Whilst we cannot give our clients financial advice, we can recommend people who can give them advice on whether a Personal Injury Trust should be something that our clients should take out when a claim settles.
Personal Injury Trusts are normally only considered in high value claims but should be considered by anyone who received a compensation pay out, particularly if they are in receipt of means tested benefits. This is because if you have more than £6,000 in your savings your benefits may be reduced and if you have more than £16,000 then your benefits could be stopped.
The first payment of compensation you get, if over £6,000 or £16,000 will not automatically result in your benefits being reduced and/or stopped, for the first 52 weeks but if you still have over £6,000 or £16,000 after 52 weeks then they can be reduced or stopped. This is why they are manly considered in higher value claims whereby the compensation payment is likely to remain in an account for more than 52 weeks.
If your compensation is placed in a Personal Injury Trust then this means that the benefit agency cannot take this money into account when assessing your entitlement to benefits, as the money is held in a trust for you to use.
The money will be held in a trust which will be managed by Trustees who hold it on behalf of the beneficiary (you). As long as you have capacity you decide who those Trustees should be, and you can be one also. There are usually three, one of which is you. You can appoint a professional to one, such as a solicitor, or it can be a partner, adult child, parent, etc.
Money can be withdrawn, but it must be agreed by all of the Trustees.
The benefits of having your money in a trust are also long terms such as the money not being taken into account if you need to go into a care home, or if you need to claim benefits in the future. It can also go some way to “ring fencing” and/or protecting the compensation in any divorce.
You can set up a trust yourself, but it is recommended that you get advice from someone experienced in Personal Injury Trusts and we have several companies we can signpost our clients to.
Alisha Butler – Solicitor Advocate & Director of Phoenix Legal Limited
E: ab@phoenixlegalsolicitors.co.uk