Setting up a Personal Injury Trust during COVID: A Step-by-Step Guide
The future is unpredictable at the best of times, and currently more so than ever. We are all aware that there are many ways in which you could be left seriously injured, leaving you unable to earn a living, or even care for yourself. This may be because of serious physical or brain injury and if the injury was someone else’s fault, you may be entitled to compensation.
If you receive personal injury compensation, you may need to ensure that your award is protected in certain circumstances. It is therefore recommended that you set up a Personal Injury Trust.
What is a Personal Injury Trust?
A Personal Injury Trust is created to safeguard the compensation you have been awarded by the courts, or arranged out of court, following an injury that was someone else’s fault.
A Personal Injury Trust allows Trustees appointed by you to administer and manage your compensation on your behalf. It protects your funds from being included for the purposes of means tested benefits and/or care assessments.
As with any legal procedure, the steps in setting up a Personal Injury Trust must be followed correctly. Many of these, however, will not be as easy while COVID restrictions are in place. Nevertheless, it is still entirely possible to arrange a Personal Injury Trust.
1. When should the Personal Injury Trust be set up?
A Personal Injury Trust should be considered as soon as you are aware that you are to receive some compensation.
A Personal Injury Trust should be set up within 52 weeks of receiving your first payment of compensation. If you receive an interim payment, it will be 52 weeks from this payment. It is therefore best practice to consider setting up a Personal Injury Trust as soon as possible, rather than leave it to the end of the 52-week period.
It is worth noting that any unexpected extensions to lockdown arrangements might make the process of setting up a Trust take longer.
2. Discuss the type of Trust Fund with your solicitor
There are several types of Trust which can be used for a Personal Injury Trust, depending on your circumstances. The main types are:
- A Bare Trust; most common form of Personal Injury Trust, which will be wound up on your death and form part of your estate.
- A Life Interest Trust; which will be transferred to another nominated Beneficiary on your death.
- A Discretionary Trust; where the Trustees have a wide degree of discretion about both when to pay out money and what to do with the Trust on your death.
By discussing these with your solicitor (currently either by phone or video call) you can determine which type of Personal Injury Trust would best suit you and your circumstances.
3. Choose your Trustees
Perhaps the most crucial decision when setting up a Personal Injury Trust is the choice of Trustees. These will, after all, be the people who will be helping you manage how your compensation money will be used.
You may appoint anything from two to four Trustees, and you can be one of them if you wish. Otherwise, you may appoint relatives or close friends whom you have confidence in. On the other hand, it is sometimes an advantage to appoint a professional person, such as a solicitor, for expertise and to avoid any conflicts of interest.
You can appoint anyone over the age of eighteen with mental capacity to be a Trustee, but you must make sure that they are willing to take on the role.
4. Draw up the Trust Deed with your solicitor
Once you have decided on the details of your Personal Injury Trust, your solicitor will draw up the Trust Deed. Normally this will be given to you at an in-person meeting, where you will sign the Deed in front of witnesses.
However, various options are available allowing documents to be signed and witnessed without everyone being in the same room, and your solicitor will advise you on how to ensure your Personal Injury Trust can be made valid without compromising lockdown restrictions.
If you have recently received Personal Injury compensation, there is no time to lose to set up your Personal Injury Trust and safeguard your funds. Get in touch with us today to arrange or to find out more.