Personal Law

Having rejoined the Personal and Family department in June to strengthen Brodies’ outstanding personal injury trust offering, Jessica Flowerdew provides an update on personal injury trusts, what are they and why you might need one.

What are they?

A personal injury trust is a special form of trust created to hold money received as a result of a claim for damages following personal injury.

Why set one up?

You may have been pursuing your case for a while and will be keen to see the end of meetings with solicitors! However, it is crucial that you think about your future and take steps now to ensure that the compensation you have received is protected for your long term benefit.

Means tested benefits

You are perhaps unable to work as a result of your injury and you may be receiving assistance in the form of benefits from the Department of Work and Pensions, and if not you might require an injury lawyer from sites as to help with this. You might also be receiving support from your local authority. You may already be aware that if you have capital of over £6,000, you could lose some or all of entitlement to state and local authority support.

You can preserve your entitlement to means tested benefits and support by placing your compensation in a personal injury trust. Personal injury trusts are recognised by the Department of Work and Pensions.

Care is costly!

You might need care at a home as a result of your injury. Holding your compensation in a personal injury trust could assist you when it comes to paying for care – you may be able to safeguard the sums you have received. However, a personal injury trust does not guarantee protection and does not mean that the sums awarded to you for care and support will not be taken into account by your local authority in a financial assessment. The income you receive from the compensation held in your trust could also be taken into consideration. Local authorities all take a different view of personal injury trusts and placing your compensation in trust does not guarantee your eligibility to free care. Each case is considered on its own merits.

Funds held in a personal injury trust will be disregarded for means testing purposes in an assessment for residential care.

Protect your funds and manage your money

Placing your compensation in trust also ensures that, with the assistance of your trustees, your money is protected while still ensuring that you can use the money to purchase the things you need. There is no obligation on you to place of your funds in trust  and creating a personal injury trust does not mean that you will not have access to your funds. Typically, personal injury trusts are used for extra expenditure where benefits are used to pay for every day needs. The advantage is that you can agree with your trustees how and when money should be made over to you in order to ensure that you preserve your entitlement to your benefits.

How do they work?

In order to set up a trust, a trust deed would be drafted and you would appoint trustees to manage the fund on your behalf. It is possible for you to be one of the trustees but you will need to appoint other trustees too. These can be friends, family members or professionals.

Your trustees will be the people responsible for managing the trust fund. They will need to take advice from professionals regarding how best to invest the sums you have been awarded to ensure that your money is properly protected for the long term as well as how to manage the trust.

It goes without saying that the people you appoint as your trustees must be people you trust and know to have your best interests at heart!

Wills and powers of attorney

It is crucial if you have received compensation for you to take advice with regard to your will and power of attorney. If you already have these documents in place, they may need to be updated in light of the change in your circumstances. If you do not yet have a will and power of attorney, it is really important for you to prepare these. A will allows you to direct where your money should go in the event of your death. A power of attorney will allow you to appoint a person or persons to make financial and welfare decisions on your behalf should you ever become incapable of making these decisions yourself for example, as a result of accident or illness.

Get in touch with us

Here at Brodies, we appreciate that dealing with a personal injury and adjusting to changes in your lifestyle can be overwhelming. We do not believe in a “one size fits all” approach and understand the need for sensitive and tailored advice that suits you and your particular circumstances.

Key contacts Susanne Batchelor and Jessica Flowerdew based in our Edinburgh office are well equipped and experienced in the set up and administration of personal injury trusts and would be delighted to offer you further advice on your situation.


Jessica Flowerdew