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Injury & Compensation Trusts

What is an injury and compensation trust?

Injury and compensation trusts are usually set up under a court order or settlement. They are set up when funds have been paid to someone for personal injury and compensation. Often, a trust needs to hold these funds for the person who was injured. This person is called the beneficiary.

What payments can the trust hold?

Injury and compensation trusts are usually set up from a lump sum payment, including:

  • payments from accident insurance, for example the Transport Accident Commission (TAC)
  • payments from court settlements
  • payments from charitable collections or donations made to people injured in an accident or natural disaster.

Who can be trustee?

The court will decide the best person to be the trustee.

Parents, siblings or friends of the beneficiary who are over 18 years of age and an Australian resident can be a trustee.

They can also choose a trustee company, such as State Trustees, or a legal, accounting or financial planning organisation.

What can the trust funds be used for?

All spending from the trust must benefit the beneficiary. When funds are requested, the trustee should think about:

  • how much is in the trust and how long the funds need to last
  • any rules in the trust deed or court order about what the funds can be used for.

Depending on what the beneficiary needs, funds may be given out for things like:

  • medical expenses
  • accommodation
  • education
  • recreation
  • respite.

It’s the trustee’s responsibility to make sure payments from the trust benefit the beneficiary.

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