Personal injury trusts
Discussion
Good morning all,
Does anyone know much about personal injury trusts?
I am due to receive my settlement for damages and a trust has been mentioned as a benifitial way of holding the money.
From my brief googleing (I am awaiting call back on proper advice) it seams that it only helps in the case of a means tested benefit - income support council tax etc.
Is there something else to it as I don't see myself likely to be needing any support like that. (Famous last words but I have a wellish paid job and have always been a saver)
Can anyone shed a !little more light on them?
Does anyone know much about personal injury trusts?
I am due to receive my settlement for damages and a trust has been mentioned as a benifitial way of holding the money.
From my brief googleing (I am awaiting call back on proper advice) it seams that it only helps in the case of a means tested benefit - income support council tax etc.
Is there something else to it as I don't see myself likely to be needing any support like that. (Famous last words but I have a wellish paid job and have always been a saver)
Can anyone shed a !little more light on them?
That's the main benefit, yes - but plan ahead. It isn't just about unemployment benefits when you're earning, care costs when you're 70 will cost how much? It doesn't just ring fence income in your earning years, it can help you in the years when you have no fresh cash coming in. In the event of divorce and separation a PI Trust can also help you.
Bear in mind that if you're earning lots and saving, any savings can't be protected by placing them into a PI Trust. You're taking proper advice - good. You do have a short period of time to reflect and set one up after you receive the money, but it's best to go into this with clarity.
Bear in mind that if you're earning lots and saving, any savings can't be protected by placing them into a PI Trust. You're taking proper advice - good. You do have a short period of time to reflect and set one up after you receive the money, but it's best to go into this with clarity.
Ginge R said:
That's the main benefit, yes - but plan ahead. It isn't just about unemployment benefits when you're earning, care costs when you're 70 will cost how much? It doesn't just ring fence income in your earning years, it can help you in the years when you have no fresh cash coming in. In the event of divorce and separation a PI Trust can also help you.
Bear in mind that if you're earning lots and saving, any savings can't be protected by placing them into a PI Trust. You're taking proper advice - good. You do have a short period of time to reflect and set one up after you receive the money, but it's best to go into this with clarity.
Thanks for the reply - Would it be protected in the event of a divorce then? (that risk could be mitigated with a prenup)Bear in mind that if you're earning lots and saving, any savings can't be protected by placing them into a PI Trust. You're taking proper advice - good. You do have a short period of time to reflect and set one up after you receive the money, but it's best to go into this with clarity.
It’s a valid point of ongoing care – should I make it that far I wouldn’t have thought I would be able to receive anything anyway – I would own at least 1 house outright and over the next few years be able to make significant investments with a view to long term income. If you own a house outright there would be no additional support available in any case.
I am struggling to see where the benefit of having it in a trust is in that situation. It was only mentioned to me by my solicitor yesterday. At the end of the day I can’t just spend it all as I need it for later on. And if I do the sensible thing with it I won’t whittle it down far enough to need state benefits.
There is no black and white answer to that, I take it from your answer you aren't currently married so a court would make a determination of the timing as well as the contents of your PI Trust, as a matrimonial asset, based on the fact that you weren't married when awarded it. It will also of course, take into account fairness and ongoing needs. If you had been married for decades and your wife, or civil partner, had formed a large part of your life up to the event which precipitated the award, the court would take a different view.
My practice tends to deal with clients who are far more liable more than most, to PI issues and it can be a humbling experience - usual advice methodology has to be treated as a guide and not a rule book, the matter is a far more immersing and involving one - so much more rests on the consequences.
My first PI client was a young lad who was very badly injured and who was happy to place the overwhelming majority of his award into trust, with the exception of just enough to pay for a fully loaded 6 Series, his dream car. And why not? Subsequently, he has drawn on part of the balance of the Trust and now has a rental property in Cheshire which gives him the balance he is comfortable with. My point is, he is happy he formed the trust and he is happy it has afforded him flexibility.
If though, you still have scope to earn significant amounts, any trust has to fit in with everything else - you're only as strong as your weakest link. Bear in mind that if you need to, you can always break your trust agreement (consider ramifications) and that if you are thinking about long term care and not so much about accrual of wealth from income, your strategy should be formed in context, and not pieces in isolation.
I usually advise clients that it's better to undo something and take a modest hit if you have to, than regret not doing something. If you are young, you need to future proof your decisions and that means staying agile and (metaphorically maybe!) light on your feet. Don't be prescriptive or dogmatic. Bear in mind too, that anything you set up has to look after your spouse in the event if you ore deceasing him/her. A PI trust can help you with pension credits, legal long term care costs.. lots of things.
