Personal injury trusts

Sadly, many people have missed out on having their personal injury award paid into a trust and have later found that what they fought for is eaten away by loss of benefit entitlement. You may soon receive your award and be wondering, what should I do? The legal firm which has fought your case might have recommended that you seek advice on setting up a trust for your award and you would like to discuss the benefits that are achievable. You may simply want to know what happens next.

Personal Injury Trusts can make sure you benefit in full from your award. People often feel that they are more complicated than they really are, or that they are not applicable to them, and miss out on the window of opportunity that is open to them. One of the main benefits of a Personal Injury Trust is keeping your entitlement to means-tested State Benefits and other means-tested support and care now, or preserving your right to it in the future. For many people the value of Personal Injury Trusts is seen straight away; for others it is when they look back in a few years' time that they are so thankful that they sought advice when they did.

It is worth considering that, when you receive a payment in respect of a personal injury suffered by you, your entitlement to means-tested benefits may be reduced or stopped. Your partner may also be affected by you receiving your award, as this may have a detrimental effect on his or her benefit. Of course, not all the State Benefits you receive will be means-tested; however, legislation governing this may change. Many people fall into the trap of believing they can just give the award away; however, this may considered as 'deprivation of capital' and may affect your entitlement to benefits and support, as you have given money away in order to claim a state benefit.

Personal injury payments that are placed in trust, however, are disregarded from the means-test, as is any right to receive money from the trust. This means that you are able to put money into a trust and the capital and income generated upon it will be disregarded from the means-tested benefits. The establishment of the trust is time critical, so talk to us now; we are here to help.

Types of trust

There are many different types of trust and there is not a 'one size fits all' trust. The different trusts have their own advantages and disadvantages and which one is right for you depends on your own circumstances. Many people worry unnecessarily about how they will get at their money, when generally it is very straightforward. We will, of course, look at the tax treatment of each trust to determine which one is right for you.

It is impossible to predict the future but it is possible to plan for it. The capital held within a Personal Injury Trust may well be disregarded from the means-test for residential care if you need it in the future; of course, legislation may change in the future.