Deputy Prime Minister Angela Rayner made headlines this week after she appeared to not pay enough tax on her second property. This has led to her having to disclose details of her family’s personal injury trust and property arrangement to explain how this happened.

Her disclosure revealed how one of her children received compensation following an injury, with the award being placed in a personal injury trust. This is a common, court-approved arrangement designed to protect compensation for children and vulnerable people. However, in Mrs Rayner’s case, the situation became more complicated when property and family circumstances were added into the mix.

The fact that even a senior government figure has had to navigate such complex arrangements shows how challenging personal injury trusts can be. What is designed to be a safeguard can quickly become overwhelming when combined with tax rules, investment requirements and family dynamics.

What is a Personal Injury Trust?
A personal injury trust is a specialist legal arrangement designed to protect compensation awarded after an accident, medical negligence claim or other injury. Instead of the money being paid directly to the injured person, it is placed into a trust managed by trustees – usually family members, friends, or a professional trustee.

The main purpose of a personal injury trust is to make sure the compensation is safeguarded and used only for the injured person’s benefit. It also provides a layer of protection when it comes to means-tested state benefits. Without a trust in place, compensation could be treated as personal savings, potentially reducing or removing entitlement to benefits. By using a personal injury trust, the compensation is not classed as part of the individual’s personal assets, which helps to preserve financial support.

How a personal injury trust works can vary depending on the amount involved. Smaller sums may be straightforward to manage, while larger awards often come with greater responsibilities such as following investment rules, meeting tax requirements and keeping clear financial records. In some cases, the court may even require a professional trustee to be appointed to ensure the trust is managed correctly.

The benefits of a personal injury trust are clear: it protects compensation, secures long-term financial stability and provides peace of mind that the injured person’s future needs will be met. However, the rules are complex, and expert guidance is vital to avoid costly mistakes.

Why expertise matters with Personal Injury Trusts
A personal injury trust can be straightforward where smaller sums are involved, but with larger awards trustees often face significant responsibilities. These include ensuring investments are appropriate, tax requirements are met and, in some cases, that a professional trustee is appointed by the court. Without proper advice, families risk making mistakes that could put a loved one’s financial security at risk.

Choosing the right professional trustee
Selecting the right professional trustee is one of the most important decisions families can make. It is essential to ask about their expertise, experience and approach to day-to-day trust management. The right trustee will provide reassurance that the compensation is protected and used for the injured person’s long-term benefit.

How Pryers can help
At Pryers, we specialise in this area. We act as professional trustees and Court of Protection deputies, supporting families to manage personal injury trusts with care, expertise and a focus on safeguarding compensation for the future.

If you are setting up or managing a personal injury trust, contact us today. We can guide you through the process and give you the confidence that your loved one’s award is secure and managed in their best interests.