A personal injury trust account in the UK is a special type of bank account used to hold compensation received for a personal injury claim, such as damages from an accident, medical negligence, or other injury-related cases. The primary purpose of a personal injury trust is to ensure that the compensation does not affect the injured person’s eligibility for means-tested benefits or care support.

Key Features of a Personal Injury Trust:

1. Exemption from Means-Tested Benefits:

   • Without a trust, compensation could be counted as part of your financial assets. If your total assets exceed a certain threshold (e.g., £6,000 for certain benefits), this might reduce or disqualify you from receiving benefits.
   • Funds held in a personal injury trust are disregarded for means-tested benefits purposes as long as the trust is correctly set up.

2. Protection of Funds:

   • A trust protects the compensation from being spent unintentionally or accessed by creditors, family members, or others.

3. Set-Up Timeframe:

   • It’s recommended to set up the trust within 52 weeks of receiving the compensation. During this period, the compensation is generally disregarded for means-testing purposes, even if a trust isn’t yet in place.

4. Trustees:

   • The trust requires trustees, who are individuals responsible for managing the account. Typically, you (the injured party) can be a trustee, but it’s advisable to appoint at least one or two other trustworthy individuals, such as family members or professionals.

5. Types of Trusts:

   • The most common type used for this purpose is a bare trust (simple trust), where the injured person retains full control over how the funds are used, but the funds are still legally held in trust.

6. Uses of the Funds:

   • The funds can only be used for your benefit, such as medical care, housing adaptations, or general living costs. However, trustees should ensure the spending aligns with the trust’s purposes.

The Personal Injury Trust Account from Money Carer

Professionals such as solicitors, independent financial advisors (IFAs), and family trustees can open a personal injury trust bank account on the Monika banking platform within minutes. The account can then be used to receive deposits and make payments from a bank account to support the beneficiary in line with the trustee’s fiduciary responsibilities.

As Money Carer has a unique and long-established relationship with Zempler Bank, trustees can immediately benefit from the banking services technology and payment innovations developed by Money Carer and used by hundreds of law firms and local authorities to help them fulfil their fiduciary duties in supporting the vulnerable people under their care.

To open a personal injury trust bank account, simply contact us.

A trust is a legal arrangement that allows money, property, or other assets to be managed on behalf of someone else. It provides a structured way to ensure that these assets are used for the benefit of the intended individual(s), often under specific conditions outlined by the person who created the trust.

Key Parties Involved in a Trust

Every trust involves three main roles:

1. The Settlor: This is the person who creates the trust by placing money or assets into it. In Scotland, the settlor is referred to as the “Granter.” The settlor also decides the terms of the trust, including who will benefit and how the assets should be managed or distributed.
2. The Beneficiary: This is the individual or group of individuals who will benefit from the trust. Beneficiaries can receive income, assets, or other advantages from the trust, depending on its terms.
3. The Trustee: This is the individual, group, or institution responsible for managing the trust. Trustees ensure the trust’s assets are managed in line with the settlor’s instructions and for the benefit of the beneficiary. Trustees have a legal duty to act in the best interests of the beneficiaries and to follow the terms of the trust.

Advantages

1. Protection of Means-Tested Benefits

• Preserves eligibility: Compensation placed in a personal injury trust is disregarded when assessing eligibility for means-tested benefits such as Universal Credit, Income Support, or Housing Benefit.
• Mitigates financial impact: Without a trust, compensation could push you over the savings threshold, causing you to lose benefits.

2. Protection of Assets

• Ring-fenced funds: The trust ensures that the compensation is separate from your personal finances, reducing the risk of mismanagement or impulsive spending.
• Asset preservation: Helps protect the compensation from creditors, divorce settlements, or other claims.

3. Flexibility and Control

• Controlled access: Trustees (appointed by you) manage the funds, which can ensure that money is used for its intended purpose, such as healthcare, housing, or other necessities.
• Tax planning opportunities: Trusts can sometimes offer tax advantages, though this depends on specific circumstances.

4. Peace of Mind

• Professional oversight: Trustees can include professionals who provide financial advice, ensuring the money is invested and used wisely.
• Longevity of funds: Ensures that funds last over the long term, particularly for those with ongoing care or medical needs.

