If you receive damages for a personal injury, it is important that you carefully consider what to do with the damages. One option is to set up a Personal Injury Trust. We look at what this means, and how a Personal Injury Trust could benefit you.

How does a Personal Injury Trust work?

If you are in receipt of means-tested benefits (‘MTBs’) and receive a payment that increases your capital to over £6,000, your MTBs are likely to be reduced. If the payment increases your funds to over £16,000, your MTBs are likely to stop altogether.

Therefore, there is a risk that if you are injured and are awarded damages in a Personal Injury claim, your MTBs may reduce or even stop. However, one of the main benefits of a Personal Injury Trust is that any funds held in the trust are disregarded for the purposes of MTBs. The same goes for any income generated by the trust. However, the funds are available for the injured person if and when they are required. If this sounds a bit like you can have your cake and eat it, you can!


MTBs are calculated on a ‘household’ basis. Therefore, if somebody who lives with the injured person receives MTBs, it is important to consider a Personal Injury Trust; the payment may affect the other person’s benefits.

Even if nobody in the household receive MTBs at the time of the award, they may become entitled in the future. Therefore, having the funds in a Personal Injury Trust may be beneficial further down the line.

Types of trust

There are typically three different types of trust used:

  • A Bare Trust. This is the simplest type of trust; the Trustees hold the funds for the injured person with no strings attached. Nobody else other than the injured person has an interest in the Trust Fund.
  • A Life Interest Trust. This type of trust gives the injured person the right to the income from the Trust Fund for their lifetime. After this, the capital passes to other beneficiaries.
  • A Discretionary Trust. This type of trust has a number of beneficiaries. The trustees have a large amount of flexibility as to which of those beneficiaries benefit from the fund, and when.


As well as Personal Injury Trusts assisting with your benefits, they also have other advantages, including:

  • Protecting the damages against being used to fund care costs, including care home fees;
  • If the injured party is unable to deal with their own finances, or if they are just not very good with money, the Trustees can handle the funds for the injured person;
  • Preventing the damages from being lost during a divorce or bankruptcy; and
  • Preventing money-grabbing friends or relatives from taking advantage of the injured person.

A Personal Injury Trust may not be appropriate in every case. It is important that an injured person receives expert legal advice about whether a Personal Injury Trust is right for them and, if so, what type of trust to use.

As Levi Direct is part of Levi Solicitors LLP, we have the benefit of being able to work with experts in Trusts to get the best advice for you. We offer a free, no obligation, initial meeting which is a great opportunity for you to find out what your options are. Contact us today on 0800 988 7756.

If you wish to discuss a personal injury claim and your options,call our team now on 0800 988 7756

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