Personal Injury Trusts

Hodge Jones & Allen Solicitors specialise in pursuing compensation claims arising as a result of accidents and hospital errors. These actions are known as Personal Injury (PI) claims.

What is a Trust?

A Trust is a formal legal relationship where assets are put under the control of at least two persons (the Trustees) for the benefit of another (the Beneficiary).

Personal Injury Trusts and acting for clients on means tested benefits

Funds held in a PI trust are disregarded capital for the purposes of means tested benefits. Therefore it is very important to advise clients on setting up a PI trust if the client is claiming means tested benefits or may ever claim benefits or require local authority funded care in the future.

A PI Trust may also be useful for other reasons such as:

  • To provide a formal structure so that there is a clear distinction between the parents’ funds and the child’ damages or
  • To protect a client who is vulnerable to financial exploitation or
  • To protect a client who may suffer periods of mental incapacity in the future
  • To assist a client who will struggle to cope with a large sum of money
  • To ring fence the damages award from a future divorce.

If your client is a child and the damages award is substantial, the court will often only approve the settlement if one of the trustees is a professional.

What is a Personal Injury Trust?

A personal injury trust is sometimes referred to as a compensation protection trust and is a trust set up using funds received as compensation for a PI claim. Personal injury includes accidental and criminal injuries and clinical negligence and industrial disease related injuries. The injury can be physical or mental. PI trusts can be set up irrespective of the size of the payment made or where the injury occurred.

A PI trust cannot be set up where the injuries were fatal. Relatives of the injured person can claim compensation for bereavement and loss of financial support but the compensation cannot be placed in a PI trust if the clients have not sustained any direct injury themselves.

We have specialists in finance deputyship work for over 10 years acting as professional deputy and trustees for a wide range of clients

PI Trust for Road Accident Victim: Housing Benefit

Hodge Jones & Allen Solicitors acted for a young woman who was injured in a road accident and was awarded compensation of £75,000 for her injuries. The client is only able to work part time and receives Housing Benefit. This benefit is only paid to people who have less than £16,000 in capital. Our specialist solicitors set up a PI trust for the client so that she could continue to claim Housing Benefit after receiving her compensation.

How do you set up a personal injury trust?

  • Specialist Experts

To set up the Trust you will need a minimum of two people to act as your Trustees. The Trustees must be over the age of 18 years, of sound mind, of good character and have no current or past problems with money. If you are unable to secure another person to act as a Trustee or wish to have a professional Trustee, the partners of Hodge Jones & Allen have experience of acting as Trustees and would be happy to be appointed Trustees.

  • Contact our Team

You will then need to contact our Private Client Team for us to take details from you and draft a Trust Deed which will need to be signed by you and your chosen Trustees.

  • Call FREE 24 hours a day

After the Trust Deed has been signed the Trustees need to open up a bank or building society account in the name of the Trust or Trustees and your compensation award would be paid into this Trust account. We would also inform the Benefits Agency of the existence of the Trust.

Why Hodge Jones & Allen?

  • A personal and sympathetic service

We offer a very personal and sympathetic service – we are a small team and we value our relationships with clients highly. We have a dedicated team specialising in deputyship and trusts for people who have recovered substantial damages awards.

  • Good communication

We provide an efficient service, always responding promptly. We are well established and respected team who have many years’ experience of acting as deputy. Our court of Protection team has specialist experience of finance deputyship work combined with knowledge of PI litigation.

  • Highly Experienced

We are highly experienced in this specialist area and offer high quality advice and pragmatic and cost effective solutions to difficult problems. We have specialists in finance deputyship work for over 10 years acting as professional deputy and trustees for a wide range of clients.

Frequently asked questions

Why do I need a Personal Injury Trust?

The primary purpose of a PI trust is to ensure that you can receive or continue to receive means tested benefits and local authority funding. Funds held in a PI trust are disregarded for the purposes of means testing. We can advise as to whether you are in receipt of means tested benefits.

For means tested benefits, the general rule for capital is:

  1. If you have over £6,000 you are at risk of having your benefits reduced, and
  2. If you have more than £16,000 then you are at risk of losing your benefits entirely.

If you have more than £16,000 you would also lose other associated benefits such as free school lunches and prescriptions.

If your compensation is held in a PI trust, you can continue to claim benefits and you can still have the benefit of the money held in the PI trust rather than see it eaten away by the cost of living.

Therefore a PI trust is extremely useful whether you currently receive benefits or if there is a chance that you may claim means tested benefits in the future.

If you need to go into residential care at some point in the future setting up a PI trust will protect your compensation as you will still be entitled to Local Authority funding for your care home fees.

How does a Personal Injury Trust operate?

Usually you would be appointed as one of the Trustees and you would choose a close relative or friend to act as the other Trustee.

The money in the Trust is to be used for your benefit. When you require funds you would submit a request to the Trustees.

The Trustees are under an obligation to take financial advice to ensure that the money is invested wisely. Your Trustees are also under an obligation to always act in your best interests.

The only money that can be put into the Trust account is your compensation money.

The one year disregard

Any compensation paid in respect of a PI claim is disregarded for the purposes of means testing for a period of one year from the date that the first interim payment was made.

A PI Trust must be set up within a year of the first compensation payment and the process can take a few months so steps should be taken to set up the trust well before the end of the year otherwise there is a danger that your entitlement to benefits could be lost.

It is a good idea to take advice during this period in order to discuss your plans with regard to the compensation and to decide whether a PI trust would be advantageous.

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    Address:Hodge Jones & Allen Solicitors
    180 North Gower Street
    NW1 2NB