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JGM, Solicitor
Category: Scots Law
Satisfied Customers: 15512
Experience:  30 years as a practising solicitor.
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I need to open a trust for some injury compensation and I’m

Customer Question

I need to open a trust for some injury compensation and I’m wondering how I start
JA: Where is this? It matters because laws vary by location.
Customer: Scotland Dumfries
JA: What steps have been taken so far?
Customer: Nothing so far my solicitor is working to get me a fair settlement and I should hear in 4 weeks
JA: Anything else you want the Lawyer to know before I connect you?
Customer: I need it in a trust to protect means tested benefits thankyou
Submitted: 6 months ago.
Category: Scots Law
Expert:  JGM replied 6 months ago.

Thanks for your question. If your solicitor is an experienced personal injury lawyer he should be able to set up the trust for you. It involves drafting a document, appointing trustees, usually you and a family member and intimating the trust to the benefits agency. There are various things you should know about such trusts but you need it some properly by your solicitor so that your benefits are definitely protected from the award of damages that will presumably take you above the limit. Let’s start with what is a personal injury trust fund? A personal injury trust fund is a type of trust fund set up using the compensation payout that is awarded from a personal injury claim. You may also come across the terms ‘personal injury trust deed’ or ‘special needs trust’ – but they are all the same thing.

The aim of a personal injury trust fund is for you to keep your compensation money even if you have to claim some kind of state benefit, either immediately after being awarded compensation, or further down the line. Having a trust fund in place is the only legitimate method for you to do this.

What are the benefits of a personal injury trust fund?

As mentioned above, the main benefit of setting up a personal injury trust fund is that you will receive your full compensation payout, without any means-tested benefits that you may be receiving being affected. These means-tested benefits include:

  • Housing Benefit
  • Council Tax Benefit
  • Disabled Person’s Tax Credit
  • Jobseeker’s Allowance
  • Income Support
  • Employment and Support Allowance

The reason any benefits that you claim could be affected is that you will be regularly reviewed and assessed, and if you have more than £6,000 in your bank account, benefits you receive could be reduced or suspended. In addition, if you have more than £16,000 in your bank account, your benefits could be stopped altogether.

For this reason, a solicitor may advise you to set up a personal injury trust fund, rather than have your compensation payout paid directly into your bank account.

Another benefit of having a personal injury trust fund set up is that if you were to go into residential care, the cost of your care cannot be paid out of the compensation sum in your fund.

Do I need a personal injury trust fund if I’m not receiving benefits?

If you are not currently receiving any benefits, no, you don’t need to set up a personal injury trust fund.

However, it is still a good idea to set up a trust fund – and a solicitor will often give you this advice, as you never know what the future holds and you could end up claiming a benefit, whether it be months or years down the line.

What can I do with the money in my personal injury trust fund?

The good news is that there are no longer any restrictions in place to limit how much of your compensation money you can spend, and what you can spend it on. So you, and any ‘trustees’ that you appoint, can use the money in your personal injury trust fund however you like.

It is always recommended that if you are in receipt of any state benefits, you use this money for what it is intended for – so day to day life; bills, food etc… and then use the money in your trust fund for bigger purchases that your usual benefits wouldn’t cover – such as house deposits, buying a new car, going on holiday and so on.

At the end of the day, the money in your personal injury trust fund is your money – it has been awarded to you. So you can spend it however you see fit.

What money can I put into my personal injury trust fund?

A personal injury trust fund isn’t like a bank account. You should not make any deposits of any other sums of money whilst you have it open. The only money that should be in the fund is the money that was awarded to you from your personal injury claim.

Can I have trustees for my personal injury trust fund?

When setting up a personal injury trust fund, one of the requirements is that you appoint at least one other person to act as your ‘trustee’. People tend to choose a family member as their main trustee, such as a partner/spouse, mother, father or child. As long as the trustee is someone over the age of 18, it is entirely up to you.

However, choosing who to have as your trustee is very important, as they will have a say in how the compensation money is spent. So if there is a family member who you feel ‘should’ be your trustee, but you know this could cause problems in the future between you both, you probably shouldn’t appoint that person.

Most law firms will act as a trustee to your trust fund, but as you would expect, this comes with a fee. However, it may make sense for you to pay this charge and have someone completely impartial in the role.

You should also note that you do have the power to change your trustees at any time. So whoever you choose when setting up your fund is not ‘set in stone’. If you find that things aren’t working out with your trustee, and that there are too many disagreements regarding the money in the fund, then you can of course make a change.

Will I need to inform the benefits agency about my personal injury trust fund?

If you are receiving any benefits then yes, you are required to inform the agency about your personal injury trust fund, although this is something that your solicitor will do on your behalf.

The only information you will need to provide to a law firm is your National Insurance number and the address and contact details for your local benefits agency.

When can I take money out of my personal injury trust fund?

As soon as your compensation payout becomes available in your trust fund, you have access to it. However, in order to make a withdrawal from the fund, any trustees that you have appointed must sign the cheque or cash withdrawal form. As this is required for you to access your money, it is important to choose the right trustee to avoid any conflict. I hope that helps. Please leave a positive rating so that I am credited by JustAnswer for helping you today.