What happens to my personal injury trust when I die?Sep 8th, 2017
It is appropriate for the majority of personal injury trusts to be established as Bare Trusts. On your death the trust will end and any money within the trust fund will form part of your estate. If you have left a Will then the terms of this will determine distribution of the trust, otherwise the Rules of Intestacy will dictate distribution.
The trustees of a personal injury bare trust will not be liable to pay inheritance tax (IHT) and the money is simply paid over to the personal representatives of the estate on sight of the grant of probate; any IHT payable is the liability of the personal representatives of the estate rather than the trustees of the PI trust.
If a pure Discretionary Trust has been established, the trust deed will indicate what happens to the remaining trust fund.In addition to the injured person, there can be other potential beneficiaries and the trustees have a greater degree of flexibility in holding and applying the trust fund for the beneficiaries.
For IHT purposes, the trust will be subject to the relevant property regime.
In the event the beneficiaries of the Estate are in receipt of means-tested benefits it may be beneficial to ensure a suitable Will is created so that bequests are held in a separate trust, created in the Will, in order to maintain the support received by the recipient.