Personal Injury Trusts
If you or someone you know have suffered an injury that resulted in compensation, either by settlement or by court award, speak to one of our expert solicitors who will help you set up a personal injury trust; this is a structure that will help preserve current or future entitlement to means-tested benefits for you and others in your household.
We can provide the advice you need to help you make the right decisions when setting up a personal injury trust. We are well-recognised within the industry, including winning Team of the Year at the Manchester Legal Awards, and are recognised as experts on our field in Chambers & Partners and the Legal 500. Our experienced team, which consists of several lawyers who are members of the Society of Trust and Estate Practitioners (STEP), is ready to tailor our service to your individual circumstances.
An injury can happen to anyone at any time and our team are experienced in advising on the benefits of a personal injury trust for clients in all circumstances. What’s more, we can also assist with a range of complex estate-planning requirements that you may now need to consider in light of your injury. We have experience working with clients of all backgrounds, including families, business owners, entrepreneurs, sports professionals, entertainers, charities and other high-net-worth clients.
Our team is made up of young, energetic solicitors who will work closely with you to understand your circumstances and provide bespoke advice to help you create and administer your personal injury trust, as well assist you where it is appropriate to consider wider estate and succession planning opportunities with you.
How JMW Can Help
We would be delighted to advise you on creating a personal injury trust, whether it is the best route to take based on your injury and compensation amount, as well as suitable structures of trust that will best suit your needs and wishes.
The following examples are of personal injury cases where your compensation (either interim or final) may be best suited to be in a personal injury trust:
- Personal injury settlements or awards
- An act of negligence by another person (including professional negligence for past undervalued personal injury claims)
- Medical/clinical negligence settlements or awards
- Industrial disease claims (for example, as a result of long-term exposure to an occupational hazard, such as asbestos in the workplace)
- Crime Injuries Compensation Authority (CICA) payments
- Motor Insurers’ Bureau (MIB) payments
- Armed Forces Compensation Scheme (both lump sum and guaranteed income payments)
- Other government compensation schemes
Your compensation may cost you more than you think as, in certain circumstances, you may lose your means-tested benefits if you receive the funds outright. This will forces you to use your compensation to supplement your income until the damages are used. Even if you are not claiming means-tested benefits, you may be entitled to do so or may need to do so in future. You should not have to suffer financially while going through or on concluding your claim. We are here to help you create a personal injury trust to hold your compensation so that you (and your household) can maintain your entitlement to means-tested benefits.
You will need trustees to hold your compensation in the personal injury trust. You can be one of the trustees, but cannot be the only trustee. Choosing your trustees is a very important decision, and we can help you choose trusted friends and family members who have the right qualities to act as a trustee. JMW’s specialist team is also able to act as a professional trustee, either alone or alongside you or a family member or friend.
We have vast experience in this field and will work in close conjunction with healthcare professionals, financial advisors and accountants to ensure the compensation in the personal injury trust is optimised and used to support you for as long as possible.
Why Choose JMW?
We will work closely with you throughout the process, guiding you through the necessary documentation, providing advice on different structures of personal injury trusts, your intentions for the funds, and helping prepare strategies to achieve your goals. We understand the importance and responsibility of handling large sums of money and property that has resulted from your injury; you can trust us to have your best interests at heart and help you to create a structure so you manage your finances effectively.
FAQs About Personal Injury Trusts
When should I set up a personal injury trust?
We would advise that you set up a personal injury trust at the earliest opportunity. This may be at the point you receive a first interim payment from the claim, but may be at final settlement. If you have a solicitor acting for you in your claim, they should advise you when to consider setting up a personal injury trust.
You may have a period of 52 weeks during which payments you receive are disregarded for the purpose of assessment for means-tested benefits. When this 52-week disregard period ends, the balance of the payment you are holding will likely be included in the assessment and you may affect or lose your entitlement to means-tested benefits.
How will my eligibility to claim means-tested benefits be affected?
The following thresholds apply to the eligibility to means-tested state benefits:
- If you hold capital in your own account(s), or in a joint account(s), above a value of £16,000, you will not be eligible to claim means-tested benefits until your capital drops below £16,000.
