Personal Injury Trusts
Ask the team at Simpson Millar Financial Services to make sure you enjoy all the benefits of holding your legal settlement in a personal injury trust – protected against any means-tested benefits that you may also be entitled to receive.
What is a Personal Injury Trust?
A personal injury trust is legally binding agreement which our legal professionals create for you to hold the financial compensation from a legal settlement. Using such a trust means that the settlement received from a medical negligence or personal injury claim is disregarded should you be assessed for means-tested benefits.
Why is this beneficial to me?
If you receive means-tested benefits, these could be stopped if your legal settlement exceeds £6,000.
By placing the settlement into a trust, the team at Simpson Millar Financial Services are able to ring-fence those funds and make sure they are disregarded during your assessment for means-tested benefits.
A personal injury trust cannot, however, be used as a savings trust to hold personal monies (i.e. money held in a savings account). The only money that can be added to the trust is what you receive as additional payments from the legal settlement case (i.e. final settlement added to a trust which was set up to hold an interim payment).
It would also be disregarded in future years should long-term care be required.
How does the trust work?
In order to set up the trust, we recommend that you appoint at least two trustees. These should be individuals that you trust; ideally family members. In most cases we also recommend that one of the trustees should be a professional Trustee such as a solicitor. A professional Trustee will usually have experience in this role which is helpful since they will be responsible for maintaining the trust on an on-going basis – registering the trust with HMRC and completing any required returns.
As the settlor of the trust (the person placing the money into trust) you will also be noted as the beneficiary. Therefore, the settlement will be held for your benefit with the trustees bound by the Trustees Act 2000 to act in your best interests.
Can I take money out of the trust?
Yes – payments can be requested from the trust to fund one-off/irregular expenses such as home improvements and holidays but should not be used to fund regular expenditure such as utility bills or food shopping.
If regular payments are made from the trust it could raise questions regarding its legitimacy.
Do I need a Personal Injury Trust?
If you are in the middle of a legal claim for medical negligence or personal injury, contact us straight away. A trust should be implemented as soon as possible to protect your legal settlement and ensure that your entitlement to means tested benefit continues.
If you delay, you may end up losing some of your benefit entitlement – potentially all of it if you have over £16,000.
How to hold the money within a Personal Injury Trust?
Not only can our advisers help you establish a personal injury trust and introduce you to our team of legal experts. We can also provide advice on how to hold the money within the trust.
Legal settlements are often substantial amounts because they need to cover your long-term needs. As such, it needs to be protected against inflation. Our advisers work with you to construct a unique financial plan that takes into account your existing needs and future ambitions.
All of our initial meetings and discussions are free and without obligation.