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This article was published on September 14th, 2017
Personal injury claims can cause some issues when it comes to state benefits, particularly if they are means-tested.
Suffering a personal injury can be extremely traumatic. It can have immediate consequences as well as long-lasting and far-reaching ones too.
Not only do victims of personal injury often have to contend with pain and inconvenience, but their injuries may mean that they are left unable to work due to reduced physical capabilities.
This could mean that victims are left with a greater reliance on state benefits to remain financially stable.
In this post, we explain how you can protect your compensation claim instead of having it replace your benefits.
Means testing is a process that the government goes through when deciding whether you are eligible to receive particular benefits.
The government looks at your income and capital. Capital can include things such as cash and savings in bank accounts, bonds, investments, property that is owned but not lived in permanently as well as stocks and shares.
If you make a successful personal injury claim and are awarded a settlement fee which you then put into your bank account, this will count as capital and could reduce the amount of benefits you’re entitled to.
The good news is the government pays little to no attention to your personal injury compensation after you receive it for the first year. This is the case whether you receive a final settlement or an interim one.
However, this doesn’t mean that you can start splashing the cash and still claim benefits.
The rules are actually quite strict. Once you have added the compensation to your bank account it is classed as capital. If you then spend the compensation so that you can continue to claim benefits, you will be treated as though you still have the compensation.
This means you could be left with no compensation and no benefits.
While the outlook may look bleak, there is something that you can do to ensure that you can continue to receive your benefits and also make the most of your personal injury compensation.
If you are looking to maintain your compensation after the 52 week period after you’ve received it, without having it affect your benefit allowance, then putting it into a personal injury trust is the easiest solution.
This will ring-fence it and protect it and also prevent it from being used for long-term care fees.
When setting up your personal injury trust you must ensure:
As trust law can be complex, it’s important that you seek legal advice from an experienced trust solicitor as the type of trust you will need will depend on your own individual circumstances.
In order for you to be able to use your compensation, your fellow trustees can make small and irregular payments to you from the trust.
Do not set up a regular recurring payment as this can affect your benefit allowance.
As tempting as it may be, steer clear of transferring money from the personal injury trust directly into your own bank account. This can also mean that your compensation is exempt from the protection that the trust provides.
If you have suffered a personal injury and would like to discuss a potential claim, our friendly team of specialist solicitors are here to help.
Our personal injury solicitors provide effective, friendly and honest advice in order to help you achieve the outcome you want.
If you would like more information about how we can help you with your personal injury claim or if you would like to discuss what options are available to you with regards to setting up a personal injury trust call us today on 0800 1979 345 or complete our online enquiry form.