, equity income funds through a platform like Fidelity investments? How could the trustees accomplish this?
    Thank you for your brilliant answers..


    • Mark Thompson says:

      It depends on the trustee powers contained in the trust. Your trust will either set out each and every power or it may refer to a standard set of provisions such as those prepared by the Society of Trust and Estate Practitioners. I would guess the answer is yes, but you will have to consult the trust document to be sure.
      Whatever investment is made, the investment must be held by the trustees, not you personally.

  22. Jayne says:

    I am soon to receive 46k for a RTA, I’m currently on ESA and PIP, all benefits that I have received since the RTA have now been paid back to the DWP. At the moment my Solicitors are keeping hold of my payout and my family are trying to persuade me to buy a house with the proceeds. Once this money hits my bank account will my benefits stop? and what are the rules about buying a property with it as far as the DWP are concerned?

    • Mark Thompson says:

      The best approach is to set up a trust for your personal injury compensation. The compensation should be held in trust and invested from there. The trust can purchase a property, the major benefit being the house stays outside the financial assessment which is made by a local authority if you need care. It should not take long to set up a personal injury trust and it will take away those worries you have about benefit entitlement.

  23. Matt Dadge says:


    I have a discretionary trust at present, the trust bought me the house I live in and the house has always been in the trust. The problem I have is that the house now needs a lot of work doing to it and the only way for me to fund these works would be to remortgage the property. One of my trustees who is also the solicitor for the trust has told me that a remortgage through the trustees is out of the question, fair enough so I have asked to remove the property for the time being to let me remortgage do the works, then pay of the remortgage and after return the house to the trusts.
    If i do this it will leave almost 20k left I the trust. But the solicitor has told me that it is not possible to do this and if I did push to do this I would have to wind up the trust.
    For me this seems a little extreme is this correct?
    If I take the house from the trust would there be any inheritance tax to pay or anything to pay seeing as I am anyway the sole beneficiary???

  24. Hi mark I’m due to receive around £18-20,000
    In compensation .
    I am currently receiveing tax credit and housing benifits . I was wondering how it works with paying for the trust to be set up . Can this be taken from my compensation when payed into the account . My claim has already had an offer which I will be expecting within the next month or so .


    Valerie Austin

    • Mark Thompson says:

      I will need the compensation figure to include in the trust, so as soon as you have that figure the trust should be prepared to allow the trustees to open the bank account for the compensation.
      If it helps you I will wait for the compensation to arrive in the trust account before being paid.

  25. susan says:

    If you have a personal injury trust, is this classed as a marital asset if you were to divorce? And if a property is purchased which belongs to the trust is this also a marital asset or does it continue to belong to the trust?
    On setting up a PIT should any agreement be written up in case of future divorce on what happens to the funds? Or what is the best way to protect personal injury compensation?

    • Mark Thompson says:

      I am not a solicitor who deals with divorce. like so many areas of the law most solicitors specialise in particular areas of the law only.
      I can only comment from knowledge I have gathered from the experiences of clients over the years. It was once the case that personal injury compensation was not considered a marital asset, with one exception which was the part of the compensation which represented loss of earnings. That is no longer the law so all compensation is taken into account, although I believe consideration is given to the reason the compensation was paid.
      Holding compensation in a trust protects the compensation from the financial assessments undertaken for benefits and care, but a trust does not mean the compensation will be protected from creditors or from being taken into account in a divorce settlement.
      We are now seeing more pre-nuptial agreements being used in the UK so you could suggest a similar type of agreement in respect of the compensation might help.

  26. Sandra says:

    Hi Mark

    Please could you advise whether a client could put back funds he loaned to a family member from his personal injury trust into the trust again?

    • Mark Thompson says:

      The first thing to check is that the trust deed includes power for the trustees to make a loan. If the trustees have that power the trust can receive repayment and any interest charged on the loan. The repayment and interest must be paid to the trust.
      The same goes for other investments. A simple example would be trust money held in a deposit account opened by the trustees. The trust can receive interest paid on that investment and the sum is protected provided it continues to be held by the trust.

  27. Matt says:

    Hi Mark.

    I wondered if you could please help me.

    I received compensation from the CICA back in 1997. That money has long gone {before 2000}.

