Should I set up a Personal Injury Trust?

If you are currently claiming means-tested benefits and you are awarded compensation following an accident or injury, your eligibility to receive benefits could be affected.

Personal Injury Trust

To ring-fence your compensation whilst simultaneously protecting your benefits, the solution may be to set up a "Personal Injury Trust" or "PI Trust".

Most people assume that any settlement or award that they receive following an accident or injury will not affect any means-tested benefits they may also be receiving.

What are means-tested benefits?

Means-tested benefits refer to financial support from the state where an individual's existing financial situation is taken into account.

Typical means-tested benefits include:

  • Income support and housing benefit
  • Council Tax Benefit
  • Jobseeker's Allowance
  • Pension credit

How to calculate whether your benefits will be affected

Local authorities do not distinguish between compensation you may have received following an injury and your savings.

Specifically, if you have over £6,000 your means-tested benefits will be cut to some degree. If you have more than £16,000, you'll most likely lose all entitlement to means-tested benefits.

How can you protect yourself against loss of benefits following a personal injury claim

General damages awards are made for any pain and suffering and costs of recuperation. General damages are carefully calculated to ensure that claimants have the right amount to return the claimant to the position they were in before the accident.

In addition, special damages may also be awarded to compensate the claimant for any financial loss such as loss of earnings.

If means-tested benefits are cut following a compensation award, then claimants have little option but to subsidise the living costs from their compensation award.

A claimant forced to subsidise their living costs from their injury compensation may find themselves unable to pay for any necessary treatment.

The solution may be to set up a PI Trust.

What are the benefits of a Personal Injury Trust

A personal injury trust effectively ring-fences claimants compensation and may prevent it from being taken into account when assessing a person's means. A personal injury trust may allow the claimant to continue to receive means-tested benefits.

A claimant does not need to set up a trust before knowing whether their claim has been successful.

Claimants can set the trust up within 52 weeks of receipt of their compensation, although in practice it is advisable to do this as soon as possible after the award has been made.

Setting up a trust will require a claimant to nominate a minimum of two trustees whose role will be to manage the compensation placed in that trust.

Trustees are people that are trusted by the beneficiary and are usually family members or friends. A claimant can be a trustee of their own trust, but it will still be necessary to nominate a minimum of 2 further trustees. A trustee must be over 18 years old.

Personal injury solicitors are familiar with the process of setting up a trust.

Should I set up a personal injury trust?

If you currently receive financial benefits from the state, or you suspect that you may need to claim financial benefits in the future, setting up a personal injury trust is highly recommended.

Setting up a trust is not expensive, although it may not be worth it if the compensation award is of a nominal amount. To determine whether a trust is for you, it is worth speaking to a solicitor. However, you do not need to decide whether to set up a trust before embarking on a claim. You can make this decision after you have received an award.

Are there any other benefits of a personal injury trust?

The trust will ring-fence your injury compensation from any third party. As an example, if a claimant subsequently goes through divorce proceedings, the payment held on Trust will not be taken into account.

Can Quittance's panel of solicitors help set up I trust?

As a matter of course, a Quittance panel solicitor will advise you on the best course of action. They will take into account your present and potential future circumstances once you receive your compensation settlement and advise you accordingly.

How can Quittance help?

Your solicitor will fight for the best possible compensation settlement for you, the highly-experienced panel of solicitors have an excellent track record of winning injury claims.

If you have any questions, or would like to start a No Win No Fee claim, we are open 8am to 9pm weekdays, 9am to 6pm on Saturday, and 9.30am to 5pm on Sunday.

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Gaynor Haliday, Legal researcher

Gaynor Haliday, Legal researcher