To help you make your decision, I have set out the pros and cons of setting up a personal injury trust. For this comparison I will deal only with a bare trust.
- Compensation ignored when assessing your entitlement to means-tested benefits.
- Compensation ignored when assessing your entitlement to local authority funded care.
- Compensated person can retain a level of control.
- Compensation can be spent from the trust with few restrictions.
- Compensated person must not have personal access to trust fund.
- Trust must have a separate bank or building society account.
- The trust must have at least two trustees.
- Trust bank account requires signature or approval of at least two trustees.
- There is a cost in setting up the trust (not as much as you think).
The significant benefit of a trust for personal injury compensation is the compensation and income received into the trust fund are ignored when calculating your entitlement to benefits. There is no legitimate alternative to a trust for personal injury compensation.
This is a very generous provision which accepts a payment following injury is not a windfall and is intended to cover an injury, plus past and future losses. To gain this significant benefit you should set up a trust and put up with the slight inflexibility involved in managing the trust fund. It is no more than a nuisance, but compare it to the advantages and the decision is clear.
If you are in receipt of benefits or care, or likely to be in receipt of benefits or care, a personal injury trust should be set up to hold the payment received in consequence of a personal injury.