    In 2011 I reopened my old CICA case on the basis that there had been a material change in my condition. The case just recently went to appeal to the first tier tribunal, which I won. The CICA now have to reassess my case and make an award for compensation, past loss of earnings and future loss of earnings.
    The Tribunal recommended that the CICA make an Intrim payment to cover medical expenses for me to gain access to immediate treatment before making a final award.

    My question is, am I still able to set up a trust with this and have it disregarded for the purposes of benefits payments and future care costs, or would the DWP and the Government in general regard the 52 weeks disregard starting in 1997 when I received my original award?

    Kind Regards


    • Mark Thompson says:

      The 52 week period can be confusing.
      There are two disregards for personal injury compensation, the first being that compensation will be disregarded, or ignored, for benefit purposes for 52 weeks from the first payment of compensation. Quite separately the benefit agencies must disregard compensation held in a trust. These are quite separate provisions and there is not a 52 week time limit in which a trust must be set up.
      The answer is you can set up a trust today despite the passage of time.

  28. Peter McGarrity says:

    My wife and I have received seperate compensation payments for injuries obtained in the same accident. Do we have to seperate trusts ?
    Thank you.

    • Mark Thompson says:

      The trust is an individual arrangement so you must have one trust each, even if the compensation comes from the same accident.

  29. Ed Williams says:

    I opened a personal injury trust account at Metro Bank in Holborn, London a year or so ago. The bank made so many errors and it took about 5 months but we got there in the end! However I heard a comment from someone recently saying that they get interest paid on their Metro bank PIT account and I do not get anything.
    Do you or anyone know if that is correct – ie whether anyone does receive interest on their Metro bank Personal Injury Trust account deposits and, if so, how much % they get?
    Thank you so much.

    • Mark Thompson says:

      You are not bound to use just one bank account for the trust fund. Most trusts allow wide investment powers to the trustees so most investments, including property, can be held by the trust. A good starting point would be a savings account and clients have given me good reports of Skipton Building Society.
      Make sure the account is opened by all trustees, the account has the same name as the trust and you do not have personal access to the money.

  30. Richard says:

    Hi Mark,

    Thank you for your reply. I am looking to get rid of the means tested benefits and live on the rental income as trying to get a credit card with a large limit without a job or income is problematic. Will this affect my trust in anyway? I don’t want to worry about having to keep an eye on how much I transfer to myself which is another reason for coming off benefits.


    • Mark Thompson says:

      Can I suggest you look at this another way as I think you are concentrating on the downside of managing a trust.
      Calculate how much you receive in benefits on an annual basis and multiply that by the number of years you may be in receipt of benefits. Then assume you might need care in the future, say for two or three years at £2,400 each month. Tot up those figures and then weigh that against the inconvenience of managing the trust.
      Let me know what you decide.

  31. Richard says:

    Hi Mark,

    I currently have a personal injury trust with enough to live on for the rest of my life. The purpose of the trust was because I received a 60/40 split in my favour of an accident and I was receiving state benefits as a result of the accident (ESA, DLA, housing and council tax). Since then, I have bought a home through the trust and two other properties to rent out as income back in to the trust so I am only receiving ESA and DLA. I figured that life’s too short and wanting to travel, explore the world etc and just enjoy life but to do so, the benefits I am on is not enough to pay for this and therefore restricting what I can do/purchase. I am very sensible with money and I am looking to come off the ESA benefit and have the rental income from the two properties as my own and write cheques from the trust account to my current account as and when I need to. Is this okay to do and viable? Is it best to keep the trust as well, incase of future care needs?


    • Mark Thompson says:

      Thanks for your questions Richard.
      The answer to both is to follow the golden rules, which are receive any income on trust assets into the trust fund and buy direct from the trust bank account.
      You can transfer money to your personal account but take care not to pay yourself “wages” by a regular transfer. Also keep a careful eye on how much money you have personally as transferring money from the trust can take you over the limits.
      So do not receive the rent personally and avoid regular transfers to your self. Some people find use of a credit card helps with the impractical cheque book only operation of the trust bank account. The trustees can pay the credit card off, but take care. The way you approach use of a credit card is important. The trustees can allocate funds for a specific purpose. If a purchase is agreed with the trustees, the purchase can be made with a credit card and the trustees can pay the agreed amount when the credit card bill arrives.

