Personal Injury Trusts

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We support people to establish and manage personal injury trusts for compensation and insurance pay-outs.

Funds in personal injury trusts are not considered for means-tested benefits. That means people can continue to access all the government help they need, whilst damages payments are ringfenced for their most beneficial use.

We have a vast amount of experience supporting people to consider, create and manage trusts, following compensation awards for medical negligence and serious injury, including child injury compensation.

Do get in touch to discuss how we can help you.

What is a personal injury trust?

A personal injury trust (PI trust) is a way of holding funds received due to injury and ensuring they are not a barrier to accessing the means-tested benefits you are entitled to.

Named trustees are appointed to oversee the fund and must agree to how the money is spent.

It is usual to have two to four trustees. They can include anyone aged 18 or over who can make decisions for themselves (i.e. anyone who does not have mental capacity issues). This can include the person who was awarded the funds.

Professional trustees, such as solicitors, can be used. It is also possible to name close friends or relatives.

WE PROVIDED MARK WITH ADVICE AND RECOMMENDED THAT HE SET UP A PERSONAL INJURY TRUST. A TRUST DEED WAS PREPARED WHICH DETAILED MARK, HIS WIFE AND DAUGHTER AS TRUSTEES.

— Read more about Mark's Story

Personal injury trust created to help Mark* continue accessing means tested benefit

Mark faced losing the benefits that he was entitled to due to his £85,000 compensation award, which would have meant it being eroded by day-to-day living costs.

We were able to advise Mark about the established system that is in place to ensure people can still receive the benefits they need and preserve damages payments to be used in their best interests.

Damages payments are intended to allow people to live a life that reflects, as closely as possible, the one they had before their injury. The money is often required for house adaptations, specialist equipment and treatment, carers, support to enable a person to continue to access hobbies and passions, plus holidays and to buy cars.

Mark was provided with advice and was recommended to set up a personal injury trust. A Trust Deed was prepared which detailed Mark, his wife and daughter as trustees.

The compensation payment was paid straight into the Trust Account meaning Mark would be able to retain his Employment Support Allowance and access other necessary means-tested benefits in the future if necessary.

Pros and cons of personal injury trusts

The benefits of creating a personal injury trust include:

allowing a person and their partner and dependents to continue to claim means-tested state benefits they are entitled to now and in the future, which may include:
- Universal Credit
- Pension Credit
- Council Tax Support
- Tax Credits (Child Tax Credit and Working Tax credit)
- Income Support
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Housing Benefit
- local authority care provided in a person’s home
- costs of living in a residential home
providing a structure for managing funds, which may be particularly helpful for large damages awards that are intended to help the beneficiary throughout their lifetime
providing additional security for funds awarded for someone who is or becomes vulnerable, to ensure they are only spent in the person’s best interests
allowing opportunities to draw on the experience and knowledge of other trustees when it comes to spending decisions
ensuring the burden of managing a damages award does not all rest with one person
allowing compensation to be spent in any way that is in the interest of the beneficiary and with a great amount of flexibility.

Perceived drawbacks of a personal injury trust may include:

there must be at least two trustees
at least two trustees must provide consent for withdrawals from the trust
a separate bank account is required to hold the trust funds
there are some costs involved in setting the trust up (usually between £500 and £900 plus VAT)
ideally, damages should be paid into a trust immediately on being awarded (and within one year if they are to be ignored for means-tested benefits.

Cost of setting up a personal injury trust

A personal injury (PI) trust can usually be set up for between £500 and £900 plus VAT.

The money is usually a good investment to ensure funds are well managed and protected in the future and are not considered for means-tested benefits now or in the future.

If a professional trustee is appointed to support the management of the trust, there will usually be an additional annual fee.

Is a personal injury trust ethical/a legal loophole?

Personal injury trusts are completely ethical and are not a legal loophole. They are an established way for people who have suffered an injury to look after damages awards to ensure the money is there to support them as intended.

People who have suffered injuries may need to access means-tested benefits because of their injury or due to other reasons. They are entitled to do so without their damages payments being eroded, which could mean the money is not then available to be spent in the way it was intended.

How to set up a personal injury trust

If you have been awarded damages for a personal injury or due to medical negligence, you can decide to establish a PI trust.

Expert solicitors are best placed to manage the process for you.

You will need to nominate the trustees who will be responsible for the trust and how the money held in it is spent.

Trustees may include you, a spouse, some other trusted person or a professional trustee such as a solicitor. You will at least two trustees and it is usual to have up to four.

If the person who has received damages is a child or does not have the mental capacity to make their own decisions a trust may also be appropriate.

Our supportive team can answer all of your questions, do get in touch today.

Do I need a personal injury trust fund?

If you are an adult who has received damages for personal injury or medical negligence a personal injury trust fund may be the best way to look after it.

One of the main benefits is that the damages are not considered for means-tested benefits. This means that you, your spouse and dependents can still claim benefits now or in the future.

Personal injury trusts may sometimes be an option for damages awarded to children who are still aged under 18. It would require a ruling by the Court of Protection. It is usual for settlements for children to be held in a Court Funds Account.

In the case of an adult who lacks mental capacity (the ability to make decisions for themselves), funds being looked after by a deputy are disregarded for means testing purposes too.

It is important to get expert advice around how best to look after damages payments before they are awarded to avoid costly mistakes.

If a personal injury fund is the best option for you, it is likely best to pay damages into it straight away. If they are paid into an existing account with other funds already in it, it can create complex issues over which funds are compensation funds.

What is a personal injury trust deed?

A trust deed sets out all the rules and obligations concerning a personal injury trust.

It must be prepared by a specialist solicitor and signed by the trustees.

If the person who is entitled to receive the personal injury award does not have the mental capacity to manage their affairs they cannot sign the necessary trust deed. Instead, they will require a deputy appointed by the Court of Protection to manage their affairs.

How can Enable Law help with a personal injury trust?

As specialist personal injury, medical negligence and mental capacity solicitors we have extensive experience with personal injury trusts and can help with all aspects.

This includes: