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Partner and Head of Family Law, Rugby
Author: Alison Bristow
Most people think that a personal injury claim ends when an individual receives a large sum of money. This is not the case at all; the money needs to be used carefully to help support and fund future care and rehabilitation, often for the rest of someone’s lifetime. A Personal Injury Trust is the most effective way of achieving this.
A PI Trust is a legally binding financial arrangement into which your compensation can be placed. The Trust is administered by Trustees, chosen by you, who have a duty to maximise the funds and apply them for your benefit.
The main advantage of a PI Trust is that the funds contained within the Trust are not taken into account by your benefits agency if set up correctly, and should not therefore affect your entitlement to means-tested benefits. Your Trustees will also be able to guide you with the use of the funds and provide much needed support at what can be a very difficult time.
If you do not set up a PI Trust and your household savings exceed £6,000 then your compensation will affect your entitlement to means tested benefits and may even stop your benefits entirely.
If you do not receive any means-tested benefits now, you may think that there is no need for a PI Trust, however, what happens if your circumstances change in the future and you need to rely on benefits at a later date? What happens if you need Local Authority or Social Services’ assistance for your care in the future? By ring fencing your compensation now, you will avoid any complications in the future.
PI Trusts are also a useful way of protecting the funds from undue influence or pressure from third parties.
It is sensible to set up your PI Trust as soon as possible and ideally in anticipation of receiving the first payment through your claim. You only have 52 weeks from the receipt of any compensation in which to place the funds into a PI Trust before your benefits are impacted.
If you would like advice, please contact our team.