After receiving compensation following a personal injury, establishing a Personal Injury Trust can be vital for protecting your award and ensuring you maintain access to essential means-tested benefits provided by the DWP.
At George Ide LLP, our experienced solicitors regularly help clients understand and set up these important legal arrangements.
Understanding Personal Injury Trusts
A Personal Injury Trust is a legal arrangement that allows compensation received from a personal injury claim to be held and managed for you without affecting your entitlement to means-tested benefits.
Personal Injury Trust law takes into consideration various pieces of legislation and is an area where specialist advice is necessary to ensure claimants can still access the support they need during their recovery and beyond.
Trusts can also be established to help people who may be vulnerable, old, young, or unfamiliar with managing large sums of money. As such, although you may not be necessary for all personal injury claims, considering a PI trust nonetheless may be worthwhile.
Why Consider a Personal Injury Trust?
Protecting Your Benefits
One of the most important reasons to establish a Personal Injury Trust is to preserve entitlement to means-tested benefits.
Without a trust, compensation exceeding £16,000 could result in the complete loss of these benefits. Even amounts between £6,000 and £16,000 can affect your entitlements, with £1 of benefit lost for every £250 of capital.
Safeguarding Your Compensation
Beyond benefits protection, a trust can:
- Shield your award from potential third-party influence
- Provide structured management of your compensation
- Help protect vulnerable beneficiaries
- Ensure your award is used as intended for your ongoing care and needs
Some injured parties may not be receiving DWP benefits, but don’t want their award to be swallowed up by care costs. Ultimately, any award you receive is yours to spend as you see fit, but it’s always wise to be cautious of what you spend it on.
The DWP and local authorities can deem some gifting or spending to be a “deliberate deprivation of assets” and to still form part of your assessable estate, meaning you could see benefits reduced, interrupted, or stopped even after spending your award funds. Our personal injury solicitors will provide guided advice on whether setting up a PI trust will be worthwhile given your current and future circumstances.
When Should I Set Up a Personal Injury Trust?
When establishing a Personal Injury Trust, timing plays a crucial role:
- The initial compensation payment is disregarded by DWP for 52 weeks
- Any unspent compensation after this period could affect your benefits
- Additional compensation payments are considered immediately
- It’s advisable to set up the trust before receiving your final award and before the 52-week period is over
- A trust can be established with a nominal amount from an interim payment
Choosing Your Trustees
Selecting appropriate personal injury award trustees is vital for the effective management of your trust. These individuals hold the trust funds for your benefit.
Your options include:
- Family members or close friends
- Professional trustees
- A combination of both
When choosing trustees, consider:
- Their capability to manage financial matters
- Their availability and reliability
- Their understanding of your needs
- The benefit of having professional expertise involved
Your trust should always be managed by people you can rely on. Family members or friends often fill this role, but it may be wise to avoid anyone with a history of financial issues, or anyone either overseas or unresponsive. Professional trustees can be established alongside family members, as they can often facilitate smart PI trust management practices and provide key, impartial advice. Professional PI trustees will invariably be held to a higher degree of care in terms of trust administration.
How Much Does a Personal Injury Trust Cost?
Personal Injury Trust costs vary from case to case, but be mindful that there will be:
- Initial costs for setting up a trust
- Registering and initial reporting processes to HMRC if applicable
- Trust administration fees if applicable
Costs are also influenced by the complexity of the personal injury case, where more difficult cases incur additional expenses. At George Ide LLP, we can meet clients for a free, no-obligation meeting and provide a fixed quote for the formation of a PI trust.
Professional Personal Injury Specialists You Can Trust
Our experienced team provides comprehensive support in:
- Assessing whether a Personal Injury Trust is right for you
- Advising on the most appropriate trust structure
- Preparing all necessary documentation
- Providing ongoing support and guidance
At George Ide LLP, we understand that dealing with a personal injury and associated trust can be overwhelming. Our dedicated team is here to guide you through every aspect of protecting your compensation, ensuring you make informed decisions that secure your future.
For expert advice on Personal Injury Trusts, contact our team at our Chichester office on 01243 786668 or email us at info@georgeide.co.uk to book your free consultation.
Contact Our Friendly Legal Experts Today
For general enquiries or to discuss more specific needs in personal or commercial law please get in touch with a friendly member of our team today.
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Author: Samuel Carter
Last updated: 1732188847
