Why should I have a Personal Injury Trust?
If you have received £10,000 in compensation or are about to, and you receive means-tested benefits or care funding or may want to in the future, then you need to set up a Personal Injury Trust.
If your compensation is paid directly to you, then you will be classed as having this money at your disposal. As a general rule, if you have over £6,000 at your disposal, you are at risk of having your benefits reduced. If you have over £16,000, you are at risk of losing them entirely. Not having means tested benefits may also stop you receiving other valuable services such as free prescriptions and school dinners for children. If you think you may need to go into residential care at some point in the future, then setting up a Personal Injury Trust will protect your compensation from being taken away by the Local Authority in order to pay for your care.
There are timescales to follow and legal deeds to draft to ensure your benefits and care payments are not stopped and our experienced team can help you with this.
What are means-tested benefits?
Means tested benefits include:
- Income Support
- Housing Benefit
- Council Tax Benefit
- Working Families Tax Credit
- Disabled Person’s Tax credit
- Income Based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
How much does it cost?
Linder Myers charges a fee of £750 plus VAT to set up the trust for you. If you receive £50 a week in benefits, the trust will have paid for itself after 15 weeks.
What do I need to do?
As we would be setting up a trust you need two people to act as trustees. Usually one of these people would be you. The other person can be anyone over 18 years old, and most of our clients usually have a family member act as trustee with them. A solicitor from Linder Myers can act as a trustee for you.
We will take details from you and draft what is known as a Trust Deed for yo u. You will sign this deed and so will any other trustees that you wish to appoint. We then help you to open up a bank or building society account in the names of the trustees.
What happens next?
The money is yours. If you do not spend the money it will sit in the bank / building society and gain interest. If you have been awarded a significant sum, say over £50,000, we would recommend that you see an Independent Financial Adviser (IFA) to see how you can make your money work best for you. We can recommend an IFA to you. Please note that we do not have any formal relationship with any IFA and we will not receive any payment for the introduction.
How easily can I get hold of my money?
The money is to be used for your benefit. You can easily obtain the money, provided that all of the trustees sign the cash withdrawal form or cheque. However, see below for some rules about how you should spend your money.
Do I need to inform the Benefits Agency of the existence of the Trust?
Yes. We will do this for you.
Will the trustees have to complete an income tax return?
Often the trust will be a “bare” trust, which means that, notwithstanding the existence of the trust, you are immediately entitled to the trust fund. In such circumstances the Trustees do not need a separate tax return and any income should be included on your personal tax return, if you need to complete one. If the trust is not a bare trust then it may be necessary to complete a tax return, but we will advise you of the position.
What if my trustees won’t let me have the money?
Your trustees have to act in your best interests. There may be very good reasons why they do not want you to have money at a particular time. However, if you are unhappy you have the power to remove a trustee and appoint someone else.
Can I put more money in the account?
The ONLY money that can be placed into the trust account is your compensation money. It is very important that you DO NOT put any money into the account that is not part of your compensation.
What can I spend my money on?
You can spend the money on anything you like, the money is yours!
Ongoing Trust Administration
If you are in receipt of larger compensation payments our team offers an ongoing administration service and we can discuss the best way for your funds to be managed for you on an ongoing basis. We regularly work alongside families to provide the most workable and cost effective solutions to ongoing management. We act as professional trustee for many of the trust that we manage and have expertise in these areas.
Why use Linder Myers?
Our dedicated team is experienced in these matters and can provide you with the necessary advice. It is worth getting our expert legal advice to avoid difficulties with the benefits agencies and for your peace of mind that your benefits or care contribution will not be reduced or stopped. If you receive £50 a week in benefits, the trust will have paid for itself after 15 weeks.
For friendly advice and guidance, contact our Court of Protection team on 0800 042 0700 or email email@example.comMeet the Court of Protection team