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Personal Injury Trusts
If you or someone you know have suffered an injury that resulted in compensation, it can make sense to set up a Personal Injury Trust in order to preserve yours, or a member of your household’s, current or future entitlement to means-tested benefits. A Personal Injury Trust is also referred to as a 'PI Trust', 'Special Needs Trust' or 'Compensation Protection Trust'.
The professional and approachable team at JMW can provide the advice you need to make sure you make the right decisions when setting up a trust.
Examples of when damages can be awarded following a personal injury include:
An act of negligence by another person
- Medical/clinical negligence
- Industrial disease (for example, as a result of long-term exposure to an occupational hazard, such as asbestos in the workplace)
- A criminal act of another person
Without a trust, in certain circumstances means-tested benefits may be stopped, forcing you to use your compensation to supplement your income until the damages are used up in this way. Alternatively, by putting your money into a trust it can mean that you are still entitled to means-tested benefits and the capital monies in the trust cannot be taken into account by the benefits agency.
How JMW Can Help
JMW's specialist team is able to act as professional trustees either alone or alongside you or a family member. As well as incorporating our years of experience in this field, we work in conjunction with healthcare professionals, financial advisors and accountants to ensure your compensation is used in the best possible way for your benefit.
Recognised by the Legal 500 and Chambers Guide as one of the best law firms in the North West, our experienced team, which consists of several lawyers who are members of the highly-respected Society of Trust and Estate Practitioners (STEP), is ready to assist you with a tailored approach specific to your individual circumstances.
If you would like to discuss setting up a personal injury trust with our experienced team of solicitors, get in touch today. Simply call us on 0345 872 6666 or fill in our online enquiry form to request a callback.
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 is typically at the point that the first interim payment is made (if applicable) from the claim, or at the point of final settlement. Your personal injury, clinical negligence or industrial disease solicitor should advise you when to consider setting up a Personal Injury Trust.
From the date in which the very first payment is made, whether this is an interim payment or final settlement, you will have a statutory 'period of disregard' of 52 weeks in which to make a decision as to whether to set up a Personal Injury Trust. During this period, any payments received are disregarded for the purpose of assessment for means-tested benefits. On the expiration of the 52-week period, the balance of the payment will be included in the assessment and you will lose entitlement to means-tested benefits if you hold more than £16,000.
How is a Trust Administered?
As soon as the damages are held in a Personal Injury Trust they are administered by your trustees. You choose who you wish to act as your trustees. If at any time in the future you wish to change your trustees, you will have the authority to do so. The trustees must act in your best interests at all times.
Can I Transfer Any Other Funds Into a Personal Injury Trust?
No. 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 period of disregard) you must ensure that the funds do not become mixed by non-personal injury funds if it is your intention to set up or transfer the funds to a Personal Injury Trust at a later date. We therefore recommend that you set up a Personal Injury Trust at the earliest opportunity.
Is Setting Up a Personal Injury Trust Always Appropriate?
Not necessarily. Whether or not it is appropriate to set up a Personal Injury Trust is very much dependant on your own, and your family's circumstances.
Our solicitors will only advise for you to set up a Personal Injury Trust if it is appropriate for you to do so in consideration of your financial circumstances and intentions for the funds going forward.
If setting up a Personal Injury Trust is not appropriate, our solicitors will advise 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.
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 this threshold.
- If you hold capital between £6,000 and £16,000, your entitlement to means-tested benefits will be restricted on a sliding scale.
- If you hold under £6,000, you will have full entitlement to means-tested benefits.
- It is possible that on receipt of your personal injury settlement (or on receipt of an interim payment during the course of the litigation) you will hold more than £16,000. As a result, you would lose your entitlement to means-tested benefits.
However, if you were to hold your settlement 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.
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 can still provide the following benefits:
- It will 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 the personal injury - your trustees can continue to use the funds for your benefit. Alternatively, you should consider setting up a Lasting Power of Attorney.
- It is possible that a trust may give some protection against divorce or bankruptcy. If this is a concern, you should seek advice. 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?
Ultimately, your ability to work will be determined by the severity of your injury and how it has impacted your life. If you are able to manage your condition in a manner that allows you to continue in the job you had before the accident, then of course, there is no reason for you to stop working.
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, something that our team will be able to advise you on dealing with.
Talk to Us
For a no-obligation discussion about how we can help you set up a Personal Injury Trust or for advice on any related area, call us on 0345 872 6666 or allow us to give you a call back by completing our online enquiry form.