What is a personal injury trust?

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.


Who can be a trustee, and what role do they play?

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.


What are the benefits of having a personal injury trust?

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.  


How do I set up a personal injury trust?

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.


What can I spend my trust money on?

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.


What are special needs personal injury trusts?

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.


How can Thompsons Solicitors help me set up a personal injury trust fund?

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 personal injury claims for compensation. 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.