Personal Injury Trusts

15 Apr 2011

A Personal Injury Trust is a facility that can be used for any damages received from a Personal Injury claim.

– Child Tax Credit

– Council Tax Benefit

– Housing Benefit

– Income Support

– Jobseeker’s Allowance

– Pension Credit

– Working Family Tax Credit

It is important to remember that even if an individual is not in receipt of benefits at the time of receiving their personal injury award, they may become eligible for benefits in the future as their circumstances change, possibly as a result of the injury they have suffered. By establishing a Personal Injury Trust to hold their award it will allow the possibility of claiming benefits in the future – i.e care home fees.

How does the Trust operate?

A minimum of 2 Trustees are appointed and these people are then responsible for investing the Trust monies in the most appropriate way, such as in a bank account or invested with a stockbroker. The Trustees should therefore be responsible people, whom the individual trusts and who will be available to assist with the management of the funds. Any release of funds will have to be authorised by the Trustees.

What can the money in the Trust be used for?

The Trust funds remain the individual’s own and they are able to use these funds as they please. It is important that the funds within the Trust are not being obviously used for their day to day expenses as these are intended to be covered by their benefit payments. If they do use the Trust funds for that purpose, it could potentially affect their benefit entitlement. The Trustees can make payments directly to the individual provided the payments are not made on a regular basis and the individual never owns a total of more than £6,000 at any one time. As long as any payments for items which would otherwise take the individual’s own funds over £6,000 are made directly to the supplier of the goods or services, they will be disregarded for means-tested benefit purposes.

What happens to the Trust on death?

In the event of an individual’s death, if any money is left in the Trust at that time, it will be distributed in accordance with the terms of their Will or under the Intestacy Rules if they do not have a Will in place. It would therefore be advisable to ensure that there is a Will in place which carries out their wishes appropriately.