Personal Injury Compensation Protection Service
When you receive a payment in compensation from a Personal Injury claim you should consider protecting it through a Compensation Protection Trust (also known as Personal Injury Trust). Such a trust can protect your compensation in various circumstances including:
- Government benefits. If you receive or may receive in the future means-tested benefits, placing your compensation into a trust will ensure that you can continue to receive such benefits. If you do not set up a trust upon the receipt of compensation you may lose benefits and other services such as free prescriptions and free school dinners for children.
- Costs of long term care. Placing your compensation into a trust will mean that the funds will not be taken into account in assessing your entitlement to means-tested care funding in a nursing or residential home in the future.
- Care in your own home. The basis of funding of care in your own home (as compared to in a care home supplied by the Local Authority) is subject to local authority discretion. However, our view is that the local authority should also disregard your compensation if it is placed into a trust.
- Incapacity. If you were to become unable to manage your financial affairs in the future, you can be confident that compensation placed in a trust will be looked after properly for you and your loved ones.
We advise on all aspects of Compensation Protection Trusts including drafting and implementation and opening a Trust bank account. Our fees are likely to be in the region of £500 to £750 + VAT. We will discuss with you how much of your compensation you wish to place into trust and you can decide how much you need to spend and on what. The money you wish to save can be invested in the trust for you. The trust can be brought to an end at any point with the monies being paid to you (although this may lead to a loss of benefits). The monies in the Trust can also be used for purchases such as holidays, debt repayments, care, home improvements or the buying of a car.
A Compensation Protection Trust is created by a special document called a ‘Trust Deed’ which we prepare. In the document you name the individuals who must look after your compensation for you. These people are known as your ‘Trustees’ and you choose them. We would recommend having two or three trustees. The Trust Deed also explains how the money is to be invested and looked after for you.
Once you have set up a Compensation Protection Trust it is important that the local authority and the Benefits Agency are notified and we can do this on your behalf. This will ensure that your entitlement to benefits is not affected by your compensation.
The compensation you receive may mean that you need to complete income tax returns in future whether or not the money is placed into a trust. We will provide advice about this and also deal with the income tax returns for you or the trust.
It will also be important for you to consider making or reviewing your Will. We will be pleased to deal with this for you.
For more information and advice, contact Francis Durrant or Robert Curry on 01223 417200
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