What payments can go into a Trust?
This is a question that we frequently encounter. It is sometimes assumed that only the settlement sum from a personal injury claim can be paid into a Personal Injury Trust, however, the scope is much wider. For example, if someone has received a payment from an insurance policy following an accident or through a charitable collection, then these funds can also be paid into the Trust. Also if a claim is on-going and the client is going to receive interim payments from the defendant then these can also be paid into a Trust.
If the client is in receipt of means tested benefits the receipt of these types of payment is likely to have an impact on the client’s benefits entitlement, unless they are paid into a Trust.
The law provides that any money which derives from the personal injury can be paid into a Trust. However, it is important to ensure that only money which derives from the injury is paid into the Trust. If money from other sources is paid in then the Trust will become “contaminated” and the protection the Trust provides will be lost. Contaminated payments could include, for example, payments from a claim where there is a non-personal injury element (e.g. false imprisonment cases), payments of the client’s benefits into a Trust or income from an asset which has not been purchased from personal injury funds.
Please contact one of our Trust advisers should you wish to discuss further.
Mike Knott or Emma Reid