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.

Personal injury trust fund to protect means tested benefits

Author: Mark Thompson

Personal injury and accident specialist solicitor

4 thoughts on “Why aren’t there more personal injury trusts?”

  1. what happens if you want a trust but the value of the compensation is quite low, say a few thousand quid. Banks require a minimum deposit of £25k for a trust. So is the only option to forgo the personal injury claim? Otherwise you put the compensation money into your account and lose your benefits which is pointless

    1. At the moment, Metro Bank insist on an opening balance of £25,000 to open an account for trustees. They will open an account for trustees for a lower amount, if that lower amount is an interim payment and more than £25,000 is expected in the final settlement.
      The other main providers of such accounts at the moment, Barclays and Cater Allen, do not set a minimum deposit figure, so you can certainly open an account for a trust with less than £25,000.

  2. Want to know if I receive 2250.00 as a personal injury fee do I need a trupstee .or is it over a certain a amount .thankyou

    1. If you are to receive a compensation settlement of £2,250 it is unlikely you need a trust. A trust for compensation means the compensation is ignored in the assessment of your finances. With most benefits you are able to hold up the £6,000 without benefits being reduced. Remember the finances of your household will be assessed, but if you are comfortably below the £6,000 line you do not need a trust. If you do already have more than £6,000 then a trust will assist, as without it all of the compensation will be taken into effect and some or all of your benefits may be stopped.

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