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:
Typical Costs
- 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.
- 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.
- 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.
- 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.
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.
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.
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.
