A Personal Injury Trust (PI Trust) is a trust set up by a solicitor to specifically hold compensation received from a personal injury claim or clinical negligence claim.
The Trust will be in writing and is legally binding. The benefit of creating a PI Trust is to separate compensation from other assets so that that money is protected, used for the purpose for which it was intended and ensures those funds can be appropriately disregarded in any future calculations for means-tested benefits and care fees.
Personal Injury Trust Glossary of terms
Definitions of the various terminology used in Personal Injury Trusts.
A type of trust in which the Beneficiaries are fully entitled to the whole income and capital of the Trust Fund. In a Bare Trust, the Trustees are effectively just holding on to the Trust Fund for the Beneficiaries. A PI Trust can be a Bare Trust, and this is usually the most straightforward option.
A person who has a right, or a potential right, to benefit from a Trust. In the case of a PI Trust, this will usually be the person who suffered the injury.
someone qualified to advise on financial decisions, such as how the Trustees should invest the Trust Fund. A lawyer is not allowed to give this kind of advice, but may be able to put you in touch with a Financial Advisor.
PI Trust (Personal Injury Trust)
Also known as a Compensation Protection Settlement, this is a Trust set up by someone who has suffered a personal injury, to hold their compensation award. This will enable the funds held in trust to be disregarded when that person is being assessed for means-tested benefits. If the person who suffered the personal injury lacks Mental Capacity to manage their own finances then the PI Trust may require the authorisation of the Court of Protection. The Court may suggest, in such circumstances that a Property and Financial Affairs Deputy is appointed instead.
Read more – What is a Personal Injury Trust?
The person who provides the funds to set up a Trust. In the case of a PI Trust, this is the person who suffered the injury and was awarded compensation.
An arrangement where certain people (Trustees) hold assets on behalf of other people (Beneficiaries), on particular terms and subject to certain duties.
The document legally establishing a Trust, which will appoint the Trustees, identify the Beneficiaries, set out the terms on which the Beneficiaries can benefit from the Trust Fund, and set out some of the Trustees’ powers and duties. However, in addition to anything in the Trust Deed, the Trustees will also have other powers and duties set out by statute and case law.
A person who is responsible for looking after the Trust Fund, on behalf of the Beneficiaries. The Trustees will have control of the Trust Fund and are responsible for making sure it is properly invested. They can be either professionals or laypeople (such as trusted friends or family).
This is the assets that are held on a Trust. It can be cash, or a house, or investments, for example.
Read about protecting benefits when making a brain injury compensation claim
This article has been written by Francesca Tubb & Jack Burroughs TEP at Ashtons Legal
Ashtons legal serve clients nationwide and are based in Bury St Edmunds.
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