Specialist Trust Creation and Administration Solicitors 
When you receive a lump sum of compensation following a personal injury claim, one of the most important financial decisions you can make is how to look after that money. A personal injury trust can be an excellent way of protecting your compensation, but as with any legal arrangement, it’s important to understand both the advantages and the possible drawbacks.
At Bonallack & Bishop, our specialist trust solicitors have extensive experience advising clients across England and Wales on whether a personal injury trust is right for them. Below, we outline the key pros and cons so you can make an informed decision.
Looking for help with setting up or managing a trust? call our specialist on FREEPHONE 0800 1404544 or one of our local office numbers [see below] for FREE initial phone advice.
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What is a Personal Injury Trust?
A personal injury trust is a legal arrangement where your compensation money is placed into a trust account managed by chosen trustees. These trustees (which can include you and others you appoint) are responsible for looking after the funds and making sure they are used for your benefit. And these type of trusts, cover compensation for both accident claims and medical negligence compensation.
Why choose Bonallack & Bishop for your personal injury trust
Our team includes Elizabeth Webbe, a Full Member of STEP – the Society of Trust and Estate Practitioners (the leading global organisation for trust specialist). She has huge experience with trusts, having previously been a lecturer for solicitors nationwide on trusts. The team also has plenty of experience in acting as professional trustees.
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Advantages of a Personal Injury Trust
1. Protecting Your Means-Tested Benefits
Perhaps the biggest reason to set up a personal injury trust is to avoid losing entitlement to means-tested benefits. If your compensation sits in your personal bank account, it will usually be counted as part of your capital and could push you over the threshold for benefits such as:
- Universal Credit
- Housing Benefit
- Council Tax Reduction
- Income-related Employment and Support Allowance
A personal injury trust keeps your compensation separate, so it does not affect your eligibility.
2. Clear Separation of Compensation
Placing your damages in a dedicated trust account prevents them from becoming mixed with your everyday money. This makes it much easier to show exactly how your compensation is being used if questions arise from the Department for Work and Pensions or the local authority.
3. Professional Oversight and Safeguarding
By choosing trustees you trust – often family members, close friends, and sometimes a solicitor – you ensure that your compensation is managed responsibly. This can be especially important if you are vulnerable or unable to manage large sums of money yourself.
And here at Bonallack & Bishop, we regularly act as trustees for a variety of clients.
Click here to read more about our Professional Trustee Solicitors service
4. Flexible Use of the Funds
Although the money is in a trust, it is still for your benefit. Trustees can make payments to you or on your behalf to cover things like care needs, equipment, housing adaptations, or even general living expenses.
5. Peace of Mind for the Future
Knowing that your compensation is safely ring-fenced provides reassurance. It ensures that the damages you received to help you recover, adapt, or secure your long-term well being are not accidentally used up or put at risk.
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Disadvantages of a Personal Injury Trust
1. Cost of Setting Up and Running the Trust
There are legal fees involved in establishing the trust and, depending on your arrangements, ongoing costs if you appoint a professional trustee such as a solicitor.
2. Some Loss of Independence
Because trustees have a say in how the money is managed and released, you cannot treat the funds as you would an ordinary bank account. For some, this can feel restrictive.
3. Choosing Trustees Carefully
It’s vital that you select trustees you can rely on. Poor decisions or disagreements between trustees could cause difficulties, especially if you include family members.
4. Long-Term Commitment
A personal injury trust can last for many years. While this is generally a good thing, it does mean you need to be comfortable with the ongoing involvement of trustees in your financial affairs.
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Do the Pros Outweigh the Cons?
For most people who are entitled to means-tested benefits, the advantages of a personal injury trust far outweigh the disadvantages. Even for those not currently claiming benefits, a trust can provide useful protection should your circumstances change in the future.
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Why Choose Bonallack & Bishop?
At Bonallack & Bishop, our specialist trust solicitors understand the complexities of personal injury trusts and the issues that matter most to you. We regularly advise clients on:
- Whether a personal injury trust is the best option in their situation
- The process of appointing suitable trustees
- Drafting and registering the trust deed
- Ongoing advice to ensure the trust continues to meet your needs
We pride ourselves on offering clear, practical advice in plain English. With years of experience helping clients safeguard their compensation, you can trust us to help you make the right decision for your future.
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Frequently Asked Questions About the Personal Injury Trust
Do I need a personal injury trust if I’m not on benefits?
Yes, in many cases it is still a good idea. Even if you do not currently claim means-tested benefits, your circumstances may change in the future. A personal injury trust ensures your compensation will not affect your eligibility later on.
Can I be a trustee myself?
Yes, you can act as one of the trustees, but you must appoint at least one other person alongside you. Many people choose a close family member, friend, or a solicitor.
How quickly should I set up a personal injury trust?
You usually have a 52-week “grace period” from the date you first receive compensation before it is counted as part of your capital for benefits. However, setting up a trust sooner is recommended to avoid complications.
Can I use the trust money however I want?
The funds are for your benefit, but you cannot simply withdraw them as if from a personal account. Trustees make payments to you or on your behalf, but they can cover a wide range of needs, from daily living expenses to specialist equipment or housing adaptations.
How much does it cost to set up a personal injury trust?
Costs vary depending on the complexity of the trust and whether you appoint professional trustees. At Bonallack & Bishop, we provide a clear upfront quote so you know exactly what to expect.
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Get Expert Advice Today
If you have received or are about to receive a personal injury compensation lump sum, don’t risk losing your benefits or mismanaging your settlement. Setting up a personal injury trust could be the smartest step you take.
Call our specialist trust solicitors today on 01722 422300 or complete our quick online enquiry form