Personal injury trusts – how I can help
My aim is to help you decide if a personal injury trust is right for you. I deal with most clients by telephone, email and letter and a meeting is rarely necessary. I will:
- Help you decide if a trust for your compensation is right for you.
- Agree a fixed fee so you know the cost – £480 including VAT – correct at May 2023.
- Gather information and documents.
- Prepare a trust deed.
- Guide you through signature and witnessing of the deed.
- Guide trustees to open a bank or building society account.
- Give notice to the agencies handling your benefits claim.
- Explain how the trust should operate.
I hope you will find me to be flexible as I know you have other calls on your time. I am willing to talk out of office hours, by prior arrangement, as I know many people can only be available in the evening or at weekends.
Once I have the information I need, I will send you a draft trust within a few days. Once agreed, I will send the trust document to you by post and, once signed and witnessed, your trustees can set up a current account for the trust with a bank or building society.
I will help and guide your trustees to set up an account for the trust. I do not offer to open a bank account for you, as the process is not in my control. A bank willl make its own decision, based on identity, address and credit checks.
As we set up the trust, I will provide lots of information. My aim is that you and your trustees will be able to manage your trust confidently.
To help you decide if a trust is necessary:
- if you do not claim benefits please click here and
- if you do claim benefits please click here.
For the points you must consider in setting up a trust and the information I will need please click here.
For help without obligation please call 01392 314086.
Hello, my husband has PI bare Trust and I am a trustee. If he dies will I still be able to retain the means tested benefits we currently both receive.
Thank-You.
I suggest you read the trust document, as it should state what happens to the trust fund in the event of the death of the compensated person. The trust will not continue beyond the death of the compensated person, so your benefits will not be protected beyond that point in time.
Hello Mark you advise that we should make a 1 to one appointment with a private banker or or financial advisor. (Do we pay them at all)
Also bearing in mind there is a pandemic i don’t think it will be possible to have a 1 to 1 appointment with the trustees and the banker so can you please advise how to work around this or if it can be worked around so that a personal injury trust could be set up i would ask questions with you on a one to one basis but i cant see how I can do that so if you could advise i would be very grateful
thank you
Hello Mark can you tell me why three trustees are required would me and one other be sufficient
I’m these difficult times are banks open for trusts to be set up do you know
Do you recommend any specific bank in which to open the account
Many thanks
Linda
I think a trust should always have two trustees.
You can have only one trustee, but if the trustee can no longer act, how can the trust operate?
If you, as the compensated person, want to be a trustee, the situation to avoid is you being the only trustee. If you are the only trustee, holding your money for your benefit, that no longer looks like a trust. If you want to be a trustee, have at least two other trustees, so you reduce the risk of you ever being the only trustee.
Some clients do go ahead with themselves and one other trustee. So long as the risks are understood, you can proceed on that basis.
I will answer the banking point separately.
The trust is created by a legal document, called a deed.
The deed appoints the trustees and the trustees then open a separate bank account to hold the trust fund. Beyond that, the trustees can invest in any way you could invest personally. The exceptions are ISAs and Premium Bonds, as these can only be held by individuals.
I suggest an appointment be made for the trustees to open a joint bank account. I suggest this, as a bank may not have a staff member available if the trustees simply turn up at a branch.
The current medical crisis means an appointment may not be possible at the moment. A number of clients are investigating opening accounts online and by post.
The banks which clients find most consistently helpful are Barclays and NatWest. Metro Bank has also had positive feedback recently.
I do point out to clients that I do not offer financial or tax advice. seeking such advice is a metter for you and the trustees.
Thank you
Hello I’m expecting up to 200.000 I’m going to receive 10.000 interim payment can I set up a personal injury trust with the 10.000 and add the rest when it comes or do I need the whole sum first
I am on sickness benefit my lawyer says I’ve 52 weeks in which I don’t need to worry about the 10.000 is this true
If I set up the pi trust does there have to be a lapse in time for the rest to be added or can I put it in as soon as i receive it
Also if. A trustee dies will I pay to have another trustee added not that I want my trustees to die but we’re living in terrible times
Lastly and forgive so many questions if I die before my personal injury compensation comes will
My son have to pay tax on the money I saw in another post that compensation can be taxed what is the threshold please
Oh yes is it possible other people who set up trusts provide additional services in the process of setting up the trust hence charging more or is the service exactly the same but you charge more reasonably than others
Many thanks
One trust should be set up for all personal injury compensation you receive. I draft such a trust for any personal injury compensation received now and in the future.
I suggest you set up the trust to receive the interim payment. You do have 52 weeks from first receipt of compensation, but this is a period in which the trust shoud be set up. The 52 weeks is not a time within which you can spend the money, as spending it not through the trust will mean it is taken into account against your benefits. The 52 week disregard is explained here.
You should have at least two trustees and, if you are to be a trustee, you shoud have at least three in all. Provided you have individuals you would like to be trustees, appoint more.
If a new trustee has to be added, a further deed is the usual method of appointment.
Compensation is not taxable. It will become part of your estate after your death, so would be taken into account for inheritance tax purposes.
