Personal injury trust fund

rosalindr8

My adult son was severely disabled in an accident and was awarded a personal injury compensation payment which was placed in a personal injury trust fund current account. It earns no interest. 

How can we invest the money within this fund whereby any interest does not affect his benefits.  

HillStreetBlues

rosalindr8 said:

My adult son was severely disabled in an accident and was awarded a personal injury compensation payment which was placed in a personal injury trust fund current account. It earns no interest. 

How can we invest the money within this fund whereby any interest does not affect his benefits.  

You really need paid legal advice so it's done correctly.
If a mistake is made then the protection of the trust fund could be lost.

It is far too risky to depend on advice on any forum, no matter how well meaning it may be.

kaMelo

rosalindr8 said:

My adult son was severely disabled in an accident and was awarded a personal injury compensation payment which was placed in a personal injury trust fund current account. It earns no interest. 

How can we invest the money within this fund whereby any interest does not affect his benefits.  

The fund trustees or your son's legal representative(s) would be an obvious starting point.
As above, without knowing the whole picture in terms of what support is required and for how long it may be needed it's impossible to offer any suggestions as getting it wrong could have major implications.

With regard to any potential loss of benefits, especially if the injuries have a long term/lifelong impact, this would usually be factored into the compensation awarded.
As in they come to a compensation value, then look into potential loss of benefits due to receiving the compensation and if determined it will affect benefit qualification, add an additional amount of compensation to offset the potential loss of benefits going forward (and any possible benefit overpayment recovery) 
This ensures the recipient actually benefits from the entire compensation award.

HillStreetBlues

kaMelo said:

With regard to any potential loss of benefits, especially if the injuries have a long term/lifelong impact, this would usually be factored into the compensation awarded.
As in they come to a compensation value, then look into potential loss of benefits due to receiving the compensation and if determined it will affect benefit qualification, add an additional amount of compensation to offset the potential loss of benefits going forward (and any possible benefit overpayment recovery) 
This ensures the recipient actually benefits from the entire compensation award.

If the trust has been set up correctly there will be no loss of benefits as injury trust funds are exempt from mean tested benefits.
The danger is if moved incorrectly then the protection is lost and becomes capital.

Any interest  or earnings from the fund if paid into the trust is protected, if not paid into the fund it becomes capital.

Very few banks now allow trust funds  and the interest is very low on the ones that do.
The other option is for the fund to invest.

Albermarle

Very few banks now allow trust funds  and the interest is very low on the ones that do.
The other option is for the fund to invest.

OP - Away from the legalities of the trust fund, the general advice is to only invest where money is unlikely to be needed for many years. This is because investments go up and down in the short to medium term, but in the long term the trend has always been up. Usually 5 years is said to be the minimum time, but 7 or 8 years is better and over 10 years is best.

If some of the money at least will not be needed for many years, then it is not good if it is languishing in a low interest paying account and looking at investing some of it would be sensible.

To be clear by investing, I mean mainstream funds in a 'buy and hold' strategy . Not trading individual shares, or anything unregulated like crypto.

ManekiNeko

I was awarded compensation myself some years ago. The money was placed into a Personal Injury Trust account and, as you say, earnt little to no interest.

After some years, and with the agreement of my Trustees, the money was used to buy me a home. The Trust will recoup its money upon sale of the property. The legal advice I had was that it's possible to structure this either as an investment by the Trust, or as a fixed sum.

It's easier to understand with an example, so let's imagine my Trust had £10k in it. My Trust could either invest £10k into the house - let's say it cost £100k, so the Trust's investment is 10 per cent of the property value. In this case, the Trust would receive back 10 per cent of the value upon the future sale of the home, which could be more or less than the £10k invested. The alternative is for the Trust to put in (say) £10k into the house purchase, and receive a fixed £10k back upon sale (regardless of how much the home is now worth).

This is as close to an investment as I would personally care to use Trust funds for. That money is supposed to compensate me for my injuries for the rest of my life, and I am very risk averse, as well as thoroughly sans any understanding of stocks, shares, and the like. That's my preference, but it may not be everyone's.

Do note that such a process requires a solicitor to set up all the paperwork correctly. And, self-evidently, your son's circumstances are no doubt different to mine, so this may or may not be the appropriate route for him; in any case, I would advise you finding a suitable solicitor to help advise and guide you (or his Trustees, if you are not one). My solicitor is a specialist in Trusts, among other things. I would imagine you would look for someone similarly qualified, but do caveat that with knowing I have no idea about anything legal; I found mine by word of mouth recommendation.

Also, I believe that the Trust can bear the necessary legal costs for Trustees to receive this advice, although you or your son may prefer to pay for it yourselves.

I would add that depending on the nature of your son's injuries, it might be advisable to keep at least some of the Trust funds available as liquid cash. For example, he might suddenly need to pay for health-related costs, or need more care. If the money is tied up in a fixed-term investment, he may not be able to access the care he needs in a timely fashion. Again, individual circumstances make such a difference here.

I hope that my personal experiences and thoughts are of some use to you in considering this matter.