If you have significant assets, start now to preserve everything as best you can - look upon the PI issue as a catalyst. In your case, discuss the matter with an investment adviser as well as your solicitor. Poor tax and underlying trust investment decisions can make or break an otherwise appalling or impeccable legal strategy.
My practice tends to deal with clients who are far more liable more than most, to PI issues and it can be a humbling experience - usual advice methodology has to be treated as a guide and not a rule book, the matter is a far more immersing and involving one - so much more rests on the consequences.
My first PI client was a young lad who was very badly injured and who was happy to place the overwhelming majority of his award into trust, with the exception of just enough to pay for a fully loaded 6 Series, his dream car. And why not? Subsequently, he has drawn on part of the balance of the Trust and now has a rental property in Cheshire which gives him the balance he is comfortable with. My point is, he is happy he formed the trust and he is happy it has afforded him flexibility.
If though, you still have scope to earn significant amounts, any trust has to fit in with everything else - you're only as strong as your weakest link. Bear in mind that if you need to, you can always break your trust agreement (consider ramifications) and that if you are thinking about long term care and not so much about accrual of wealth from income, your strategy should be formed in context, and not pieces in isolation.
I usually advise clients that it's better to undo something and take a modest hit if you have to, than regret not doing something. If you are young, you need to future proof your decisions and that means staying agile and (metaphorically maybe!) light on your feet. Don't be prescriptive or dogmatic. Bear in mind too, that anything you set up has to look after your spouse in the event if you ore deceasing him/her. A PI trust can help you with pension credits, legal long term care costs.. lots of things.
If you have significant assets, start now to preserve everything as best you can - look upon the PI issue as a catalyst. In your case, discuss the matter with an investment adviser as well as your solicitor. Poor tax and underlying trust investment decisions can make or break an otherwise appalling or impeccable legal strategy.
Thank you for that Gingr.
So you would see it as more of an insurance policy against possible benefit needs in the future?
My solicitors have implied that and the cost through them to set up is about 1200+vat, which is more than others have quoted but still effectively nothing in comparison to the award really. It's something I will need in the future. Likely early retirement and real potential of loosing a limb still in future.
I suppose i could raise my current ideas for investments etc through the trust and it would be no different?
Can you almost treat them as a normal account and spend on anything?
Are there any real downsides to using a trust? Other than the obvious signatures from the trustees before releasing funds?
So you would see it as more of an insurance policy against possible benefit needs in the future?
My solicitors have implied that and the cost through them to set up is about 1200+vat, which is more than others have quoted but still effectively nothing in comparison to the award really. It's something I will need in the future. Likely early retirement and real potential of loosing a limb still in future.
I suppose i could raise my current ideas for investments etc through the trust and it would be no different?
Can you almost treat them as a normal account and spend on anything?
Are there any real downsides to using a trust? Other than the obvious signatures from the trustees before releasing funds?
Apologies for my slightly tardy response. Its primary benefit is just that, yes. If those are your circumstances, you definitely do need to consider the longer, bigger picture.
You can't place any other wealth and/or investments into a PI trust, no. The principle of a PI trust is eminently sound and sensible; however, there are always individual circumstances or variables that might make one now, or at some time in the future, less so. On the surface of it, and this isn't advice, it would seem to be an obvious thing for you to consider - thankfully, your solicitor is carrying the legal and financial indemnity for his/her advice!
In respect of the terms of the trust, make sure that your adviser has squared away the manner that the trustees can be changed. If you nail the terms of the trust at outset, no other trustee will be able to contest your trust aims and objectives and if they do, if you want to sack one, then the terms of the deed at outset will allow you (with your settlor's hat on) to sack them. You can be the settlor (the person establishing the trust), a trustee (someone administering it and signing the cheques) and the beneficiary.
You can't place any other wealth and/or investments into a PI trust, no. The principle of a PI trust is eminently sound and sensible; however, there are always individual circumstances or variables that might make one now, or at some time in the future, less so. On the surface of it, and this isn't advice, it would seem to be an obvious thing for you to consider - thankfully, your solicitor is carrying the legal and financial indemnity for his/her advice!
In respect of the terms of the trust, make sure that your adviser has squared away the manner that the trustees can be changed. If you nail the terms of the trust at outset, no other trustee will be able to contest your trust aims and objectives and if they do, if you want to sack one, then the terms of the deed at outset will allow you (with your settlor's hat on) to sack them. You can be the settlor (the person establishing the trust), a trustee (someone administering it and signing the cheques) and the beneficiary.
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