  32. Charles Parsons says:

    my son does not have capacity to contract due to an accident, he has been awarded six figure sum. during his time in hospital I had to give up my job and I still do not work.
    He receives 24 hour care and income support. I have set up a pit and was wondering if it is possible for the trust to gift money to the family for favour & care for what we have lost or to purchase a second car to help with his care, he currently has a car from state benefits but cannot drive.

    • Mark Thompson says:

      It is a difficult situation. I do not know the hold story so will set out a few thoughts.
      If your son lacked mental capacity at the time of his settlement it would not be possible for you to set up a trust on his behalf. Your son must set up his own trust.
      If your son lacked mental capacity the settlement of his compensation case should have been approved by a Judge. Part of that approval would have involved how the compensation should be handled. Judges usually direct that an application ought to be made to the Court of Protection which will then oversee management of someone’s financial and property affairs.
      Sometimes a personal injury trust will be approved for someone without mental capacity, but there are always stringent safeguards built in.
      So I do not know how you have reached your current position. Has mental capacity been lost since the trust was set up? If that is the case you may find the trust is no longer valid unless it includes a clause which allows the trustees to carry on after the injured person has lost mental capacity.
      If family members and friends have provided care, above and beyond what might be usual in a family, it is possible to make a claim for gratuitous care. That claim is made within the case of the injured person and any compensation received is itself held by the injured person for the people who provided that care. The claim should have included past and future care and within the approval of the settlement of the case a Judge would have given directions as to how much money should be paid out to the carers.
      If the trust is valid and is written solely for your son’s benefit you cannot compensate or pay wages to those providing voluntary care. If your son has been provided with a vehicle for his own use, which means family members drive him, I cannot see it would be right for his trust to buy the family a car.
      There is a very fine line between right and wrong in such cases. I will happily help if you would like to call me.

  33. Rebecca says:

    I fear I’ve made a mistake buying a house in my name rather than the trust buying it. I wish I’d took advice first! Anyway, is there a way I can transfer it back to the trust?

    • Mark Thompson says:

      I need to know more about your situation but it is possible to bring the property into the trust fund provided personal injury compensation was used for the purchase. Much depends on how the agencies handling your claim approach the trust.

  34. Alan says:

    could you please advise me. I have a trust fund and 1 of my trustees set up an investment of £50,000 via a financial advisor. My trust allows for investments to be made. However this was done without my knowledge and the said trustee is no longer a trustee. My question is can my new trustees(s) get I what is left of this investment returned back to my personal injury fund from where the investment was originally finaced.

    • Mark Thompson says:

      Provided the investment which was set up is owned by the trust the existing trustees can reverse the investment. Do check if the investment is worthwhile as you may want to keep it and do also check for penalties if it is fixed term or notice is required.
      Most trusts give trustees wide investment powers. The golden rule is that any investment must be held by the trust and not by an individual.
      The bare trusts I draft include a power for the person who set up the trust to add and remove trustees. very useful in cases like yours.

  35. Silvia says:


    Would you be able to clarify some of my questions?
    I am receiving a compensation of a sum of £11,500 for injuries. I receive a very small amount of housing benefits, and 2 years ago I got cancer and applied for Work and Pension benefits as I could not work due to my illness. However, I only started receiving the accumulated payments about a month ago.

    I have been told that if Itake the money and use it within 12 months my benefits will not bee affected and I won’t be required to pay any taxes. Is this true? Also, within this 12 months, can i take the money in cash and put it on another account in say my daughter’s name to be used in the future?

    Furthermore, which trust fund do you think it’s appropriate for me, in case I need one and why?



    • Mark Thompson says:

      Yours is question I am often asked.
      First of all I have a question for you. Have you received an interim payment? I ask this as the 52 week period runs from receipt of the first payment of compensation you receive, not from the final settlement. For the purposes of this reply I will assume the 52 week period has only started to run.
      The 52 week period is not a time limit for setting up a trust, it is a period during which personal injury compensation is disregarded by the benefit agencies. It is simply ignored during that one year but at the end of the 52 weeks if you have not set up a trust your use of the money can be taken into account.
      For most means tested benefits your total money must be below £6,000 to have full entitlement to a benefit. You can often hold up to £16,000 but your benefit will be reduced depending on how much you hold above £6,000. Also please note if you do not live alone the money held by all those in your “claiming unit” or household will be added up in checking your entitlement.
      If you aim to reduce your money below £6,000 giving away the difference to your daughter to hold will not work as you will be considered to be hiding the money. If you spend money the reasonableness of your expenditure will be reviewed. You can certainly pay off genuine debts and undertake necessary maintenance on your home, but it is difficult to provide a definitive list of what will be considered reasonable.
      So dependent on what must be spent to reduce the money you hold a trust is often the best solution. A trust will allow you to hold onto all of the compensation until you really need to use it, or alternatively it allows you the opportunity to spend it as you wish without question as to the reasonableness of your expenditure.
      The cost of setting up the trust should not be an issue when compared with the benefits you might lose.
      The correct advice depends on your own circumstances so do call for a chat without obligation.

  36. Susan says:

    Hi Mark,

    I am due to receive £2,500 compensation, but was told to set up a compensation trust fund it will cost me £500. I am on means tested benefit. I have read your articles and can see how I should open an account with trustees, but I was wondering if I can set up my own document for trustees to sign, or if a solicitor has to do this. If I can, what information needs to be in it?
    Many thanks for your time and great articles you write.

    • Mark Thompson says:

      Tell me if £2,500 is the total compensation you are to receive or is it an interim payment. The purpose of a trust is to ring fence the compensation so it is ignored when assessing your finances in a benefits claim. If receipt of compensation does not affect your benefits then I question whether a trust is necessary.
      If £2,500 is the total compensation then look at the financial circumstances of those you claim with, add in the £2,500, to see if you have less than £6,000. If the compensation does not take you over £6,000 I cannot see that a trust is necessary.
      If the compensation is an interim payment then you should certainly set up a trust now.
      Let me know the answers to these points and do telephone me for a more competitive quote.

  37. Kieran Bradley says:

    Can you please tell me if I must pay Capital Gains Tax
    when cashing in shares from my compensation trust to
    pay for a flat?


    Kieran Bradley

    • Mark Thompson says:

      The answer depends on the type of trust you have. The usual trust is a bare trust which is tax neutral which means the tax rules apply as if the money in the trust belongs to the compensated person. On the whole compensation protection trusts are not designed to give tax breaks, they are designed to allow means-tested benefits to be received.
      For a definitive answer you will have to talk with the people who set up the trust for you.

  38. Jessica says:

    Hello Mark,
    May I ask two questions-
    (1) I understand from your prior answers that all I have to do to set up a PIT is to open a bank account in my name with the words “Personal Injury Trust” after it. How do I then appoint the other one trustee (myself being the 2nd trustee, as per your advice)? Do I have to draft a trust deed and, of so, how do I do this?
    (2) If sums under the threshold for means-tested benefits are transferred occasionally into my regular current account (not the PIT account), would I be correct in understanding that this would not affect my benefit entitlements if that account’s cumulative balance remained below the benefit’s threshold for savings?
    Thank you so much.

    • Mark Thompson says:

      The trust is created by a trust document known as a deed. The bank or building society simply holds the money, and does not create the trust. The account has the same name as the trust so the account is clearly identified.
      So you need a trust document drawn up first. That document will identify the trustees. If you want to be a trustee then you should have two other trustees. A trust must have a minimum of two trustees, but if you are a trustee you should avoid the risk of being the only trustee. Your money is being held for your sole benefit, and if you are the only trustee it does not like a trust does it. You can see details of all the things you must think about and the information I need to prepare a trust document at
      I always advise that you should avoid transferring funds from a trust account to your personal bank or building society account. The same advise goes for cash, as once money is in your account or in your hand, it is yours for benefits purposes and may affect your eligibility for benefits. Staying below the benefit threshold is not easy. Entitlement will be calculated across a household, and knowing the exact figure at any one time strikes me as difficult at best. You might think you have got your sums right, but the benefit agencies are perfectly entitled to call for your account statements.
      There are no longer rules as to how compensation can be used. There used to be rules, and there will be rules again, so I suggest the compensation be kept separate from you. Buy direct from the trust and you will not have a problem. There is more at the link above.

  39. Jacek Kokula says:

    Dear Mark Thomson,

    Thank you so much for an over phone advice regarding buying a house in the name of the injury trust. I have been looking for a lawyer to explain to me that subject which proved a very difficult task. Fortunately at last I have found your website and got your professional advice.