- If you hold capital between £6,000 and £16,000, your entitlement to means-tested benefits will be restricted on a sliding scale, with those holding capital closer to £6,000 having greater entitlement.
- If you hold capital under £6,000, you will have full entitlement to means-tested benefits.
These thresholds are relevant to you and anyone in your household who is treated as being part of your family unit for the purposes of assessment.
It is possible you may receive funds from your personal injury claim, which will mean that you will hold more than £6,000 or perhaps even more than £16,000 (either as a result of an interim payment, or a final award or settlement). As a result, your compensation may affect your entitlement to means-tested benefits or mean you lose all entitlement to means-tested benefits.
However, if you were to hold your compensation within a personal injury trust, the funds (both capital and income) become disregarded for the purpose of the financial assessment and as such will not affect your entitlement to means-tested benefits. This will be the case as long as the personal injury trust is holding the funds, or they use those funds to buy assets held in the trust, such as a home to live in.
I am not in receipt of means-tested benefits - should I still consider setting up a personal injury trust?
Yes. If you are not currently eligible to claim means-tested benefits, a personal injury trust may still benefit you for one or more of the following reasons:
- It could give you the opportunity to claim means-tested benefits if you later become entitled due to a change in your circumstances (for example, if you became unemployed).
- It will protect/disregard the funds should you later require residential/nursing care for which you are financially assessed by the local authority.
- If your mental capacity should deteriorate - possibly as a result of your injury - your trustees could continue to use the funds for your benefit. You should consider setting up a lasting power of attorney.
- It is possible that a personal injury trust may give some protection against divorce or bankruptcy. If this is a concern, you should seek specialist advice from our team. It may be appropriate to consider a pre or postnuptial agreement.
- Your trustees can provide assistance with the management of large sums of money.
Will I still be able to work?
Your ability to work will be determined by the severity of your injury and how it has impacted your life. You may be able to return to work as you did before your injury, or your working conditions could be managed to accommodate your condition following the injury. However, you may not be able to work for as long or under the same conditions as you did before. A personal injury trust could be created should your circumstances change now or in the future, or supplement your income as you continue to work, or you may consider using the structure for wider estate planning to benefit you and your family.
If you are able to stay in work but require additional support or for your role to be modified, your employer must make adjustments so you can continue in your role comfortably - if your employer fails to do so, or treats you differently, this could be classed as discrimination and JMW’s employment solicitors may be able to assist you with.
How is a trust administered?
As soon as your compensation is put into the personal injury trust, the funds are administered by your trustees. You will choose who you wish to act as your trustees. If you want to be a trustee, we can discuss this with you. If at any time in the future you wish to change your trustees, you will have the authority to do so.
When you wish for the personal injury trust to use the funds for your benefit, all trustees will need to agree. However this doesn’t necessarily mean they can prevent you accessing the funds. The trustees must act in your best interests at all times, and so you should think very carefully about trusted friends and family members who you would wish to act as trustees.
Can I transfer any other funds into a personal injury trust?
The only funds that can be held in a personal injury trust are those that derive from a claim for personal injury. If you hold part of your settlement in your own account (for example, during the 52-week disregard period), you must ensure that the funds do not become mixed with non-personal injury funds, especially if you intend to set up or transfer the funds to a personal injury trust at a later date. We recommend that you set up a personal injury trust at the earliest opportunity, with funds being transferred straight to the trust from your acting solicitor (if you have one).
Is setting up a personal injury trust always appropriate?
Whether or not it is appropriate to create a personal injury trust is very much dependent on yours and your family's circumstances.
We will discuss this with you, and consider your financial circumstances and intentions for the funds going forward to advise on whether a personal injury trust is appropriate.
If setting up a personal injury trust is not appropriate, we will advise you of the best course of action. Where necessary, we will put you in touch with an appropriate independent financial advisor to offer and discuss any financial guidance that you require.
I am a solicitor acting for a client in a personal injury claim - can I refer the client to JMW to discuss a personal injury trust?
We would be happy to discuss a personal injury trust with any prospective client, even if JMW is not acting for them in the claim. If you client would like to speak to JMW, they can contact us directly or you can make an introduction.