Why aren’t there more personal injury trusts?

You can see from the questions I am asked, there is a shortage of clear advice about compensation protection trusts, or personal injury trusts, as they are better known. The banks and building societies often lack experience of opening accounts for trustees. This tells me that trusts are not being used where they are necessary.

If a personal injury compensation case produces a payment the need for a trust must be weighed up. This should take place even if a small interim payment is to be received. Too many solicitors make the mistake of thinking a trust is only necessary if a client is already in receipt of means-tested benefits. That is a short-sighted approach which is wrong.

People claim benefits as a household, so the position of the household must be considered. Just because benefits are not being received today does not mean a trust is not appropriate. What about the future and the possibility that benefits may have to be claimed two years down the track?

The fundamental error I see is solicitors forgetting, or not realising, that a trust can protect compensation when local authority care becomes necessary. Setting up a trust can mean the compensation can be retained and the local authority will pay for care. Bearing in mind that care may cost £450 per week and more it will not take long for that cost to wipe out all but the biggest compensation awards.

So the need for a personal injury trust is not something to be briefly raised it is something to be carefully explained and considered. Solicitors are forced to handle lower value cases within a computerised process, but that is no excuse for failing to offer fundamental advice which can have a long-term effect.

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Receiving interim or final compensation payment?

You may need a trust to protect benefits and local authority care.

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