If you suffer a personal injury, you may be able to bring a legal claim against those responsible to receive compensation.
If your claim is successful, the sum you receive may seem substantial, particularly in the case of serious or life-changing injuries. However, compensation is usually awarded to cover the costs of specific needs caused by those injuries, such as home adaptations or rehabilitation. Compensation awards are rarely intended to cover day-to-day living costs.
This means that if you have suffered a personal injury, you may need additional support with your living costs, even if you have secured compensation. Many people are forced to give up work because of their injury, while in severe cases a family member may also have to stop working to become their carer. It’s important to ensure any compensation awarded does not affect your access to any ongoing or future means-tested state support you or your family may need, such as income support, carers allowance or housing benefit.
In this situation, a personal injury trust may help.
A personal injury trust is a legally-binding document that allows you to hold and manage your compensation in a separate bank account, protecting it from assessment for means-tested benefits and ensuring it can be spent as originally intended.
The money is held in a special personal injury trust account that is separate from personal finances to avoid any ambiguity about what should be considered within the means-testing process. Personal injury trust funds are subject to specific rules and obligations, usually set out in what’s called a trust deed, and there are different trusts to suit different circumstances.
The trust is managed by between two and four trustees.
Personal injury trust funds must be managed by at least two trustees.
The person who was awarded the compensation, known as the beneficiary, can be one of those trustees. Usually, the others are friends, relatives, or professional trustees, such as solicitors. All trustees must be 18 or over, they should not have any personal financial problems, and they should be trustworthy. They will need to read, sign, and adhere to the terms set out in the trust deed.
Trustees will also be provided with guidance about their role, so they can make informed decisions together about how the money is managed and any payments made. Having this support can be reassuring when faced with the responsibility of managing a large sum of money, particularly when seeking to ensure it is of maximum value to the beneficiary.
As you can see, trustees play an important role in managing a personal injury trust account, so appointing the right trustees is crucial. They must be trusted to act in your best interest, and you must value their judgement and opinion. Family circumstances and relationships can alter over time too, so it’s worth noting that if you change your mind about your trustee selection you can remove trustees and appoint someone else.
There are several personal injury trust benefits.
As already mentioned, funds within it are protected from means testing for state support, so you and your family can continue to access the ongoing benefits you need. For those who don’t yet qualify for state benefits or care support, ring-fencing funds can help future-proof that money should their circumstances change.
Personal injury trust funds are also a useful tool for managing your finances or protecting your money, including from other people. As each trustee must authorise every transaction, personal injury trusts can also help protect the most vulnerable, including young children, the elderly and people with disabilities, from any attempt to abuse or misuse funds.
Trustees’ knowledge and experience can also be helpful when making big spending or investment decisions.
To avoid compensation being considered for means-tested benefits and services, you should set up a personal injury trust as soon as possible - but certainly within a year (52 weeks) of receiving your first compensation payment.
The 52-week period isn’t a time limit. It’s a grace period that gives people already claiming means-tested benefits breathing space to get their finances in order and set up a personal injury trust. It is still possible to set up a trust after that 52-week period has lapsed, but the compensation will be treated as your personal funds for the time from week 52 until the trust is put in place, and would be taken into account if you’re assessed for any means-tested benefits.
To set up a personal injury trust, you should seek the advice of a specialist solicitor. They can set up the trust on your behalf. The legal process and implications of having a trust can be complex, so it is advisable to seek the support of a solicitor with experience in this area as soon as you can.
Law firms do charge a fee to set up a personal injury trust, but it is often a fixed fee and there should be no ongoing cost.
How you spend the money in your trust is up to you, though you will need the sign-off of your appointed trustees.
The money in your personal injury trust fund is there for your benefit only. It is recommended you use your bank account to pay directly for your needs, which may include home adaptations, such as an accessible shower or bathroom aids; specialist rehabilitation care; physiotherapy; mobility equipment; prosthetics; psychological support; and in-house nursing care, among others.
As the name suggests, special needs personal injury trusts are set up to provide financial security to someone who has a special need or disability. As with other personal injury trusts, these trust funds protect any compensation or settlement from assessment for means-tested state benefits.
These personal injury trusts allow the beneficiary to benefit fully from specific tax legislation. They also offer a secure way for friends or family, for example, to make someone a financial gift if the beneficiary is unable to manage their own affairs. A special needs trust or disability personal injury trust also offers people extra protection against financial abuse and it can help ensure the money they have will help them throughout their lifetime.
Asbestos remains the leading cause of occupational death in the UK. Every year, hundreds of people who have breathed in asbestos dust, usually unknowingly at work decades earlier, are diagnosed with asbestos-related illnesses such as asbestosis, mesothelioma, asbestos-related lung cancer, pleural plaques and pleural thickening.
These patients and their families are entitled to seek compensation for the ill-health that asbestos exposure has caused. A personal injury trust may be beneficial to help families manage any compensation awarded for asbestos-related diseases. As it can take decades to develop symptoms for asbestos-related illnesses, negligent firms or employers may no longer exist. However, specialist asbestos solicitors can pursue claims by reviewing companies’ insurance records and seeking compensation from the insurers.
Some companies have also established asbestos personal injury settlement trusts to handle compensation claims for those who have contracted asbestos-related diseases because of their activities. These asbestos trust funds usually have a set pot of money that claimants can draw from and, as with other personal injury claims, the statute of limitations for doing so is usually three years from the date of diagnosis. These settlement trust funds tend to be more common in the United States than in the UK. In the UK, compensation for asbestos exposure is usually awarded from insurers as well as government funds, such as the Diffuse Mesothelioma Payment Scheme.
There are many benefits to setting up a trust fund but the process and choices available can feel overwhelming.
Our expert legal team has a proven record of securing compensation claims for people who have suffered a personal injury. We also have extensive experience of helping our clients set up a trust fund that helps ensure the compensation awarded has the greatest impact on their quality of life.
Contact Thompsons Solicitors today on 0800 0 224 224 for free, no-obligation legal advice.