Setting up a Special Needs Trust

There is only one legitimate way to ensure that entitlement to means-tested benefits and Local Authority support is maintained now and into the future, and that is by setting up a Special Needs Trust.

If you feel that your financial position may be adversely affected in any way by receiving a personal injury award, then it is important that you seek advice soon and in any event prior to settlement as this option is only available at the time the case settles.

What is a Special Needs Trust?

It is a way of making sure that you keep the right to means-tested state benefits following a personal injury award.

Why a Special Needs Trust?

There are strict limits controlling the amount of capital or income an individual can receive and still retain benefits.

Without a Special Needs Trust you run the risk of being worse off due to having received a compensation award.

What can be done with the money in a Trust?

The Trustees of the Special Needs Trust can pay for services or benefits provided, such payments must be for items not covered by Income Support.

Typical examples include care costs, therapy, house purchase, holidays, a car, travel, but not housing costs, council tax, or food.

What are Trustees?

Trustees look after the damages award once it has been placed in a Special Needs Trust. They are chosen by you to act on your behalf and have a wide range of investment powers.

Who can be a Trustee?

You can decide but it is recommended that there at least two Trustees, usually your solicitor and a member of the family.

What do Trustees do?

Trustees look after the damages award and invest it as they think fit. They also decide if and when to pay out money to you or for your benefit. They can take account of your wishes but they are not bound by your requests.

How do Trustees invest the money?

They should take appropriate investment advice from an independent financial adviser.

What if you change your mind?

The Trust Deed can be revoked at any time and the damages monies returned to your control. All you have to do is write formally to the Trustees requesting this. However,you will then run the original risk of losing entitlement to benefits.

Can new Trustees be appointed?

Yes, they can. The power to do so is in your control. For example, Trustees have to act by a majority decision - if there is a stalemate, you can appoint a new Trustee, who will have the casting vote.

How much will it cost?

A professional Trustee, usually a Solicitor, will charge for their costs. These are normally agreed up front. For the creation of the Trust, there is a one off fee of £500 - £750 plus VAT.

Running costs in the region £500 - £1,000 plus VAT per annum, but could be more depending on the size and activity of the Trust.