What is an Injury and Compensation Trust?
Injury and Compensation Trusts are usually established under the terms of a Court Order or Settlement, where funds have been paid to an individual for personal injury and compensation. Often these funds are required to be held in trust for the benefit of the individual injured, called the beneficiary.
What payments can be held in trust?
Injury and Compensation Trusts are usually established from a lump sum payment. These include:
- Lump sum payments from accident insurance, for example the Transport Accident Commission (TAC)
- Lump sum awards from Court Settlements
- Lump sum payments following charitable collections or public donations made to people injured in an accident or natural disaster.
Who can be trustee?
Parents, siblings or friends of the beneficiary who are over 18 years of age and an Australian resident can be a trustee.
A professional Trustee Company such as State Trustees, or a corporation that specialises in legal, accounting or financial planning may also be appointed.
The Court will decide who is best placed to be the trustee.
What can the trust funds be used for?
All expenditure from the trust must benefit the beneficiary. When a request for funds is made, the trustee should consider:
- The amount of funds in the trust and how long the trust funds need to last
- Any specific rules about what purposes the funds may be used for, as outlined in the trust deed or Court Order.
Depending on the needs of the beneficiary, who may be disabled, funds may be released for medical expenses, accommodation, education, recreation or respite etc. It is the trustee’s responsibility to ensure payments made from the trust benefit the beneficiary.