Personal Injury Trusts

• Published date: 09 March 2023
• Subject Matter: Litigation, Mediation & Arbitration, Personal Injury
• Law Firm: Lanyon Bowdler
• Author: Toni Reeves

Many people will not be aware of what a personal injury trust (PI trust) is, but the benefits of having one in place could be invaluable. Whilst a PI trust may not be suitable for everyone, it is something to consider if you are pursuing a claim due to sustaining an injury.

What is a PI Trust?

A PI trust is a type of trust which holds compensation following a successful personal injury claim or insurance policy pay out. It allows the settlor to transfer funds into the trust for the trustees to hold and manage in a way which is suitable for the beneficiary. It is another mechanism which helps people, who have been injured as a result of an accident that wasn't their fault, to try and put them in as similar position as possible had the injury not occurred.

What is a Settlor?

The settlor is the injured person who is transferring their award into a PI trust.

What is a Beneficiary?

A beneficiary is someone who is entitled to benefit from the assets held within the PI trust. Beneficiaries can vary depending on the type of PI trust you create.

What is a Trustee?

Trustees are individuals who are the legal owners of the assets held within a PI trust. Depending on the type of trust you create, a trustee could also be a beneficiary.

Why should I set up a PI Trust?

When an individual is means tested, for the purposes of means tested benefits or local authority support, their capital is considered which, after a 52 week disregard period, can include compensation from a personal injury award, with some specific exceptions (such as if personal injury funds are managed by a deputy or held within a PI trust). If the award is held within a PI trust then the funds are disregarded by the DWP and local authority, meaning you will be as eligible for means tested benefits or local authority support as you would be without the PI trust.

You do not have to be in receipt of means tested benefits or support at the time of creating your PI trust, but it does mean...