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Disadvantages

1. Costs

• Set-up costs: Establishing the trust requires legal assistance, which can be expensive.
• Ongoing fees: Trustees, especially professional ones, may charge fees for managing the trust. There may also be costs for preparing annual accounts.

2. Administrative Burden

• Ongoing compliance: Trustees must comply with legal and regulatory requirements, which can involve paperwork and reporting.
• Time-consuming decisions: Trustees must collectively agree on how the funds are managed and spent, which can delay decisions.

3. Limited Access

• Restricted use of funds: The trust can only be used for specific purposes, as outlined in the trust deed. You’ll need trustee approval for withdrawals.
• Potential frustration: Some beneficiaries find it inconvenient not to have direct access to their compensation.

4. Tax Implications

• Tax liabilities: While many personal injury trusts have limited tax exposure, they may still incur tax on income or capital gains generated within the trust if they exceed certain thresholds.
• Inheritance Tax (IHT): Depending on the type of trust, there could be IHT implications every 10 years or when assets are distributed.

5. Trustee Challenges

• Trustee selection: Choosing suitable trustees can be difficult. Trustees need to act in your best interests and manage the trust responsibly.
• Trustee disagreements: Conflicts among trustees could lead to delays or legal disputes.

6. Potential Impact on Relationships

• Dependency on trustees: Relying on trustees for access to funds can strain personal relationships if friends or family members are appointed.

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Who Should Consider a Personal Injury Trust?

• Individuals receiving a significant compensation payout and who rely on means-tested benefits.
• People who need long-term financial planning for ongoing care or medical expenses.
• Those seeking to safeguard their compensation from financial mismanagement or external claims.

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Types of Personal Injury Trusts

• Bare Trusts: The beneficiary has direct entitlement to the funds, and income tax is paid at the beneficiary’s rate.
• Discretionary Trusts: Trustees decide how and when to distribute funds, offering more flexibility and protection but with more complex tax rules.
• Life Interest Trusts: The beneficiary has the right to income generated by the trust, while capital is preserved for others.

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Key Takeaway: A personal injury trust can offer significant benefits in terms of financial protection and means-tested benefit preservation. However, it is important to weigh the costs, administrative responsibilities, and restrictions. Consulting with a solicitor or financial adviser is crucial to determine if a trust aligns with your circumstances.

If you would like to open a personal injury trust bank account on the Monika platform, simply contact us and our friendly banking team will be happy to assit you with this.

The cost of setting up a personal injury trust in the UK can vary depending on the complexity of the trust, the type of trust chosen, and the professional services you use (e.g., solicitors, financial advisors). Here’s a breakdown of the typical costs:

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Typical Costs

1. Basic Setup Costs
   • For a straightforward Bare Trust (the simplest type of personal injury trust), the setup cost is typically between £300 and £600.
   • For more complex trusts like Discretionary Trusts, costs can range from £1,000 to £2,500 due to the additional legal and tax considerations.
2. Professional Fees
   • Solicitors’ fees: Solicitors usually charge a fixed fee for drafting the trust deed and advising on the setup. This is often included in the setup cost mentioned above.
   • Financial advice fees: If you seek advice on managing or investing the compensation, independent financial advisors may charge additional fees, either as a flat fee or a percentage of the investment.
3. Ongoing Administration Costs
   • If you appoint professional trustees (e.g., a solicitor or accountant), they may charge annual fees for managing the trust. This can range from £500 to £2,000+ per year, depending on the complexity of the trust and the level of involvement required.
   • DIY trusts (where family members or close friends act as trustees) generally have no ongoing professional fees but may still require occasional legal or accounting advice.
4. Additional Costs
   • Tax advice: For discretionary trusts, you may need advice on income tax, capital gains tax, or inheritance tax implications. A one-off consultation with a tax advisor could cost £200 to £500.
   • Bank account fees: Many trusts require a separate bank account, which may incur maintenance fees, especially for business or trustee accounts.

It is worth noting that setting up a Personal Injury Trust on the Monika Banking Platform is free of charge.

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Cost Factors

• Type of Trust: Bare Trusts are simpler and less expensive than Discretionary Trusts, which require more detailed drafting and administration.
• Professional vs. Non-Professional Trustees: Using family or friends as trustees reduces costs but may lack expertise.
• Size of the Compensation: Larger settlements may require more complex trusts and professional advice, increasing costs.

