What is a personal injury trust?

A personal injury trust is an estate planning tool that can be used when someone has sustained an injury leading to the impairment of physical or mental capacity. This type of trust is set up for the sole purpose of allowing the injured person to receive funds for the purpose of providing necessary care and support. In Rhode Island, a personal injury trust can be set up by the injured person, typically with the assistance of a lawyer, in order to protect them from creditor claims. The injured party can then receive a regular income from the trust to pay for medical expenses, living expenses, and other costs related to their disability. As the trustor of the trust, they name a trustee—usually a family member or trusted financial advisor—who will manage the trust. The trustee is responsible for investing the funds from the trust, as well as for filing taxes on behalf of the trust and managing any distributions that are made to the injured party. The trustee also ensures that the money is used solely for the benefit of the disabled person, and is not used to pay for any other expenses or legal liabilities. Personal injury trusts are an important part of disability planning and provide an important safety net for people who are facing disabilities. It can be a helpful tool in protecting the injured person’s assets and income, even in the event of bankruptcy. With such trusts, it is possible for disabled people to secure a stable, better-quality life.

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