Personal injury trusts and over £85k value to protect

Jolly_F

Hello,

Ive been looking at setting up a personal injury trust and now really need to move this forward so it’s done within the 12 month window. I have researched quite a bit and found many answers to questions but the actual working of a trust, the movement of its money and importantly the protection is still a concern and something I’m struggling to find information on. 

I have to apologise up front for missing anything that should be obvious as my neuropathic medication can scramble me somewhat.

I cannot work now as a result of an accident and my award was higher because of this. I intend to open a trust and other than slim pickings (metro, Skipton and one other I think) to hold a trust account, made worse by all the press around metro bank I’m not sure what to do there. 

But if all banks did similar trust accounts my main worry is any one bank or institution (not sure if that is the correct term) is guaranteed up to £85000. What happens when people receive hundreds of thousands or even millions (not me sadly). How do you protect the money? Do you put the lump sum into the trust account and then very quickly split it into several different banks savings account to protect? Is there another way? Providing you can do that anyway. 

I know the NS&I direct saver guarantee much higher amounts but believe their products are for individuals only and cannot be used by a trust.

Im not quite sure how assets, say a car or a house etc bought using personal injury settlement or interim payments, are then sold, how the process should go to show where the money has come from and then be able to feed a sum back into the trust if an asset is sold. There’s more on rules and how to go about opening an account, the solicitors needed to do the paperwork but specifics of how it works day to day and in still uncertain times necessitate the need to protect the money. Its not just like one can make a mistake and then just go back to work if they need money. I don’t think I could handle any more loss. A large part of why I’ve shyed away from investing the money even though general consensus is in the long term history has shown it to be the best way to grow but need to be in it for the long term. It’s never guaranteed and we are in times where we’ve had a number of first time world effecting events. 

Regards,
Justin

Albermarle

What happens when people receive hundreds of thousands or even millions (not me sadly). How do you protect the money?

Putting aside people getting Millions ( out of my knowledge also) someone receiving a large lump sum, first have to think about what the money is for, how and when it will be spent ( or not).

Money needed within the next 5 years should be kept as cash savings, whilst money needed in more than 10 years time, should normally be invested. 

If you keep money as cash savings, you should limit the amount with each bank/building society to £85K ( including future interest gained) this could mean having multiple accounts. As you say any savings with NS&I are protected 100% though.

However you do have the problem of finding enough accounts that will deal with a trust. Perhaps it is worth noting that the chance of a bigger institution failing and not being taken over or bailed out by the government is actually very small.

HillStreetBlues

I will have to set up a personal injury trust in the next couple of years, so have like you trying to read up on what it involves.
I think certain assets like property are easier as the property will be owned by the trust, so any sale proceeds would be the trusts, so a clear paper trail.
With a car it would have to declared for insurance that the trust was the owner, and say you as registered keeper.

Jolly_F

The difficulty I have is I had paid off so much of my property over the 10 odd years I had been there before the accident. During recovery of 5 to 6 years I used interim payments to cover the mortgage and when settled I paid the final amount. So I own part and I guess the trust would own part but after the event. 

Same with cars, I bought them with interim / settlement money but in my name as the trust isn’t set up as yet.

Im not sure how I feel about investments, I know people say history and trends always show a good return but you need to play the long game. I just don’t feel we are in normal times and that things may very well all go belly up. I’m not and expert, not even an amateur in investing but loosing the money that needs to keep me for the rest of my life is a real worry and stress. Needing to maintain 5-10 separate accounts doesn’t seem straightforward either. Also paying a financial adviser to look after the money is really expensive and there’s no guarantee on X% over x years or something. The only guarantee is you need to pay them, even if it all goes wrong and you loose the lot. I just don’t know how I can decide / choose the right path. 

Sorry I went into a bit of personal difficulty with it all, my psychological issues and neurological meds don’t help, confusion and dissociation are not great attributes to making such important decisions, but I can’t just bury my head in the sand either. Which is what I’ve sort of been doing since February 

HillStreetBlues

Have you taken legal advice about the trust?
There is no time-frame to set up a PIT, the 12 months window only applies to income related benefits. The 12 months start when the first payment is made and that includes interim payments.

Jolly_F

That is the first time I’ve heard about it being from the point of first interim. I will need to look into that before anything else. I’ll report back.