  40. julie says:

    Can I just say what a good site you have here. I have been reading the information on local authority care assessments and wasn’t given any advice on this by my solicitor. I was a homeowner when I received my compensation, and got my solicitor to pay off my mortgage on my home directly from my compensation before i even received it (never even hit my bank account). I had paid £127,000 for my home but had borrowed extra on it so ended up paying £138,000 to redeem my mortgage. Should I have put this money into the Trust fund then paid the house off?

    • Mark Thompson says:

      The short answer is yes.
      Overall the value of your house, or the amount of equity you have in the house, has no effect on your ability to receive means-tested benefits. On the present rules your home is included in the financial assessment undertaken by local authorities if you have care needs. That is the position today but I always fear that entitlement to State benefits will become tighter.
      In the situation you describe an alternative would have been to place the compensation in a personal injury trust, and the trust could then take over the ownership of the home. The home would then be outside the local authority financial assessment of the local authority.
      I think what is often forgotten by personal injury solicitors is the future.

  41. Chris says:


    Very informed site and great info !

    I am just about to get a payment for compensation resulting from an accident, and after the shocking fees scale from my solicitor decided to have a look at a PIT to see about looking after it ‘in house’, as opposed to the afore mentioned running the fund with quite high charges.

    Now the one thing I noticed was that for the Bare fund, you recommend 2 trustees and one can be the beneficiary, (me). I was told by my solicitor that I could not be named as it then is funds in my name !?! Can you please clarify this as I am in receipt of means tested benefit and would like to get this resolved so I can get the PIT up and running.

    Best Regards


    • Mark Thompson says:

      One of the attractions of a bare trust is that the person receiving the compensation can be a trustee. If not people would become nervous if they felt they were handing the money, and permission for its use, to others. A bare trust means the “Settlor” (you) is the only person for whose benefit the trust can be used. You can bring the trust to an end, and depending on how the trust is written appoint and replace trustees. The trust is therefore a mechanism to hold money which is effectively yours, but by using a trust to hold the compensation you are identifying it as outside the means-testing mechanisms.
      It is not correct to say you should not be a trustee, but there is a belt and braces view which says if there are two trustees, the Settlor and one other, and that other dies, then having the Settlor alone as trustee means the trust is no longer. I advise you should have at least two trustees, but most people are not interested in having three because it can be administratively difficult. Most people also prefer to keep their affairs private, so I quite understand why most clients draw the line at two trustees, one of which is them.
      Hope that helps.

      • Chris says:

        Thank you for the reply and I have just got off the phone to my solicitor, who after telling them about myself being one of the trustees, said in no way should I be a trustee and that the law on this for benefits will not allow me to control the money in trust as I am the sole beneficiary. They quoted note 147 of the income support !!??!! I did not catch the whole title but thought you ought to know that as the beneficiary you cannot be a trustee !

        Thank you for the continued help and the senior partner of the firm that won my case in the first instance said in no way should you be a trustee !

        Not sure what to do now but they did advise non professional trustees as my amount is not in the seven figure bracket and that they would happily draw up a trust deed, supply the details of the trustees and send the deed and cheque to them, who can then open an account as outlined here.

        Best Regards


        • Mark Thompson says:

          Thanks Chris. I cannot track down the note from your description.
          The person who receives compensation can be a trustee of a bare trust. The reason why that may not be a good idea is this – a trust has two trustees, and one is the compensated person. If the other trustee dies leaving the compensated person as the only trustee it could be argued that the trust no longer exists. So where the compensated person is to be a trustee there could be two other trustees to help avoid such a situation.
          I find that compensated people want to be trustee of a bare trust. Even though they are the only beneficiary of such a trust, and even though they can boss the trustees, or even bring the trust to an end, the compensated person will find it odd to hand over their hard won compensation to others, no matter how close and reliable those people may be.
          I find most people when faced with this question opt for two trustees, one of which is the compensated person. There are elements of confidentiality and convenience in such an arrangement. It is important the compensated person should have the ability to appoint new trustees.

  42. lee says:

    hi would i have to pay back the cru out of my compensation for personal injury or could i not have to pay it back if i put it into a trust fund .

