Duncan Glassey

What is a personal injury trust?

A personal injury trust is a legal arrangement where ‘trustees’ hold and manage a personal injury award for a ‘beneficiary’ to protect any current or future entitlement to any means-tested state benefits/support, and/or minimise the beneficiary’s contribution towards the costs of ‘community care support’ provided by their local authority social services department.

This is because regulations state that personal injury awards, held in a personal injury trust, must be disregarded when assessing entitlement to means-tested benefits and contributions towards community care costs.

On receipt of your compensation, the funds are transferred directly to the personal injury trust and held by your chosen trustees on your behalf.

Do I need a personal injury trust?

If you receive a compensation award in respect of a personal injury, your current or future entitlement to certain state benefits may be affected. This could mean that your state benefit income could be reduced or stopped if you have more than a certain amount of capital held in your own name.

When does a personal injury trust need to be set up?

You will usually have a period of 52 weeks from when you receive either an interim or final settlement. However, it is often best practice to set up a trust as soon as possible.

Who should I choose to be my trustees?

Your chosen trustees should be people you trust and may include yourself, family, friends, a solicitor or a trust company. It is your decision as to who you choose to act as your trustees. There are no general restrictions as to who can be your trustees, although they must be over 18. If you choose to involve friends or family, it is preferable to have at least three trustees.

What are the responsibilities of my trustees?

Your chosen trustees hold your personal injury award and manage it in accordance with your wishes and a set of rules, which are designed to protect you.

For your trustee’s peace of mind, your award does not count as part of your trustee’s capital; therefore, it will not impact their entitlement to means-tested benefits.

What if something happens to my trustees?

If for whatever reason, your chosen trustees are unable or unwilling to continue, you have the power to replace them.

What happens if my circumstances change in the future?

If at any time you decide you no longer need the personal injury trust, you simply instruct your trustees in writing to send the money over to you. The personal injury trust will then cease, but you may lose your entitlement to any means-tested state benefits/support.

What happens if I die?

If you were to die, the value of your personal injury trust would be distributed in accordance with the terms of your will. If you die without making a will, you may not control who would receive your award/money. Your estate would simply be distributed in accordance with a set of legal rules.

Are there any tax implications?

The money held in the personal injury trust is usually taxed in exactly the same way as if you held the money yourself.

How can WealthFlow help?

We work with professional legal advisers and offer a simple and straightforward service to help you decide whether a personal injury trust is in your best interests. Working with our legal partners, we are able to guide you through the process, including providing a suitable personal injury trust document and helping your trustees set up a trustee bank account.

Duncan Glassey is the founder of Wealthflow