Answering your queries regarding Personal Injury Trusts
What is a Personal Injury Trust?
A Personal Injury Trust is generally set up to prevent your personal injury compensation affecting your entitlement to means tested state benefits or to protect you against the settlement being used in the wrong way, either due to pressure from other people or through your own behaviour.
The money in the Personal Injury Trust can still be used for your benefit (and would normally be treated as belonging to you for all tax purposes) but if the Trust is for benefit protection purposes, it cannot be used for regular expenses that your benefits are meant to cover (such as Council Tax, gas, water, electricity etc.). The Trust can, however, be used for all non-regular expenses, such as holidays, cars, houses, clothing, etc.
When should I set up a Personal Injury Trust?
It is best to set up a Personal Injury Trust as soon as you are aware that a payment is to be made to you in order to ensure that all of the compensation you receive is protected.
What is involved in setting up a Personal Injury Trust?
It’s a simple process:
- You decide who the Trustees will be. These are individuals who will be legally responsible for looking after the money. You can choose relatives, close friends or a professional, such as one of the Partners at Nelsons
- A Trust Deed is then prepared, which you and the Trustees sign
- The funds are then received by the Trustees. These funds can be held in our client account or invested. The Trustees may well also need to set-up a bank account.
- The Trust is then registered with HM Revenue & Customs, who may require tax returns to be submitted, although in general terms, the form of Trust used means that any relevant income can simply be reported on your own tax return
- You also need to consider what should happen to any money left in the Trust after you die. We would recommend that you make a Will, if you have not already done so, or review any Will you already have in place.
What does it cost to set-up a Personal Injury Trust?
The cost for setting up a Personal Injury Trust, including all advice, is £800 plus VAT. There is an additional charge of £150 plus VAT for registration with HM Revenue & Customs.
Annual on-going fees will depend on the amount of work we carry out. These costs will normally be paid as part of a personal injury settlement.
If our involvement is simply the completion of a tax return, then the fees will be approximately £300 plus VAT.
These fees are our standard costs but these charges may be higher if your case is more complex. If this is the case then we will provide you with a quote. However, in the vast majority of cases our standard fees will apply.
What do I do if I want to set up a Personal Injury Trust?
How we can help
- A telephone review to help understand your position.
- A written report highlighting issues for you to consider.
- Advice on how a Personal Injury Trust can work for you and the best type of Trust to use.
- Support in helping you to select the right people to be your Trustees.
- Our services as Professional Trustees should you not know anyone else you feel would be willing or able to act.
- Access to expert Independent Financial Advisers who are able to advise on investing funds on behalf of Personal Injury Trust’s.
- Support in arranging a Trust bank account.
- Registration of the Trust with HM Revenue & Customs where needed.
- A carefully worded Trust Deed, which is designed to protect against any challenge brought by the benefit agencies.
If you have any further questions in relation to Personal Injury Trusts or would like to discuss how we can help you set up and manage your Personal Injury Trust, please call 0800 024 1976 or contact us via our online enquiry form.
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