    • Mark Thompson says:

      The repayment of benefits received after an accident is handled within the compensation case. You may have to give credit for some or all benefits within the calculation of your case. Any benefits to be repaid to DWP are dealt with by the paying insurance company, and the cheque you receive is net of the benefits. CRU is therefore not an issue for personal injury trusts.

  43. Simon says:

    Once a trust is set up and had my compensation money paid in, can additional compensation money be paid in at a latter date, whether it is for the same incident or not?

    • Mark Thompson says:

      A personal injury trust is for compensation paid to you as a result of a personal injury. You can hold the compensation and you can hold income arising from that compensation, the most obvious example being interest.
      If you suffered a second personal injury it is possible to use the same trust provided the wording of your trust allows that.
      What you should not do is pay in other money to the trust, as it is not money from a personal injury. The law allows compensation to be ring-fenced from the financial assessments for means-tested benefits, but it is not meant as a hiding place for other cash.
      Remember the agencies which pay benefits know how much compensation you received, and can ask you how much money is held in trust and ask to see bank statements etc.

  44. Mark Thompson says:

    Income from funds held in a bare trust is income of the beneficiary, in this case your father-in-law, and should be included in that person’s tax returns. This simplicity is one attractions of using a bare trust.
    The question you ask is different, as the bank acts as a collector of taxes, and therefore must follow the guidelines from HMRC. I am no tax expert but found an explanation of the position at as follows:
    “But, if the beneficial owner of the interest is an individual, (and therefore the deposit is a relevant investment) the account cannot be registered with a form R85 ….. The reason is that the certificate must be given by the person in whose name the investment is held and who is beneficially entitled to the payment. In this case the investor is the trustee and the account will be held in the name of the trustee, and as the trustee is not beneficially entitled to the payment they cannot complete a form R85.
    But it may be possible to accept a declaration form R105…”
    The guidance does also say:
    “Where interest on a deposit arises to trustees, the deposit may be a relevant investment depending on the nature of the trust. To determine the nature of the trust for this purpose Financial Institutions may rely on information provided by the trustees such as a copy of a letter from a solicitor or accountant acting for the trustees”
    So you could go back to whoever set up the trust and ask that they confirm the position in a letter to the bank. My guess is the bank will stand by its position, but no harm trying.
    Let me know how you get on.

  45. Kat says:

    My partner and I would like to use our trust fund to purchase a property which requires renovation, carry out the renovation and then sell it on again and make a profit. However, the house in question is more than the sum of our trust fund so we would need to use money from other sources as well as the trust to be able to purchase it and carry out the works. Am I right in thinking that, once the property is sold, we can only put back in to the trust what we took out of it plus a percentage of the profit made? So, for example, if we use £50,000 from the trust and £50,000 from other sources, and then sell the property for £150,000 we could put £75,000 back in the trust (the original £50,000 plus half of the profit)?

    If I’m correct, would it then be necessary to keep track of exactly what money paid for what? I.e did the trust fund pay for the plastering/painting/new kitchen etc etc.


    • Mark Thompson says:

      A personal injury trust is designed to receive the compensation from a personal injury and any income gained on that compensation. You cannot use the trust to hold other funds. The answer to your question lies with whoever set up the trust for you in the first place. The starting point is to ask if the trustees have the power to undertake such an investment.

  46. neville says:

    I have just opened a trust fund for the compensation i am about to recieve.I understand that it protects benefits that i am recieving.What i am unclear about is what i can do with the money when i recieve it.Can i invest the money ie buy a property,buy shares etc.Will this effect benefits recieved if i go down that route. Thankyou

    • Mark Thompson says:

      Dear Neville,
      When you receive compensation and you are in receipt of benefits the first thing you should do is tell the benefits people you have received the money. This is part of your ongoing responsibility to tell them of a change in your circumstances.
      The best course is to have the trust completed and a separate bank account opened to receive the money. That way the notification to the benefits agency is much simpler, as you tell them you have received the money which is already protected by a trust.
      A separate bank account makes great sense, and I think it is vital, as it is then clear what money came from the compensation. If something is to be bought the trustees should buy it for you, and not put money into your account. Once the money goes into your personal bank account the protection of a personal injury trust is lost.
      There is no restriction as to how the trust money is used. You can buy a pair of shoes, a television, or a house. I repeat the trust money should be used for the purchase as then there is a clear “audit trail” and your own personal bank balance has not been inflated temporarily.
      If you are thinking of buying property you must consider whether the property is to be owned by you, or by the trust. I say this because a personal injury trust can provide protection from the means test carried out for local authority care. A property owned by you would be included in a local authority means assessment, but a property owned by the trust would be exempt from that means assessment. If you need firm advice on the purchase of property through the trust you will need more detailed advice than I can provide.

