The importance of a personal injury trust

Upon developing CRPS, you may be unable to return to work. In addition, there’s a strong chance you’ll require care and support around the home and in getting out and about. Consequently – and maybe for the first time in your life – you may qualify for one or more forms of government assistance. Some state benefits are payable irrespective of your financial situation. Others are means-tested. A personal injury trust is crucial to preserving your current and future entitlement to means-tested benefits.

CRPS and benefits

Among the benefits that people with CRPS often qualify for are:

• Income Support
• Child Tax Credit, Working Tax Credit, and Pension Credit
• Housing benefit, Council Tax Benefit, and Residential Care Assessments
• Income-based Jobseeker’s Allowance
• Income-related Employment and Support Allowance

These benefits are means-tested, meaning that your eligibility is affected by the amount of income and capital you have. For example, savings in the bank of £6,000 reduces the amount of benefit you receive, and £16,000 or more means losing your entitlement entirely. You must then wait until your capital falls below the threshold before reapplying.

Personal injury claim settlement

Payments to you in a personal injury claim are very likely to take your capital above the qualifying threshold for means-tested benefits. That may even be the case with an interim payment made during the claim. If you are already receiving means-tested benefits, you must inform the Department for Work and Pensions (DWP) if your circumstances change. Of course, that’s likely to result in your benefits stopping immediately.

Personal injury trust

A personal injury trust is a legitimate mechanism ensuring personal injury compensation payments are not taken into account when assessing your eligibility for means-tested benefits. The trust also ensures that your compensation is disregarded in assessing current or future care fees.

How do personal injury trusts work?

It all comes down to control, or rather, lack of control. At least two trustees manage a personal injury trust on behalf of the beneficiary. And only the trustees can access the funds held in the trust. All trustees must agree before money can be released. So, as the beneficiary doesn’t have complete control of the funds, they are disregarded in the means test. The DWP are informed of the existence of the trust, so everything is kept completely open and above board.

Interestingly, there’s no reason why the beneficiary can’t also be one of the trustees. Indeed, in many cases, the two trustees are the beneficiary and their spouse or partner.

The funds should be held in a designated trust bank account set up by the trustees. If you and your partner are the trustees, currently, you can hold up to £6,000 between you outside the trust without affecting your benefits. So, by keeping a careful eye on your respective balances, you can then periodically agree to top up your account with money from the trust.

With a strong likelihood of early payments in your personal injury claim, your solicitor will advise you on setting up a personal injury trust at a very early stage.