Personal Injury Trust

If you are awarded compensation after suffering a personal injury, and you are also receiving means-tested benefits, it may surprise you to learn that your compensation could result in you losing your benefits. This is because means-tested benefits are only payable if your savings are below a certain amount (usually between £16,000 and £6,000 depending on the benefit). If your compensation payment takes you over that amount, the benefits agency or local authority will look to take away, or reduce, your benefits.

This can seem unfair. After all, it wasn’t your fault you suffered the injury, so why should you lose your benefits just because you’ve received compensation for your injuries?

The answer is to create what is known as a “Personal Injury Trust”. This is an arrangement where your compensation gets paid into a Trust, rather than to you directly. You choose ‘Trustees’ (of which you can be one) to hold your money and they can release money from the Trust to you as you wish which might be in a steady stream, or to make big purchases for you. This way, you can avoid having too much money in your own bank account and therefore can still receive your benefits, whilst still being able to spend your compensation.

It is important to remember that a Personal Injury Trust should ideally be set up within 52 weeks after you receive your first payment of compensation, whether that is an interim or final payment. Any compensation paid to you after this 52 week period has expired would be considered your savings unless it is paid into a Personal Injury Trust.

If you would like to discuss Personal Injury Trusts with one of our experts please contact me directly on