Personal Injury Trusts

Once you have obtained your settlement amount there will be lots of thoughts running through your head about where to spend your compensation. However, it is important to protect your compensation. A Personal Injury Trust is a legal document that preserves an injured person’s entitlement to on-going and future means-tested benefits once they have received their compensation.

Any money held within a personal injury trust is to be disregarded by the Benefits Agency when an assessment for means-tested benefits takes place (see: Income Support (General) Regulations 1987 (SI 1987/1967).

Where a claimant receives compensation that increases their household cash/savings above £6,000 their means-tested benefits will be reduced following a re-assessment by the Benefits Agency. Where a claimant receives compensation that increases their household cash/savings above £16,000 their means-tested benefits will be stopped entirely following a re-assessment by the Benefits Agency.

Under Section 16 of the Social Security Fraud Act 2001 it is a criminal offence if a person receiving means-tested benefits fails to inform the Benefits Agency of a material change in their financial circumstances (i.e. he/she has received a compensation award that takes their household cash/savings above £6,000 or £16,000).

Consideration of a personal injury trust is therefore an essential component of any personal injury action as this protects the claimant’s entitlement to means-tested benefits now and/or in the future,

At Khan Law we are committed to assisting you in claiming compensation for your injury but also in protecting your compensation.

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We have listed some FAQ’s below to assist you.


How does my Personal Injury Trust work?

Instead of receiving your compensation directly, your Personal Injury Trust will hold your compensation money. The Trustees you appoint will look after the money in the Trust, in accordance with the Trust Deed you will sign.

To remain eligible for means-tested benefits and care services in the future, your compensation should be placed immediately into a specially designated Trust account set up by your Trustees. This bank account will be in the name of the Trust and will be separate from your personal finances. It is very important that you don’t mix your personal money with Trust money.

What do the Trustees do?

You will always be one of the trustees of your Personal Injury Trust. You can choose another person or persons to act alongside you as your fellow trustee, so long as that person is: over 16 years-old; is capable of making financial decisions; and is not bankrupt, sequestrated or under a trust deed or debt arrangement scheme.

Appropriate trustees can provide valuable advice and support when making important decisions. This can ensure that the Trust is managed to protect your long-term finances. Although your Trustees hold and have control over your compensation award, they cannot use it as their own personal property or for their own benefit. Your Trustees have to act in your best interests and that is why you have chosen people you trust.

Can I get money from the Trust at any time?

Yes, provided all your Trustees sign the cash withdrawal form or cheque at the Bank.

You will still need to be aware of the financial limits in respect of any benefits you are claiming or the cost of care when drawing cash from the Trust. We would advise against withdrawing a lump sum from the Trust and keeping this in your personal account or savings if this will take your available capital over £6,000.

Be sensible with the Trust money and use your Trust to buy things for you. It’s also a good idea to keep a written record of how the money is being spent.

How do I bring the Trust to an end?
If at any time you decide that you no longer need the Trust you can instruct your Trustees (in writing) to transfer the money to you, at which stage the Personal Injury Trust will then stop – but you may then lose your entitlement to any means-tested state benefits/support.
Do I need financial advice?

It would be sensible for you to obtain independent financial advice as soon as you consider making a Personal Injury Trust. Once you set-up your Trust, you may have register this with HM Revenue & Customs so that any tax due (i.e. Income Tax, Capital Gains Tax, etc.) can be assessed. Failure to register your trust with HM Revenue & Customs may result in a financial penalty.

Finance and taxation are complex issues and you are advised to obtain independent financial advice if you are concerned that you or your trustee(s) may be exposed to a tax liability or liabilities. Weir Law is licensed to conduct only incidental financial business and will not advise you or your trustee(s) on financial and taxation matters. Weir Law can, however, recommend a suitable financial advisor to you on request.

Is there a cost to make a Personal Injury Trust?

Although we charge for the set-up costs of your Personal Injury Trust, it is designed to save you money in the future by protecting your ability to claim means-tested benefits.

Our legal fee for setting up the Personal Injury Trust is charged as a one-off fixed fee, and there will be no on-going costs. Our legal fee can be deducted from your compensation award.

How long does it take to set up a Personal Injury Trust?
The process to create your Personal Injury Trust is straightforward, however a trustee bank account must be opened to hold your compensation payment. Most high street banks provide a (non-business) trustee bank account facility. At this stage, it may be useful for you to contact your current bank to ask if they can provide you with a personal trustee bank account.

No Win No Fee

All of our personal injury claims will be dealt with on a ‘no win no fee’ basis. Which means if your claim is not successful you don’t pay a penny! Talk to us now on freephone 0141 378 0514 or contact us online to speak to one of our specialists today.

Find out more about No Win No Fee personal injury claims

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