Q&As

Can trustees of a personal injury bare trust make gifts to third parties out of the trust fund if directed to do so by the beneficiary of the trust?

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Produced in partnership with Andrew Wilson
Published on LexisPSL on 20/07/2020

The following PI & Clinical Negligence Q&A produced in partnership with Andrew Wilson provides comprehensive and up to date legal information covering:

  • Can trustees of a personal injury bare trust make gifts to third parties out of the trust fund if directed to do so by the beneficiary of the trust?

Can trustees of a personal injury bare trust make gifts to third parties out of the trust fund if directed to do so by the beneficiary of the trust?

For the purpose of this Q&A we have assumed that in setting up or authorising the setting up of a personal injury trust, the claimant wished to protect the fund, made up of the proceeds of the award, from consideration as part of their estate, in connection with future entitlement to means tested state benefits.

An injured claimant who has received agreed damages or a court award, whether by way of interim payment or final compensation, may enter into a special needs trust (more commonly known as a personal injury trust and one example of which is a bare trust) to protect their future entitlement to means tested state benefits and, less commonly, to protect the proceeds of the personal injury compensation claim from being taken into account in the assessment of capital in connection with local authority provision of residential care.

By the Income Support (General) Regulations 1987, SI 1987/1967, reg 2 and more recently, the Universal Credit Regulations 2013, SI 2013/376, capital of up to £6,000 is disregarded in the assessment of the benefits claimant’s available capital. Capital of between £6,000 and £16,000 will reduce the entitlement to benefits on a sliding scale and over £16,000

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