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Money's Too Tight to Mention… Protecting your Personal Injury Award

on Friday, 16 September 2016.

Imagine that you have ultimately succeeded in gaining compensation from a personal injury or medical negligence claim, only to then watch that money drain away as a result of various factors outside your control.

The answer for most, to prevent this happening, is to create a personal injury trust.

Here are four good reasons why.

1. Saving Care Fee Costs

If your compensation is held in a personal injury trust it is ignored in determining your entitlement to Local Authority assistance with care fees. You can therefore receive Local Authority funding and still benefit from the funds held in your trust, which the Local Authority must disregard. By comparison, if the compensation is not held in trust you will need to use the compensation funds towards the cost of your care.

2. Planning for Inheritance Tax

As house prices increase, many more estates will suffer the burden of Inheritance Tax. If your compensation is placed into certain types of trust it will fall out of your estate for Inheritance Tax purposes after seven years. By comparison, if you hold the compensation in your own name, the value of your estate will be increased, and the tax payable on your death may be greater as a result.

3. Means-Tested Benefits

If you are claiming any type of means-tested benefits at the time you receive compensation, or if you wish to make such a claim in the future and your compensation is not held in trust, you may lose your entitlement to benefits. By comparison, if the compensation is placed into a personal injury trust, it is entirely disregarded in the calculation of your entitlement to benefits.

This means that those who have set up a personal injury trust are able to continue to receive their benefits, but also have access to their trust funds to help with expenses such as cars, holidays and household goods.

4. Protection on Divorce

Whether your compensation is intended to meet your future needs or to compensate you for past suffering, the person intended to benefit from the award is you. However, on divorce, all the financial resources of each party can be taken into account in determining how the assets are divided.

If your compensation is held in a personal injury trust it will be easier to argue that these funds should be retained by you and not included in the pot of assets to be divided between you and your ex-spouse.

How we Can Help      

If you are due to receive compensation for personal injury or medical negligence, taking advice on the option of setting up a personal injury trust is essential.

We have expertise in advising on the creation, setting-up and the ongoing running of personal injury trusts. Our specialist private client solicitors can help you find the right options for you, taking into account your wishes, your circumstances and tax position and the individual factors which are most important to you.


For more information please contact Shelley Faulkner on 0117 314 5423.

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