5 reasons why you should put your compensation into a PI Trust Fund
If you have been involved in a serious accident, or have suffered as a result of medical negligence, you may be entitled to receive compensation in the form of a legal reward or an insurance pay-out, to help fund any new financial or lifestyle needs that you may now have.
Compensation pay outs vary according to the injury suffered and If you are expecting to receive a compensation award of £6,000 or more, then we recommend setting up a Personal Injury Trust Fund (or PI Trust Fund).
We thought we would share our 5 reasons why you should put your compensation into a PI Trust Fund with you here.
1) Protect your means-tested benefits
In the event that you receive £6,000 or more in compensation, you are at risk of having your means-tested benefits reduced or even lost.
This is because the way in which means-tested benefit entitlements are decided, is based on how much money or financial assets you own. And if you receive more than £16,000 it is likely that you will not be entitled to receive any means-tested benefits at all.
When you set up a PI Trust Fund, HMRC will ignore your compensation when assessing your entitlement to means-tested benefits, such as:
- Housing Benefit
- Income-based Jobseeker’s Allowance
- Income-related Employment and Support Allowance
- Child Tax Credit
- Working Tax Credit
- Income Support
Find out more about how your compensation will affect your benefits here.
2) Protect your entitlement to any local authority funded care
If you need to go into a care home, you are at risk of losing funding entitlement for local authority funded care, if you receive £6,000 or more in compensation. Instead, it is likely that you will need to use your reward to fund your care.
Having a PI Trust Fund will protect both your compensation and funding entitlement from the Local Authority.
3) Keep control of your compensation
The advantages of opening a PI Trust Fund are not only limited to receiving means-tested benefits and funded care. Having a PI Trust also enable you to control how you wish to use your compensation pay out according to your needs.
For example, if you are not receiving benefits you might not want your compensation to be expended on care costs or other third parties.
A PI Trust Fund will allow you to spend the reward on any treatment, facilities, or care that you now need.
Having a PI Trust gives you peace of mind that your compensation is protected.
4) Manage how you spend your money
Another advantage of opening up a PI Trust Fund is that it makes it easier to manage your money.
Keeping this money separate from any benefits or any other savings pots that you have means that you can decide how you wish to spend it – without the fear of any other expenditure, or third parties, eating into this.
For instance, you may choose to use your means-tested benefits to fund your housing, bills, food and day-to-day expenditure, then to use your compensation to fund bigger purchases or a new vehicle.
Your money in a PI Trust Fund is yours to spend, however you wish. Or, if you lack the mental capacity to manage your own finances, your Trustees will be able to help you manage it.
5) Protection from bankruptcy or divorce settlement
A PI Trust Fund will also protect your compensation fund should you ever go bankrupt or go through a divorce.
Your compensation is ring-fenced and is protected so that no one else can take your funds from you in circumstances such as these.
At Osborne Morris & Morgan our Medical Negligence and Personal Injry Trust Teams work closely together to ensure that you receive the best possible advice and expert service for your legal needs. If you would like to know more about making a claim for compensation due to Medical Negligence , or if you would like to discuss setting up a PI Trust Fund, please contact our specialist team on 01525 378177 or you can contact us online.