How does a personal injury trust fund work?

How does a personal injury trust fund work?

What is a personal injury trust? A PI trust allows someone who has received payment as a result of injury to hold and manage their funds to ensure that it is not taken into account for assessment of means-tested benefits or care contributions.

Is a personal injury trust worth it?

In summary, whilst setting up a personal injury trust may seem a little scary at the start, it is a quick, easy, and efficient way to ensure that your compensation is protected and that the compensated person is able to continue to receive support from the state for their lifetime.

What can I spend my personal injury trust money on?

So you, and any ‘trustees’ that you appoint, can use the money in your personal injury trust fund however you like….These means-tested benefits include:

  • Housing Benefit.
  • Council Tax Benefit.
  • Disabled Person’s Tax Credit.
  • Jobseeker’s Allowance.
  • Income Support.
  • Employment and Support Allowance.

How are personal injury trusts taxed?

The injured person will be entitled to the income of the trust and the trustees usually will have power to apply capital for his or her benefit if they decided to do so. For income tax purposes, the trust income is generally taxed on the basis that it belongs to the beneficiary.

How do I withdraw money from a Personal Injury Trust?

As soon as your compensation payout becomes available in your trust fund, you have access to it. However, in order to make a withdrawal from the fund, any trustees that you have appointed must sign the cheque or cash withdrawal form.

Do you pay tax on a personal injury trust fund?

3.2. 3 Payments of capital from the trust fund to you are not subject to income tax. 4 Gains in value (between purchase of trust assets and sale) are subject to capital gains tax but, as you will have an interest in your own trust, your own personal capital gains tax allowance should be available to set against them.