Personal Injury Trusts
If you have received personal injury compensation you can place it in a trust to protect it from any benefits and care means testing.
At Clifford Johnston & Co. we can help you to understand the benefits of a personal injury trust and aid you in setting one up.
For helpful, straightforward, affordable advice from one of our friendly team, contact us today.
Why do I need a Personal Injury Trust?
If you have received a significant compensation award there are a number of reasons why you should set up a personal injury trust:
- To protect your benefit payments.
- To avoid your compensation award being used towards care costs.
- To protect your money from third parties.
- To help you manage such a large sum of money.
Any money you have received as a result of an accident or injury is rightfully yours as a means of redressing the financial damage caused. It should therefore be protected from any means testing by the Department of Work and Pensions (DWP) or the local authority for care costs now or in the future.
If you are in receipt of any benefits, a personal injury trust is your only option to protect payments including:
- Housing benefit
- Council tax benefit
- Disabled person’s tax credit
- Job seeker’s allowance
- Income support
- Employment and support allowance
It is essential to ring-fence your compensation money as soon as possible because if you have more than £6,000 in the bank your benefits could be reduced or suspended and if you have more than £16,000 they could be stopped all together.
Money in your personal injury trust is also exempt from care costs, should you ever need to go into residential care.
Specialist legal advice will be required to ensure that your interests are protected and that you’re not financially disadvantaged due to your compensation award.
How to set up a Personal Injury Trust
You have a period of 52 weeks from the date of your first compensation payment to set up a trust and protect your funds from means testing. Before this, your compensation will be ignored by any financial assessment.
It is however better to set up a trust in advance of any payment and we can help you to be as organised as possible. Your personal injury trust must:
- Be set up as a separate savings account.
- Be separate from your personal account.
- Not have any state benefits paid into it.
- Not be used for day to day living expenses.
You will also need to appoint at least one other person to act as a trustee along with yourself. This can be anyone that you choose as long as they are over 18 and ideally with a good credit rating to avoid problems setting up the trust fund. You need to choose someone that you completely trust and who you are certain has your best interests at heart as they will need to approve any withdrawals you make from the fund. It is that vital you appoint your trustee(s) wisely in order to avoid any potential disagreements or conflict.
How can I access my money?
You can pay the full amount of your personal injury compensation into your trust, with the money accessed by all trustees signing a cheque or withdrawal form.
It is good practice to avoid transferring money from your trust fund to your personal account to avoid any confusion with benefit payments or care costs. Any purchases should be made directly from the trust fund and a record of expenditure kept.
Can I make changes to the Trust Fund in the future?
The trust fund is yours and it is important that you take legal advice on the terms of the trust so that you are entitled to make any changes in the future including:
- Closing the trust should you no longer need it.
- Changing or replacing a trustee.
- Naming a beneficiary of the trust.
Contact our Wills and Trusts team
At Clifford Johnston & Co. we are renowned for working to the highest standards and pride ourselves on delivering a professional, affordable service to all our clients so that everyone has access to exceptional legal advice.
For more information contact Wills & Trust Solicitors in Manchester or Stockport.