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How to Minimise Costs

• Shop around: Compare fees from different solicitors or trust providers.
• Use fixed-fee services: Many solicitors offer fixed-fee packages for personal injury trusts, avoiding unexpected costs.
• Consider your needs: If the trust is for straightforward purposes, a Bare Trust may suffice, reducing setup and administration costs.

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Funding the Trust Setup

The cost of setting up the trust can often be paid from the compensation awarded, ensuring that it doesn’t require out-of-pocket expenses.

For an exact quote, it’s recommended to consult a solicitor experienced in personal injury trusts. They can assess your needs and provide a clear breakdown of the costs involved.

To open a personal injury trust bank account, simply contact us.

Yes, you can transfer your deputy bank accounts to the new bank accounts opened on the Monika platform.

If you are a professional deputy and wish to use the Monika banking platform. In that case, we have simplified transferring your deputyship accounts using our unique access to the Current Account Switch Service (CASS) In fact, we have engineered the ability to bulk transfer current accounts so as to make the process as hassle free as possible.

As with standard current account switches, all inbound payments made to the old deputy accounts will be automatically redirected to the new deputy accounts opened on the Monika platform. Similarly, any existing direct debits and standing orders set up on the old account will be automatically ported to the new account, with the old account closed and the entire balance transferred to the new account.

All this happens within seven working days and is completely free of charge.

To discuss arranging for a bulk transfer of deputyship bank accounts, just get in touch and our friendly banking team will be happy to discuss the process and your requirements.

Read an article about how Pay.UK and Money Carer have worked together to develop the Current Account Switch Service to promote financial inclusion for vulnerable clients.

Absolutely.

We often suggest that you put us in touch with your solicitor or financial advisor when they are in the process of setting up the trust, as they can supply us with a copy of the Trust Deed as we will need this to open a personal injury trust bank account. With your permission, we can also supply them with the trust account bank account details when it is opened so they can transfer the funds from their client account if they receive any money awarded.

As your Monika account can also be used to store and view important documents such as the Trust Deed, your solicitor or financial advisor will be able to upload documents into your Monika account, and you can receive notifications when any new activity on your account occurs. You can receive notifications via email or message notifications within our free smartphone app.

You will also be able to see the balance of the personal injury trust account and view any stored documents as well along with lots of other features.

Open a PI Trust Bank Account by contacting our friendly banking support team.

Yes, you can, and its simple to do so.

Firstly, we will open a free Personal Injury Trust bank account for the trustees. Please provide us with a copy of the Trust Deed, the relevant identification details of each trustee and the beneficiary of the trust. Our banking partner, Zempler Bank, will then undertake the necessary KYC (Know Your Customer) checks using the information you have provided.

Once we have received the confirmation from Zempler Bank that all the documentation is in order, we can open the trustee managed bank account in the name of the beneficiary within a matter of minutes. If there are any queries that arise from the documentation you provide, our banking team will liaise with you directly to obtain any additional information Zempler Bank may require in order to proceed with the opening of the account on the Monika platform.

Once we have opened the personal injury trust account, you will be able to transfer the money held in the old trust account into the new trust bank account opened on the Monika platform so that the trustee can then manage the funds more easily using the unique features and functionalities available within Monika.

In the UK, several high street banks and building societies have recently withdrawn their personal injury trust accounts, citing increased costs, complexity, and compliance challenges. Notably, Nationwide Building Society has closed such accounts, leaving customers to seek alternatives.

This trend has significantly impacted vulnerable individuals, including those with disabilities or learning difficulties, who rely on these accounts to manage compensation funds without affecting their eligibility for means-tested benefits. The closures have led to difficulties in accessing essential funds, causing distress among account holders.

The Monika Banking Platform provided by Money Carer, the UK’s largest provider of appointee money management services for vulnerable people, provides a much-needed solution via its Personal Injury Trust Bank Account that allows professional and family trustees to open an account online and free of charge.

The account can be used to receive deposits and make payments to support trustees and beneficiaries, and can also be linked to separate, everyday spending accounts and issue prepaid debit cards for use by beneficiaries or their carers.

In summary, while a few traditional banks like Metro Bank offer personal injury trust accounts with associated fees and potentially longer setup times, innovations such as the Monika Banking Platform provide a more modern, cost-effective banking service with quick account opening and no setup fees.

Linked Article: Nationwide Building Society Personal Injury Trust Accounts