If you have suffered life-changing injuries due to an accident that was not your fault, consideration of your financial situation is likely to be a high priority. Victims of personal injuries are often entitled to personal injury compensation.
Why would I lose my benefits?
Many people who are due to receive such personal injury compensation and are in receipt of state benefits do not realise the impact that personal injury compensation can have on your ability to continue receiving benefits. Unfortunately, under state benefit claiming rules, your compensation may well be classed as “capital”, potentially reducing your eligibility to claim benefits, or even stopping your benefits completely.
If you own capital between £6,000 and £16,000, you must declare this to the relevant organisation and your means-tested benefits will be reduced on a sliding scale. Once you have capital of £16,000 or more, you and anyone you live with will not be able to claim means-tested benefits at all until your capital has reduced below this upper threshold. This means that once your Personal Injury compensation is in your bank account, the Department for Work and Pensions will re-assess your circumstances and potentially remove your right to continue receiving benefits.
How would a Personal Injury Trust help?
A Personal Injury Trust is a special kind of trust that holds any money or other benefits which result from an award of damages or compensation for any personal injury. The primary purpose of setting up a personal injury trust is usually to enable the injured person, or a member of their household, to be eligible, or continue to be eligible, for means-tested benefits.
Crucially, when assessing eligibility for means-tested benefits, the State disregards damages held in a trust when calculating how much capital the injured person owns. This means that with a trust in place the injured person will be able to claim means-tested benefits while still having access to the damages award.
Even if you are not claiming means-tested benefits, a trust may still be a good idea as a way to hold and protect your compensation and to ensure it is always being used for your benefit.
It is very important that you consider setting up a trust as soon you know you will receive compensation from a personal injury.
More information
Anybody who has successfully claimed damages or other benefits for personal injury should be referred to a trust specialist for advice on the benefits of setting up a trust to hold their compensation.
For more information on Personal Injury Trusts please see our Personal Injury Trusts webpage.
How can Nalders help?
We are law firm based in Cornwall firm who can set up a Personal Injury Trust on your behalf – even if we did not deal with your claim for compensation.
We will provide you with all the information you need on the process, prepare the Trust paperwork and advise you on how to execute it and, where required, convey you into the safe hands of a bank who understands what a Personal Trust is and its implications. We will provide you with advice on how to operate the Trust going forward to ensure that you keep good records of how your Trust funds have been used for your benefit.
To find out more, please fill in our contact form, or phone our Truro office on 01872 241414 and ask for Grace Holland.