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Personal Injury Special Needs Trusts

In most cases, there are ways to prevent your settlement from being taken into account when calculating your entitlement to benefits, by establishing a Personal Injury Special Needs Trust.

What is a Personal Injury Special Needs Trust?

If your personal injury compensation award is held in a Personal Injury Special Needs Trust, then the value of the award is disregarded in relation to most types of Means Tested benefits/support.

The objective of the Trust in your case is to protect any current or future entitlement to any Means Tested benefits that you receive.

Instead of the award being paid into your own back account, a Trust is set up and your money will be held by your chosen Trustees on your behalf.

Once the Trust is set up a Trustee bank account is opened by your Trustees. This is run on your behalf by your Trustees.

Can I pay other money (e.g. savings) into the Trust?

No. Only money received as a result of a personal injury claim can be paid into the Trust.

What if I no longer want the money to be held in Trust?

If at any time you decide that you no longer need the Trust you can write to the Trustees to instruct them to close the trust and transfer the money to you. However, if the Trust is closed then you may lose your entitlement to any Means Tested benefits/support.

What happens if I die?

In the event of your death, the Trust will end and any money still held within the Trust will form part of your estate, which will be distributed in accordance with your Will. However, if you die without making a Will your estate will be distributed according to the rules of intestacy.

What are the tax implications?

The money held in the Trust is usually taxed in the same was as if you held the money yourself.

What is a Trustee?

A trustee is a person chosen by the Claimant to look after their money and act in their best interests within the rules of the Trust.

Who can be a Trustee?

A Trustee must be someone the Claimant trusts such as a partner/spouse, close family or friends. A solicitor or trust company can also be nominated as a Trustee although they are likely to charge for their services. A Trustee should be at least 18 years old.

What are the responsibilities of the Trustees?
  • To hold and manage the money in the Trust on the Claimant’s behalf.
  • To ensure that the money is invested* and distributed according to the rules of the trust.
  • To keep a record of all trust dealings; incomes and expenditure, assets and debts for preparing, where necessary, accounts each year.
  • Trustees are responsible for the tax* affairs of the trust and liaison with the Inland Revenue.
  • Although Trustees hold and have control over the Claimant’s compensation award, they cannot use it as their own personal property or for their own benefit.
  • Trustees are require to act in the Claimant’s best interests and are obliged to take the Claimant’s wishes into account although they are not forced to act upon them.

*We recommend that professional advisers are appointed to carry out some if not all of these tasks.

What if something happens to the Trustees?

If for whatever reason, the Trustees are unable or unwilling to continue to act as Trustees, the Claimant has the power to replace them.

Will the Trustees’ Means Tested Benefits be affected?

No. They hold your compensation award as a Trustee and it can therefore not be counted as part of their capital.

McKeag & Co Solicitors, 1-3 Lansdowne Terrace, Gosforth, Newcastle upon Tyne, NE3 1HN
Tel: 0191 213 1010
24 Hour Emergency Line: 07850 565543 (Crime only)
Email: enquiries@mckeagandco.com