  47. Pingback: I may need a personal injury trust | Mark Thompson Law

    • Mark Thompson says:

      No is the short answer.
      The law in the USA is fundamentally different to the law in the United Kingdom. The law also differs between States in the USA. We will help members find the right representation, but you will need a lawyer in the State where the accident happened.

  48. Paul says:

    My wife and i have just set up a trust fund under recommendation from our solicitor, and the amount of compensation received is in the six figure area.
    Could you please advise me on the tax implications, Thanks

    • Mark Thompson says:

      I am always surprised that a solicitor has set up a personal injury trust but has not explained how it works.
      If the personal injury trust is set up as a bare trust the money belongs to the person who has received the compensation, so any income from the trust should be included in that person’s tax return.
      A bare trust is a way of holding money for someone, but the money remains theirs, and they are entitled to ask for it at any time. This is usually the best method for a personal injury trust. If a more complicated trust is advised, such as a discretionary trust, then you need to know why such a trust is thought best, and you must take great care no tax is payable on setting up the trust. Income tax is also different if you use a discretionary trust so make sure you understand every twist and turn before the trust is created.
      Please also make sure the compensation is paid into a separate bank account, and the account has the name of the trust. Signing a trust and then paying the money into your current account spoils the point completely.

  49. Peter says:

    We opened a separate joint account in anticipation of a settlement before we knew about PI trusts. We have now accepted an offer to settle and the amount, although not huge, takes us over the £16000 threshold for means tested benefits which we are currently in receipt of. Can we use this existing joint (Lloyds current, with a zero balance and no funds have ever been deposited) account to be the trust account, with my wife, the beneficiary, as one trustee and myself, her husband, as the other?

    • Mark Thompson says:

      The money paid into a Personal Injury Trust must be held in a separate bank account, and the name of the account must state it is a trust. Have a word with your bank and have the account name changed to your name with Personal Injury Trust added at the end. If they will not change the account open a new one. You could get away with the arrangement you suggest but why take a chance. Do it properly from the start and avoid problems down the track.
      One additional tip is to keep a record of what you use the Trust money to buy. The money should not be used for items for which means tested benefits are intended. It is rather bizarre that you can buy a television from Trust funds but not use it to buy the weekly shop at the supermarket. I have not known a client to have their expenditure examined, but there are rules, so abide by them and avoid problems.

  50. Alan says:

    Could you tell us how long it will take to set up a personal injury trust fund?

    • Mark Thompson says:

      Dear Alan,

      A personal injury trust does not have to be complicated, and the time necessary depends on what works for you.

      Assuming the Claimant has the mental capacity necessary to deal with their compensation, then a simple trust, called a bare trust, is all that is required.

      A bare trust holds the Claimant’s money, the money remains the Claimant’s for tax purposes, and the Claimant can demand the money at any time. Two trustees should be appointed, and I usually include the Claimant as a trustee. You then set up a joint bank account to deal specifically with the compensation from the personal injury case, and that is all there should be to it.

      The statement above assumes the claimant has the mental capacity to handle their own money, and there are no investment reasons which make a more complicated form of trust necessary. By more complicated I mean a discretionary trust, but these have significant complications in terms of tax. The money in a discretionary trust is for the trustees to deal with, and this contrasts with a bare trust where the money actually remains the Claimant’s. If a trust more complicated than a bare trust is advised then serious and specialised advice is necessary. There should be vey good reasons if a complicated arrangement is necessary.

      The answer to your question is it takes days rather than weeks or months to set up a simple personal injury, a bare trust. It will probably take longer to open the bank account.

      Make sure you get clear advise as to what purchases should not be made from the trust, which means the trust funds should not be used for items for which State benefits are intended. You should also keep a record of what the trust money was used for in case there is a dispute.

Leave a Reply

Your email address will not be published. Required fields are marked *


This site uses Akismet to reduce spam. Learn how your comment data is processed.