If you have received, or are due to receive, money to compensate you for personal injury you have suffered, it is recommended that you consider setting up a personal injury trust for the compensation. You could have received compensation from a medical negligence claim, criminal injury, accident at work or compensation for industrial disease.

Carly Teer, a paralegal in the Wills, Trusts & Estates team, explains how personal injury trusts work and what they can be used for.

Get in touch to speak to one of our experts.

How do personal injury trusts work?

Money held in a personal injury trust can be accessed by its “trustees”. Trustees manage the trust and will usually be you and your spouse or partner, or a parent, but may also be solicitors, especially if the compensation is for a child. The trustees hold the money for the person who benefits from the trust, known as the Beneficiary. If money is needed from the trust, all trustees must agree to its release.

To remain eligible for state benefits, your compensation should be placed in a specially designated trust bank or building society account that will be set up by your trustees. This money should be held separately from your personal finances.

You and your partner can have £6,000 (between you) outside of the personal injury trust before your benefits will be affected. You can top up your own account with money from your trust. If you are in receipt of government benefits, you are under a duty to declare your compensation award to the benefits agency as a change in your circumstances. If you receive means tested benefits, your personal injury compensation is excluded from your capital for benefits eligibility calculations, but only for 52 weeks.

One of the benefits of setting up a personal injury trust is to ringfence your compensation from affecting your means tested benefits. If you are likely to have compensation left at the end of the 52 weeks, and still be relying on means tested benefits, you should consider a personal injury trust, otherwise you are at risk of your benefits being stopped.

How can I use the money in my trust?

It is up to you how the money in your trust is used, but typical examples which would not affect your benefit entitlement are the purchase of personal possession and the cost of care and other needs.

How can we help?

Our team of experts are on hand to assist you if you need to set up a personal injury trust. Call us today or make an enquiry to speak to our friendly team.