The following Private Client guidance note Produced in partnership with Lynne Bradey of Wrigleys Solicitors and Phillipa Bruce-Kerr of Harrison Clark Rickerbys provides comprehensive and up to date legal information covering:
Personal injury trusts are often considered in the context of the injured person having full capacity and being the settlor. However, they can also come into existence through a court order during or at the end of a personal injury claim, established on behalf of an injured person with or without impaired capacity. Watt v ABC (see Practice Note: The Court of Protection versus personal injury trusts) suggests that such orders may be made either by the court which hears the claim or the Court of Protection, but concedes there are jurisdictional issues to be clarified. While these notes assume the injured person has sufficient capacity to establish the trust, the analysis of the different types of trust are relevant to preparing a trust for the court to approve.
It follows that assessment of capacity of the injured party to establish a trust is crucial, as if there is doubt the court will need to approve the trust.
Where the injured person has full capacity, a bare trust is usually the most appropriate type. The injured person retains a large degree of control in a bare trust and the trust is tax neutral. If the person changes their mind later, the bare trust is also easiest to
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