I currently charge £480 including VAT to prepare a trust deed, to coach the trustees through the bank account opening process and then give notice of the compensation and trust to benefit agencies. You can see how I wourk here. I cannot comment on what other firms offer, save to say I believe my fixed price is very competitive.
Hi I’m getting some compensation of £22.000 for a an assault some years ago.
I will be setting up a bare trust as I claim benefits right now. Will I have to pay tax on this money and how do I do this if so
Compensation is not taxable on receipt. If you invest the compensation, any income or interest is taxable, but your personal allowances will apply first.
If you hold the compensation in a bare trust, you will be treated as the tax payer, the income being part of your taxable income. Again, your tax allowances will be used up before any tax is due.
You can see how I can help you here.
Hi Mark,
I had an RTC 5 years ago and due to get my settlement of anything between 5-8.5k. Hasn’t finished yet. I am a single parent mature student and receive housing benefit. I’m a bit confused on what it is I need to do. I would ultimately be spending the money to buy a car as I have been unable to replace my car that was written off at the time of the accident.
Any advice is welcome. I don’t want my housing benefit to be affected as it pays half my rent.
Thanks
If the compensation plus any funds you hold leaves you below £6,000, your means-tested benefits will not be reduced.
If you are over the £6,000 and have not received an interim payment, you could tell the council about your plans and ask if they agree your planned expenditure is reasonable. If they do not agree, which I think is a distinct possibility, then a trust can be set up and the car bought from the trust. If you have already received an interim payment, call me, as it is important to avoid a squabble based on benefit agencies misunderstanding of the 52-week disregard for the first payment of compensation.
Benefit agencies look at personal expenditure and judge reasonableness against expenditure they would expect would be made by someone on benefits. You might think buying a car is reasonable, but a benefit agency may not.
Hello Mark .
I am waiting on a cheque for £60,000.00 for a medical negligence claim . I marred and i have child 7 years old my husband is working 15 h a week we received housing benefits and child tax and child benefit we pay council tax every month £30,my questions ARE will be affected tested benefits or no. my Lawyer told may be affected when your capital (savings) exceeds 60,000.00 it would be advisable to set Special Needs Trust ,at the conclusion of your claim .this is a way of making sure that you keep your right to means tested benefits following receipt of your personal injury award .Also i need to understand how is working the if i open Special Needs Trust from A-z please like Are they limited windrow the money from my account or What are the advantages and disadvantages of type this account. Any advice would be greatly appreciated .
all the best
Amira
The choice for you is simple, as holding money above £16,000 will stop your benefits and money between £6,000 and £16,000 will reduce your benefits. You therefore need a trust to hold the compensation, so you can keep and use your compensation and keep your benefits.
I think my website page will help you.
There are very few restrictions on how the trust fund can be used, the golden rule being not to channel the trust money through your personal bank accounts.
Avoid confusion as to terminology. You simply need a trust to hold personal injury compensation. These are given a number of names, one of those being special needs trust.
The way I work and the cost is set out at here.
George Shepherd mentionned that he brought a car with 6k of his 16k trust fund and you didn’t state that it was risky him doing so. On previous comments (previous page I think) I have noticed that you’ve said a car may not be a good choice of spenditure, I guess because that then makes it a personal belonging and something someone could sell for the cash. I don’t want to fall into that trap. Ldm stated they require a car and you hadn’t advised whether to purchase one from the trust or not. I am curious as to whether spending almost all of the trust fund on a car would be allowed? I need a new car and the 6-10k I am expecting would allow me to purchase one that is a couple of years old & not 9yrs old like my current one. This is all I “need” & something that will benefit me as I struggle with my disabilities with limited room in my little car. Can you advise me please as to whether I’d be allowed to purchase a car with some or ALL of the trust fund money? Also can you clarify that its not just a bare trust fund that is required to keep the money protected from my means tested benefits but that also a TRUST DEED has to be written? Have I got that right? Whats the average fee? Yours being £480. Thanks.
You should have a trust deed, which is a legal document which creates a trust. You need such a deed to create a bare trust.
Provided the car is purchased direct from the trust, I see no problem.
People get into difficulty by buying a car with the majority of their compensation, without setting up a trust. In that situation, the car has been purchased with personal funds. The benefit agencies will probably take the view such a purchase is not reasonable for someone in receipt of benefits. The new car owner will be treated as still having the money, called nominal capital, which will be counted against their benefit entitlement.
Protect the compensation with a trust and spend directly from the trust.
Hi Mark, you have stated on your website;
“I currently work on a fixed fee of £480, which includes VAT, with no ongoing cost and only limited administration for the trustees.”
What does “only limited administration for the trustees” mean? Will the trustees have administration costs to pay?
The trustees will operate the trust bank account and any investments made by the trust. These are straightforward tasks the trustees will be used to in their own lives.
If a bare trust is used, liability for tax on trust income or capital gains is the liability of the compensated person.
Unless a significant amount of money is involved, I doubt the trustees will need professional support.
