Following Injury Awareness Week, we’re reflecting on the long-term impact a personal injury can have — not only physically and emotionally, but financially too.

A personal injury trust is a useful tool to use for holding any funds awarded to you. The name “personal injury trust” is simply a descriptive term and different forms of trusts can be used to ring-fence your compensation.

Who can set up the trust?

If you are an adult and have the capacity to do so you can set up the trust yourself. If you do not have the capacity to deal with this, your guardian can set the trust up on your behalf.
If the injured person is a child their parent, guardian or legal representative can set up the trust on their behalf.

Who would be involved with the trust?

No matter which type of trust you use, there will be one or more beneficiaries who would be recipients of trust funds, and there will be trustees appointed to manage the funds and make payments out of the trust to beneficiaries

Types of personal injury trust?

You have several options of what kind of trust you can use for your funds;

Bare trust
This is seen as the simplest form of trust. Once the funds are in this trust you are entitled to the income generated and the funds themselves. However, there is little flexibility for the trustees.

Disabled persons trust
If the beneficiary of the trust qualifies for certain benefits, a disabled persons trust can be used which qualifies for special tax treatment.

Discretionary trust
This type of trust can have multiple beneficiaries of your choosing (including yourself) and your trustees will have the most flexibility with this type of trust. They have discretion to decide when and to whom to make payments out of the trust.

Trustees – how many and what do they do?

For all the types of trusts you must have trustees to manage the funds and assets held in the trust. You can appoint yourself and at least one other person, however it is advised to have a minimum of 3 trustees.

The trustees manage the funds and are responsible for making the decisions on any investments, distributions and payment, as well as ensuring all regulatory and compliance matters are taken care of, including annual accounts and tax returns.

We recommend that your trustees are people you know and trust to make decisions in your best interests.

You can also appoint a professional trustee, such as a firm of solicitors, which can add valuable guidance and support for decision making.

Benefits of the trust

Trusts can preserve any benefits you may be on, the funds within the trust do not count towards any capital or savings that hinder means-tested benefits.

You can have trustees to help you make decisions on what to do with the funds which can be beneficial for those who have maybe not had to deal with large amounts of money before.

Unfortunately, after many personal injury incidents people may become more vulnerable to influence from third parties and a trust is a way of protecting the funds from others.

Personal injury trusts can help to safeguard your funds for your future to ensure you are cared for financially for as long as possible.

How we can help

Here at Balfour+Manson we have expert solicitors who can help you from the beginning of your claim for your injury right through to the formation and running of your personal injury trust. We understand that a personal injury can cause many feelings and emotions and can help you navigate your next steps. Contact us here.