A Disabled Trust is i) a form of personal injury/special needs trust that contains money received as a consequence of personal injury or ii) a trust founded to protect the interests of a disabled person generally.
A personal injury related Disabled Trust is a trust created for disabled individuals, which is intended to supplement, but not replace, any means-tested benefits to which the disabled individual may be entitled.
Personal injury related Disabled Trusts are established for working-age adults or some children who want to retain their entitlement to means tested benefits, now or in the future, such as:
Under the current rules – if you have over £6,000 capital you are at risk of having some or all of your benefits reduced. If you have over £16,000 then you are at risk of losing them all entirely. If your compensation is paid directly to you, rather than put into a trust, then you will be classed as having this money as your disposable capital.
If you are expecting to receive more than £6,000 in compensation for your personal injury, then you should consider setting up a Disabled Trust. Even if you are expecting to receive less than £10,000 in compensation for your personal injury, you should still seek advise on whether to establish a Disabled Trust as it still may prove cost effective.
A traditional Disabled Trust is usually founded by a third party for the benefit of another e.g. a child with a disability. It has certain tax and other advantages apart from fulfilling a protective function.
Alternatively, it can be founded in certain special circumstances e.g. where there has been an award for damages under the Criminal Injuries Compensation Act. If the circumstances require such a trust we can advise accordingly.
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