Clinical Negligence

Personal Injury Trusts

A personal injury trust is a trust legally set up by a solicitor with money received as a result of a settlement from a personal injury or clinical negligence claim.

It can also be used for sums of money received from personal accident insurance, charitable gifts or other sources - but only if the sum arises as a result of the injury.

The money may have been awarded to cover specifics such as the loss of future income or to cover the costs of rehabilitation, aids and equipment or household adaptation required as a result of the injury sustained.

The purpose of such a trust is to ensure recipients retain their entitlement to means tested benefits including:

  • Housing benefit
  • Council tax reduction
  • Job seekers Allowance
  • Income Support
  • Employment and Support Allowance
  • PIP

A trust also minimises contributions towards any ‘community care support’ provided by the local authority social services department.

Even if a recipient is not receiving such support at the time the award is made, it is sensible to consider setting one up if there is a possibility that their situation may change in the future.

The funds in the trust are only disregarded for the capital means test under legislation if funds are paid into the trust within 52 weeks of receipt. It is important to note that the 52-week period begins from the first payment – therefore if an interim award is received, that is the point at which the trust is established.

Recipients should not be put off by use of the word ‘Trust’. They are relatively straightforward to set up and can easily be managed by the recipient alongside one or two other trustees, so long as the recipient has capacity. It is usual for one of the trustees to be a professional and therefore important that the costs of setting up and managing the trust are included in any settlement. This is particularly important with trust funds where there is a significantly large sum of compensation to manage.

Consideration should be given to selecting the right trustees, as they will have full control over the trust and the funds held within it. Trustees should be able to work well together and act in the best interests of the person for whom the funds are held. The trustee’s role is to ensure that the money is spent wisely.

Once set up it is recommended that a trust fund is used directly to pay for capital items required such as aids and equipment, household adaptations, and also care provision, holidays etc. It is advised that the funds are not used for general use as this can lead to mixing of funds which in turn may interfere with means tested benefits – the very issue the trust was set up to avoid!

Legal advice is recommended when setting up a trust, particularly where large sums of money are involved and/or the trust is for a child or vulnerable adult not capable of making far reaching decisions over the long-term management of funds.

For futher information on Personal Injury Trusts contact a member of the Clinical Negligence team.

Clinical Negligence - Personal Injury Trusts

Meet our team

Andy Shaw

Partner. Head of Personal Injury and Clinical Negligence

Personal Injury

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