PI (Personal Injury) Trust for Clinical Negligence and PI claims - written by Chen Attar, Paralegal Clinical Negligence

What is a PI Trust?

A PI Trust is a trust of any kind that holds assets derived from an award of damages or compensation.

It is created to allow the money held in the trust and income generated from the trust to be identified as compensation received as a result of personal injury / clinical negligence claim. The money in the trust can be paid only to the client as a sole beneficiary.

You will be required to complete a Trust deed, which will set out the rules and limits as to what your trustees can and cannot do with your award.

The Trustees are individuals that you nominate to be in control of the money held in the trust and you must nominate two trustees, one of whom can be you. The second Trustee may be a close relative, or a friend and you can always replace existing trustees if your circumstances change.

The responsibilities of the Trustees are as follows:

• To look after the damages and invest the award as they think fit, in the same way as if they were looking after their own money.
• To take account of your wishes, without being bound by your request.
• To decide when to pay out money to you or for your benefit.

Why establish a PI Trust?

The main purpose of setting up a personal injury trust is to enable the injured person, or a member of their family, to be eligible for means-tested benefits.

An individual that has capital of £16,000 or more, will not be able to claim means-tested benefits until their capital has reduced below this threshold.

When compensation from a PI or Clinical Negligence claim is placed in a trust, it is ignored when assessing how much capital you have for the purpose of benefits assessment.

Which benefits and support may be affected if you do not establish a PI Trust:

• Universal Credit.
• Income support.
• Housing benefits.
• Council Tax reduction.
• Income related employment and support allowance.
• Tax credits.
• Residential care home funding,
• Local Authority domiciliary care services.

How does the PI Trust protect your entitlement:

Once the PI Trust has been established and the PIT bank account has been opened, you can request for your compensation award to be placed into the account.

The capital held under the trust and the income generated cannot be considered as being assessable capital and assessable income for the purpose of income assessment of benefits.

Finally, we set PI Trust to protect our client’s entitlement to benefits when they receive compensation because of a successful clinical negligence or personal injury claim. It is essential, in helping the injured person to decide whether to establish a personal injury trust, to gather details of their background circumstances, eligibility for means-tested benefits and long-term plans. Finally, whether a trust is the best option may only be decided once a cost/benefit analysis has been carried out. This will involve balancing the value of the means-tested benefits the injured person claims or is eligible to claim, against the cost of setting up the trust and running it in the long term.

If you are seeking further information or a legal advice with regards to a personal injury or a clinical negligence claim, contact us on 01618732001 or hello@clearlawonline.co.uk