At great risk of overusing the word ‘unprecedented,’ it is times such as these where clients receiving personal injury payments, need to consider the effect of their award money, on their current and future household income.
Some view personal injury trusts as purely for clients who are currently in receipt of state benefits. In a covid / post covid world, the threat to health and job security is more prevalent than ever.
Let’s have a quick look at some of the personal injury trust misconceptions.
PI trusts for benefits only
The main driver for establish a PI Trust has been to protect a household’s current entitlement to state benefits. However, PI Trust can also ringfence an award against any future applications for state benefits and local authority funding, and should therefore be considered, as a means of guarding against the effects of ageing or deteriorating health.
Aside from state benefits, establishing a PI Trust also helps clients with their budgeting and protects them from unscrupulous individuals, who may be attracted by the damages award.
Trusts can only be set up in 52 weeks
This is incorrect. There is no time limit on when a PI Trust can be set up. Also, for larger cases, we would always advocate setting up at the trust upon receipt of an interim payment.
Difficult to access money
Accessing funds is as simple as writing a cheque. In most cases, the client can have up to £6,000 in their household bank account. Once that money is exhausted, they can simply top it from their PI Trust by writing a cheque to themselves. They can also pay off debts or buy large items to third parties direct from the trust.
Only earns bank interest
With base rates so low, interest rates on current accounts are negligible. For no extra cost, we can advise clients on term deposit accounts, or other types of account which offer higher rates of interest. Clients may wish to invest part of their award in a well-managed investment portfolio, safe in the knowledge that all interest, dividends and growth is disregarded by the DWP.
The Nestor PI Trust service incorporates a free assessment of your client’s eligibility and suitability for a PI Trust. If the client decides to establish the Trust, we charge a one off fee of £595 + VAT. For that we arrange the deed, open a trustee bank account and notify the DWP.
To find out more and to see our suite of downloadable documents, please click here.
Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Nestor as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.