Hi Mark
We have found a new home that I’m paying for from my trust,we are not sure what to do with our current home.if we sell or rent,can proceeds transfer to the trust?
Many thanks Mark
The trust can only hold assets derived from personal injury compensation.
If you are going to hold two properties, then the one you rent out should be held by the trust, as the trust can then receive rent and not reduce your benefits.
You could sell your existing house to the trust, or buy the new one with a loan from the trust, the loan to be repaid by transfer of the current property to the trust. Of course that depends on the value of the two properties. You should also check your trust deed to make sure the trustees can make a loan.
At the moment, ownership of the house you live in, plays no part in your benefits entitlement. Property ownership is relevant if you ever need local authority care.
Hi. I have just received offer of, and sent form to accept £22k personal injuries for anuse from a child. I receive ESA, PIP, HB, CT support.
I hadnt known about trust funds snd sent my form to include my current bwnk details. I have considerable health difficulties ehich prevent me from working and am looking to set up a business with my payment. To do this I need to pay some debts, purchase equipment and a car and purchase a hydropool to help with my debilitating pain which impacts on my mobility . This money is my chance of managing ny health in a manner I couldn’t before.
I am now unwell with anxiety because I haven’t a trust fund set up and am worried.
What are my options please.
Not to worry, you have not created a problem.
If you are receiving benefits, or likely to need benefits, you should set up a trust now. You can hold the compensation in your current account and then transfer it over to an account set up by your trustees.
Your planned expenditure should be made from the trust, not from your personal account.
Setting up the trust should not take long so please visit this page to see how i work and the fixed fee I offer.
Hi mark
In regards to a trust fund, is there any special steps to be concidered when setting out a will?
Thanks
Dave
I will answer only for bare trusts, which are the most usual trust for personal injury compensation.
A trust identifies the beneficiaries, including who is to benefit from the fund when the person who set up the fund dies. I usually advise that any trust fund remaining at death should be dealt with under the provisions of a will. A will can be changed, so there is more flexibility.
The trust fund simply forms part of the money and property left by the person who has died, known as their estate, and is dealt with as part of the estate.
Hi mark, it’s looking like my wife may get some criminal injuries compensation for historic sexual abuse, we have debts to pay off with some of the money so where do we stand on claiming benefits and opening a trust.
thank’s john
Set up a trust first and pay the compensation into a bank or building society account set up specifically for the trust. The debts can then be paid from the trust. You will avoid squabbles with benefit agencies if you do things in that order.
In 2008 I opened a PI trust fund £16,000. I bought a car £6,000. Wold like to replace some of this money from my current account. Is this OK……….Regards George Shepherd
Absolutely NOT. It is only personal injury compensation in a trust which is ignored for benefit purposes. In addition, your trust will probably be written to receive only personal injury compensation, so you cannot spend some of heh compensation and then top it up with money which is not compensation.
Hi. I am on esa and housing benifit and child’s tax credit. In 2014 I had a accident and it is looking like I an going to get above 2500. But I also had a accident in September this year and that has been settled for 4500. This means I could have around 7000. Now 2700 of the secords claim is for the bike that was written off. Can I put 1000 into a junior isa to bring me below the 6000 so I don’t get penalised ?
Hi Mark,
Just wanted to say thank you for your very clear explanation of this matter. I work in a housing support sevice and a young person we support is due a Personal Injury Payment, and is receiving means tested benefits. Your site here has been the clearest explanation of this that I have found so far, and hopefully I’ll be able to explain this in a way the young person can understand. Thank you very much.
I am on benefits H.B, ESA AND PIP . i HAVE wife and 3 kids. I got 150k from personal injury compensation December 2115 . but I got interim payment £5000 in first September 2014 over a year ago.and i didn’t setup the personal injury trusts until now .
can i setup personal injury trust now? and the benefits will be the same not affected ?
You can set up a trust now as there is no time limit for setting up a trust.
The only problem caused by not setting up a trust immediately is that the money you received and spent before the trust was set up forms part of your personal money and its use can be assessed by the benefit agencies. Expenditure from a trust is not subject to that same analysis, but expenditure from your personal accounts is. It is for this reason I do not advise people to rely on the 52 week disregard as it can be a trap. The 52 week period i sthere to allow you to set up a trust, not blow the compensation.
I have a p.I.trust, what are complications in adding sums to it.
Thanks
A trust for personal injury compensation can only hold funds to the extent that such amounts are or are derived from a payment made in consequence of a personal injury to yourself.
I write trusts so any personal injury compensation can be paid into that trust; not limited to one single claim.
What you cannot do is pay in additional funds which have not come from personal injury.
Hi. I’ve got a personal injury trust (bare). I’ve asked my solicitors for cost to remove one of the trustees and to add another. They say it will be a couple of hundred pounds to do this. Is this a fare price.
Regards Ian Cockbain
You will have to check the trust document to see who has the power to add and replace trustees. It is usual for the “settlor,” which means you, to have this power. A further deed is necessary to make the change and the price offered seems fair. Like all such documents it involves detailed time-consuming work.
Good to find an expert who knows what he’s taknilg about!