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Personal injury trusts

Personal injury trusts
A personal injury trust is an effective means of ensuring that a seriously injured person can receive his or her settlement, whilst at the same time retaining his or her entitlement to means tested benefits.  The trust will be created as a personal injury trust deed, and a separate bank account will be set up with at least two signatories (one of whom may be the injured person if they have capacity to manage their affairs), and into which the compensation funds will be paid.

Personal injury trusts are particularly important where the compensation includes money for future expenses, such as future care or future treatment or equipment. A personal injury trust ensures that these funds are ring-fenced for the purposes for which they are intended, so that our client does not have to use this money for their daily living expenses, with the result that they no longer have the funds to pay for.future treatment etc, when it is needed.

The fact that compensation is paid into a trust bank account will not prevent themfrom accessing the funds, though they will need the agreement of a second signatory for them to do so.

People who have suffered serious injuries such as brain injuries or spinal cord injuries, are often unable to work and may therefore, at least in the early period post-injury, need to claim state benefits.

Means-tested benefits
If a client claims means-tested benefits, the payment of any compensation, either as an interim payment or final payment, will have an impact on those benefits.

Loss of entitlement to a means-tested benefit for a seriously injured person will have a knock-on effect as they will no longer be able to claim benefits such as free prescriptions, or reductions in council tax. We always discuss with our clients whether they claim means- tested benefits, or whether there is a possibility that they may become entitled to benefits in the future, and the impact that any compensation may have on those benefits.  We will discuss the options open to them to protect that entitlement, whilst also enabling them to receive their compensation.

The Department for Work and Pensions will need to be made aware of the existence of a personal injury trust but will not be able to take funds held in that account into consideration when accessing our client’s ’s entitlement to a means tested benefit.

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