Personal Injury Trust: What You Need to Know

2 May 2024

Following a serious injury, you will face many challenges ahead not only to get your life back on track but also the often lengthy legal proceedings to claim compensation. Following a successful claim, you may then receive a large sum of money, which itself can be a further challenge, particularly if you are in receipt of means tested benefits. A Personal Injury Trust is one way that can resolve this challenge.

What is a Personal Injury Trust?

A Personal Injury Trust is a legal arrangement, which allows the compensation to be owned by the trustees in a separate entity so that it is not in your name personally but allows you all of the benefits, such as income and capital, as if it were in your sole name.

The Trust is managed by two to four chosen trustees who will manage the settlement on your behalf.

A Personal Injury Trust provides peace of mind, knowing that your settlement is protected for its intended purpose – to cover medical expenses, rehabilitation, loss of earnings and any other costs relating to your injury.

Benefits of a Personal Injury Trust

  • The main benefit of a Personal Injury Trust is that it creates ring-fence around the settlement funds, offering protection against some means-tested state benefits and allows you to continue to claim benefits and exemptions specifically available to injured people within the means tested benefits and care fees.
  • Protect your funds from future divorce or bankruptcy proceedings.
  • Restrict the access to the funds, for example, from unwanted attention from friends and family or 3rd parties, who may ask for money, knowing you have received a large settlement.
  • A trust can be beneficial to aid those who might be vulnerable, young, old, or simply unfamiliar with managing such a sum of money, including those who are in receipt of benefits.
  • Your funds are managed and looked after. Professional trustees have a wealth of knowledge and can provide guidance when making important financial decisions. This ensures that funds are managed appropriately to protect the individual’s long-term interests.

Different types of Personal Injury Trust

The most common types of trust are briefly set out below:

Bare Trusts

This type of trust allows the beneficiary a great deal of control of the trust. They can usually appoint and remove trustees and even break the trust.

The beneficiary, being the injured party has the right to access both the capital and income of the trust at any time and can make decision on how the funds are used.

Discretionary Trusts

In contrast, this type of trust grants the trustees discretion over how the trust funds are distributed and to which beneficiaries.

Life Interest Trusts

One (or more) of the beneficiaries will be entitled to the income, or enjoyment of the property for their lifetime and upon their death, there will be beneficiaries to receive the trust capital.

Whilst there is no restriction of which type of trust to use, it will be dependent on your own individual circumstances as to which would be best for you.

Our experienced team at Redkite will be able to assist in pointing you in the right direction.

How do I set up a Personal Injury Trust?

A Personal Injury Trust is created by a formal Deed and this will set out the named trustees, the nature of the type of trust and also the rules and obligations of the trustees.

Suitable Trustees need to be appointed to administer and manage the Trust. A minimum of 2 and a maximum of 4 are required. Each must be over the age of 18 and mentally capable of fulfilling the duty and responsibilities of being a trustee.

It is recommended to appoint a professional trustee, such as a specialist solicitor, given the complex rules governing Personal Injury Trusts, especially in cases where the trust holds larger sums.

I’ve already received compensation. Can I still set up a Personal Injury Trust?

Generally, it is advised that a Personal Injury Trust is established before you receive any funds, if possible. If your interim payment or settlement amount exceeds the threshold for benefits, you have a 52-week period in which the money will not count towards your capital for the purpose of your benefits eligibility. The 52 weeks starts from the date of the first payment. Therefore, if you receive an interim payment but the claim is ongoing, the 52-week period will start. It is advisable to set up the Personal Injury Trust at that point and that will allow further payments to go into the Personal Injury Trust.

The source of the funds is important to consider. If compensation money has been paid to you personally and mixed with your personal money, this will not be able to be put into the Personal Injury Trust at a later date.


We hope that this letter has offered some insight into how Personal Injury Trusts operate. Redkite Solicitors have a specialist team who are dedicated to navigating clients through the complex rules and regulations surrounding Personal Injury Trusts. We are able to assist in drafting the relevant paperwork, advising you on the most suitable Trust depending on your own personal circumstances, and tax liabilities, if applicable.

Redkite Solicitors can also act as professional trustees, allowing you to rest assured that your assets are being managed by independent trustees who will have your beneficiaries’ best interests in mind.

If you require further information or wish to consider setting up a Personal Injury Trust, please do not hesitate to contact us.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.