Personal Injury Trusts

It is important that survivors who receive compensation either through a redress scheme, civil claim or by a CICA claim, protect their eligibility to means tested benefits. This is done by setting up a Personal Injury Trust.

Personal Injury Trusts are trust funds which are set up with the compensation paid as a result of a personal injury claim.

By setting up a Trust, it means that compensation will not form part of a client’s estate for the purposes of means tested benefits and thus a client can retain their right to benefits and any local authority support irrespective of how large their personal injury award might be.

Examples of means tested benefits are:

• Income support, Income based-JSA,
• Income related – ESA, housing benefit, council tax support, universal credit or disabled person’s tax credit.

On current figures, if a client’s award means that they will have personal savings in excess of £6,000, their entitlement to means tested benefits will be reduced. If a client has personal savings of more than £16,000 they may stop altogether. 

In these circumstances a client must be advised about a personal injury trust.

The rules are clear that if monies are disposed of so that a client only has £6,000 left either by spending it, repaying debt or giving it to a friend or relative, the DWP may not regard this expenditure as reasonable and this may cause a client to have their means tested benefits stopped.

Unhelpfully, the DWP does not define what is meant by “reasonable”. Our advice would be for a client to speak with the DWP before taking any steps to dispose of the award.

It is also important to note that the 52 weeks will start to run from the date when an interim payment is received.