Why it's important to have an Armed Forces Compensation Trust?

There is a common misunderstanding that having a Trust is something that only the very wealthy would consider. This is simply not the case; putting a Trust in place is a really worthwhile exercise for anyone who has received a sum of money, including a member of the armed forces who has made a claim, as it means that they can manage and protect their money.

If you need to speak to a solicitor about an Armed Forces Compensation Trust, call our team on 0345 450 9547 or get in touch using the online contact form.

There are several reasons that having an Armed Forces Compensation Trust in place is of benefit:

It will protect any current entitlement to means-tested benefits

If you have £6,000 or more in your own or in a joint bank account, your entitlement to means-tested benefits will be restricted, including entitlement to housing benefits and employment support benefits. Compensation you’ve received as the result of an armed forces claim will be considered part of this sum of money, even if this money is an interim payment and your claim is not at an end. Any money in a Trust, however, doesn’t form part of the government’s assessment of your financial circumstances and you would be able to continue to claim benefits where necessary.

You will have the opportunity to claim means-tested benefits in the future

Should your circumstances change in the future and you need to claim means-tested benefits, your application for benefits won’t be affected by the money you’ve received after a compensation claim if it is held in a Trust.

Your money will be protected should you need residential care.

If you need to go into residential care or require nursing care, you will be financially assessed by your Local Authority to see how much support you are entitled to from them. Just as with means-tested benefits, a Trust does not form part of this assessment, meaning your compensation money will be safeguarded.

Your money will be secure should your family circumstances change

If you are married and you have a pre or post-nuptial agreement, money in a Trust may be protected in the event that you and your partner get a divorce. One of our team can advise you further about this, and what you and your spouse are entitled to in the event this may happen.

You can make sure you are supported should you become unable to support yourself

There may be circumstances where your mental capacity becomes limited (this may even arise as a result of a personal injury) and you become unable to manage your finances. If you have a Trust, one or more Trustees can be appointed to help you manage the money in your Trust and make sure that your money is used for your benefit

It is unnerving to consider what may happen to you and your loved ones in the future, and how your circumstances may change, but we would strongly advise you to look at what may happen and safeguard yourself and your finances accordingly. Our solicitors have years of experience working with clients and we will be able to handle your needs in a sensitive and pragmatic manner. We know that everyone’s individual circumstances are different and we are more than happy to talk these through with you. You can get in touch with us on 0345 450 9547, or fill in the contact form and we’ll call you back at a time you say is convenient.


If you are in the process of making an armed forces compensation claim, or have recently concluded your claim, then you should put an Armed Forces Compensation Trust in place. You can also pay any money you’ve received as a result of an Armed Forces Compensation Scheme claim into your Trust, should you decide that you’d like to safeguard some of this compensation. If your claim is significant enough that you have received an interim payment, this can be placed into your Trust and you should therefore consider putting it in place at that point.

From the date on which your first compensation payment is made, whether that is an interim payment or the final award, you will have 52 weeks in which to make a decision as to whether or not you would like to set up an Armed Forces Compensation Trust. During this period, compensation you receive will be disregarded for the purpose of means-tested benefits. After that time, your compensation award is taken into account and your benefits may be lost.


Once you have decided to set up a Trust, you will need to make a few decisions, which we as your solicitors, can help you with. We will handle all the relevant paperwork and prepare the Trust for you, but you will need to decide who to appoint as your Trustees. You must appoint a minimum of two Trustees and a maximum of four Trustees, all over the age of 18. You can name yourself as one of the Trustees and if you would like, you can name a professional trustee to assist you in the administration of the Trust, such as one of our solicitors.

When your solicitor has set up your Trust for you, the Trustees will need to open a trust bank account and seek independent financial advice. We have many contacts with such independent financial advisors and we can put you in touch with someone appropriate who will be able to help you.

After you’ve taken appropriate independent financial advice and put a plan in place for how your money is going to be managed, you can consider your Trust in place and ready to help you manage your compensation award.

You need to bear in mind that you can’t transfer any other money into an Armed Forces Compensation Trust apart from the money that you have received from your personal injury claim and from an Armed Forces Compensation Scheme payment. It is also important to remember that if you have all or part of your compensation award in your personal bank account at any time, you need to avoid the funds becoming mixed with money that isn’t part of your compensation amount if you are planning on setting up a Trust. This makes it all the more important to act quickly if you are looking at setting up a Trust, as you will be able to prevent this from happening.


Working with us to set up your Armed Forces Compensation Trust means that you can maintain your relationship with a firm of solicitors you are familiar with, and be comforted by knowing that you’ll continue to receive the same expert level of advice, care and service that you have had since the moment you contacted us to make a claim. We want you to enjoy a working relationship with professionals who are dedicated to making sure your interests come first, because we know this will help you to focus on recovering and rebuilding your life after your injury.

We have years of experience and our team has built up a strong reputation when it comes to dealing with Trusts and personal finance. Our skill is such that we have been endorsed as a leading firm in independent legal guides, the Legal 500 and Chambers and Partners, and it is this expertise that we will bring to bear when working for you.


Putting an Armed Forces Compensation Trust in place to protect your final compensation amount has so many benefits and requires very little of your time. They are a legitimate way of protecting your compensation and managing your finances and we would be delighted to help you make the most of your money.

If you want to explore setting up a Trust, or have questions ahead of making a decision, talk to us today on 0345 450 9547 or leave your details on the contact form and let us get in touch with you.

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