A personal injury trust is a legal arrangement that allows an individual who has received a compensation award for a personal injury or clinical negligence to protect their entitlement to means-tested state benefits and assistance.
The purpose of such a trust is to preserve the compensation funds for future care while ensuring that the injured party continues to qualify for government benefits that are dependent on their financial situation.
Means-Tested Benefits: You can claim means-tested benefits if you can demonstrate that your income and capital are below a certain level. The means-tested benefits are: Universal Credit, Pension Credit, Housing Benefit (England, Scotland and Wales) or Housing Benefit (Northern Ireland). These benefits are often dependent on an individual's financial situation. If someone receives a lump sum compensation for a personal injury, it could impact their eligibility for these means-tested benefits.
Preserving Benefits Eligibility: By placing the compensation funds into a personal injury trust, the individual can continue to receive means-tested benefits without the compensation affecting their eligibility. The funds in the trust are not considered when assessing the individual's financial situation for benefit purposes. The purpose of the Trust is to allow the compensation to be used for care and future needs due to the injury they sustained. Trusts are dependant on a detailed consideration of your circumstances and are not for all situations.
Trustee: A personal injury trust typically involves appointing a trustee, who is responsible for managing the trust on behalf of the beneficiary. The trustee could be the injured person themselves, a family member, a friend, or a professional trustee.
Legal Requirements: There are legal requirements and guidelines that must be followed when setting up a personal injury trust. These requirements vary by jurisdiction, so it's important to seek legal advice to ensure compliance with local laws. There are costs associated with setting up a Trust and also strict accounting and financial information retention.
Types of Trusts: Personal injury trusts are one form or trust but they can also include bare trusts, discretionary trusts, or special needs trusts. The choice of trust structure depends on the specific circumstances and the individual's needs.
Purpose of the Trust: The primary purpose of a personal injury trust is to safeguard the compensation funds for the long-term benefit of the injured person, especially in cases where ongoing care or special accommodations may be necessary.
It's crucial to seek legal advice when considering a personal injury trust, as the laws and regulations surrounding these trusts can vary. A legal professional with expertise in personal injury law and trusts can provide guidance tailored to the specific situation. We can support and direct you for advice and assistance in the setting up and organisation of a Personal Injury Trust as needed.
