Personal Injury Trusts - can you set one up without a lawyer?

Options
ticktack_2
ticktack_2 Posts: 172 Forumite
in Benefits & tax credits
About 25 years ago I received a compensation payment of £14,000. I want to place the money in a trust because I soon may need to apply for housing benefit and pension credit.

I understand I need at least two trustees, who will be my son and daughter. Is it possible for me to set the trust up myself, to save legal fees?

Also, a lot of the lawyer's web pages tell you that one of your trustees "ought" to be a professional person, such as an accountant or (ahem) a lawyer. Is this required? My children are both professionals but they're not lawyers or accountants. Do I really have to pay a lawyer to be a trustee?

Any advice on this would be very welcome.
«134

Comments

  • xylophone
    xylophone Posts: 44,413 Forumite
    Name Dropper First Anniversary First Post
    Options
    Twenty five years ago......I've an idea you might be out of time?
    See http://www.specialneedstrusts.co.uk/faq/

    "The idea is to stop the recipient of the funds holding or being seen to hold any compensation themselves. So when the compensation comes in, it should be paid directly into the special needs trust. There are regulations that allow you to hold personal injury compensation for a limited period of time without setting up a trust. However in our view, the wording of these regulations still creates the risk of losing means tested benefits."

    http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS53Capital_income_and_means_tested_benefits_fcs.pdf.pdf?dtrk=true


    Apart from that, setting up a Trust requires the input of someone with expertise?
  • Whiteknight
    Whiteknight Posts: 483 Forumite
    First Post First Anniversary Combo Breaker
    Options
    ticktack wrote: »
    About 25 years ago I received a compensation payment of £14,000. I want to place the money in a trust because I soon may need to apply for housing benefit and pension credit.

    I understand I need at least two trustees, who will be my son and daughter. Is it possible for me to set the trust up myself, to save legal fees?

    Also, a lot of the lawyer's web pages tell you that one of your trustees "ought" to be a professional person, such as an accountant or (ahem) a lawyer. Is this required? My children are both professionals but they're not lawyers or accountants. Do I really have to pay a lawyer to be a trustee?

    Any advice on this would be very welcome.

    I'm sorry but I read your question as "I have a bit of money and want to make sure that I don't lose any possible entitlement to benefits due to this money but want to make sure I don't lose money while hiding it?"

    Depending on how much money you actually have and why you got the compensation it maybe disregarded for Pension Credit purposes anyway - regardless of how much of that £14k you have actually spent!
  • rogerblack
    rogerblack Posts: 9,446 Forumite
    Options
    ticktack wrote: »
    About 25 years ago I received a compensation payment of £14,000. I want to place the money in a trust because I soon may need to apply for housing benefit and pension credit.

    As the other poster said - you're out of time.
    It can't be in your account for 25 seconds, nevermind 25 years.
    If at any time you have access to the money, and place it in a trust, so you can get more benefit, you will be treated as if you still had access to that money.
  • ticktack_2
    ticktack_2 Posts: 172 Forumite
    Options
    Thanks for your reply. I know there may be an issue with the timing. Another page says:

    "A personal injury trust can be set up ‘late’ after funds are received but if a trust is not set up before receipt then lost benefits may take time to reinstate. It may become increasingly difficult to ascertain what arose from the award and what did not so even if a late decision is made where a person is not actually in receipt of benefits an ‘audit trail’ may be difficult to follow. This could lead to difficulties in the future when a claim for benefits is made."

    stepjournal dot org slash pdf slash TQR2005i4p35.pdf

    I don't understand what it means about "ascertaining what arose from the award". I have the documentation proving the compensation award, and I wasn't claiming benefits then and haven't since, so I don't know why an "audit trail" would be needed. But I guess you're right, I'll probably have to get legal advice.
  • fogartyblue.
    fogartyblue. Posts: 482 Forumite
    Options
    rogerblack wrote: »
    As the other poster said - you're out of time.
    It can't be in your account for 25 seconds, nevermind 25 years.
    If at any time you have access to the money, and place it in a trust, so you can get more benefit, you will be treated as if you still had access to that money.

