If you receive compensation following a personal injury, you will probably just want to get on with your life. As part of this process, we recommend that you consider protecting your compensation through a Personal Injury Trust.
A Personal Injury Trust is created when you sign a legal document called a 'Trust Deed'. The Trust Deed appoints people (chosen by you) who will look after your compensation payment on your behalf. They are called 'Trustees'. We can act as the Trustees if you wish, and it is also possible for you to be a Trustee. It is possible for you to have the power to remove and appoint new Trustees if you wish. The Trust Deed sets out how the compensation monies should be applied for your benefit.
The Trustees will open a Trust bank account to hold your compensation monies separately from your personal monies. The Trust can pay for a new place for you to live which may be more suitable for your needs depending on the injuries you have suffered, a new car, petrol, a holiday and much more. You can decide how best to use the Trust monies. Any excess funds can be invested by your Trustees for your future needs.
What are the advantages of having a Personal Injury Trust?
1. Your compensation need not affect your means-tested benefits
Means-tested benefits are those state benefits which you may receive because of your low household income. These include Income Support, Jobseeker's Allowance, Housing Benefit, Council Tax Support, Income Based Employment and Support Allowance and residential care home funding.
By setting up a Personal Injury Trust, you may be able to receive your compensation and still retain your means-tested benefits entitlements indefinitely. This is perfectly legal and acceptable to both the Department for Work and Pensions and Local Authorities. The Regulations treat Personal Injury Trusts in a special way so that you are able to retain your entitlement to your means-tested benefits. However, the special rules only apply if you decide to 'opt in'. This means setting up a Personal Injury Trust.
2. Your compensation can be protected from the cost of long-term care fees when you get older
Even if you do not receive means-tested benefits now, the ability to obtain means-tested benefits in the future as well as your compensation can be of great value to you and your loved ones in the future.
3. Your compensation can be protected for you and your family
If, at some point in the future, you are unable to look after your compensation money, you have the peace of mind of knowing that your Trustees will look after things for you and your loved ones.
A Personal Injury Trust can only hold compensation that you have received as a result of a personal injury. No other monies should be put into the Personal Injury Trust. If you receive further compensation for a personal injury, this can be added into the Personal Injury Trust.
If you receive any compensation, even just an interim payment, it may affect your means-tested benefits. This will certainly be the case after the twelve months 'period of grace' ends and sometimes sooner. The period of grace is based upon complex legal provisions and our advice is that you should not rely upon it. That is especially the case if (like most people) you want to retain some of your award for any unexpected expenses in the future.
How can we help?
We have a specialist Personal Injury Trust team who will provide you with advice to ensure that you put the right arrangements in place to protect your financial position after you receive your personal injury award.
We can work with you and your independent financial adviser to help you to secure the best possible financial security after you get your compensation.
What other specialist advice do we offer?
- Consideration of your immediate and future benefit entitlements
- The appointment of suitable Trustees and if necessary the appointment of a Professional Trustee
- Preparing the Trust Deed
- Providing a letter addressed to your bank to assist you and your Trustees with opening the Trust bank account
- Providing a letter addressed to your Local Authority and/or Benefits Agency to inform them of the existence of the Personal Injury Trust
- Tax advice
- Completion of Trust tax returns
- The appointment of new Trustees or removal of existing Trustees
- Winding up the Personal Injury Trust
- Putting a Will in place
- Purchasing property using compensation monies held within the Personal Injury Trust
Protecting your reward is part of Shoosmiths’ wider private wealth offering. If you would like help finding the right team or lawyer please contact us on +44 (0)3700 863 000 or contact us by email to [email protected]s.co.uk.