    Correct!

    The money MUST go straight into the trust which would normally have been set up by your solicitor.

    To think that you can dump it in one now after 25 years in order to avoid it being treated as capital is a joke!!

    Simple question: WHY wasn't it put in trust 25 years ago?

    The answer that the OP would give to that question is the reason why it cannot be done now!
  • ticktack_2
    ticktack_2 Posts: 172 Forumite
    Options
    Whiteknight wrote: »
    I'm sorry but I read your question as "I have a bit of money and want to make sure that I don't lose any possible entitlement to benefits due to this money but want to make sure I don't lose money while hiding it?"

    Hiding it? In what way would I be "hiding" it?

    You are correct that I don't want to lose entitlement to benefits. That's why personal injury compensation is ignored for benefits, so that the recipient doesn't lose entitlement because of the compensation payment.
    Depending on how much money you actually have and why you got the compensation it maybe disregarded for Pension Credit purposes anyway - regardless of how much of that £14k you have actually spent!

    Huh? How could I put it in a trust if I had spent it? And if I had spent it, obviously it wouldn't affect any application for benefit.
  • ticktack_2
    ticktack_2 Posts: 172 Forumite
    Options
    rogerblack wrote: »
    As the other poster said - you're out of time.
    It can't be in your account for 25 seconds, nevermind 25 years.
    If at any time you have access to the money, and place it in a trust, so you can get more benefit, you will be treated as if you still had access to that money.

    But of course I would still have access to the money. That's the whole point of a Personal Injury Trust.

    Do you know of a document online which sets out the rules? That would be very useful.
  • ticktack_2
    ticktack_2 Posts: 172 Forumite
    Options
    fogartyblue. wrote: »
    Correct!

    The money MUST go straight into the trust which would normally have been set up by your solicitor.

    If you know the rules, could you please point me to something that explains them? Thanks.
    To think that you can dump it in one now after 25 years in order to avoid it being treated as capital is a joke!!

    Why? That's the point of a Personal Injury Trust -- to avoid the compensation being treated as capital.
    Simple question: WHY wasn't it put in trust 25 years ago?

    Because I wasn't receiving benefit so there was no reason to set up a trust, and it was never suggested that I should do so.
    The answer that the OP would give to that question is the reason why it cannot be done now!

    I don't understand what you mean.
  • ticktack_2
    ticktack_2 Posts: 172 Forumite
    edited 25 March 2012 at 8:37PM
    Options
    Whiteknight wrote: »
    ... it maybe disregarded for Pension Credit purposes anyway

    Yes! It looks like you may be right. Thanks for that.

    I'm not allowed to post links, but for anyone in future who may be searching for an answer to this question, look on the Turn2us website in the "Ask an Expert" feature, and go to "Disability Benefits".

    "... if you are over Pension Credit age the amount of the personal injury compensation you were paid will not count as capital. If you are under Pension Credit age, the payment will not count as capital for 52 weeks from the date the payment was received - if you put it into a trust it is ignored without time limit."

    I will ring the Pension Credit advice line tomorrow to check it out with them.

    Hooray if no trust is required! :j
  • rogerblack
    rogerblack Posts: 9,446 Forumite
    edited 25 March 2012 at 11:45PM
    Options
    ticktack wrote: »
    "... if you are over Pension Credit age the amount of the personal injury compensation you were paid will not count as capital. If you are under Pension Credit age, the payment will not count as capital for 52 weeks from the date the payment was received - if you put it into a trust it is ignored without time limit."

    I will ring the Pension Credit advice line tomorrow to check it out with them.

    Hooray if no trust is required! :j


    This is shorthand, and is incorrect.
    It is not counted as capital for 52 weeks (till 24 years ago).
    However, then it is counted as capital, unless at the time you got the compensation, it was put directly into a trust.

    Once it has gone into your bank account - it can only ever be ignored for 52 weeks - and putting it into a trust later does _not_ equal a 'personal injury trust' which is exempt, even if the initial source of money was the personal injury payout into your bank account.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards