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Home » Can I have my compensation and still keep my means tested benefits?

General News Jan 24th, 2016

Can I have my compensation and still keep my means tested benefits?

The simple answer is probably not, unless you set up a personal injury trust.

The only lawful way of retaining and protecting your personal injury compensation if you, or possibly others in your family, wish to claim means tested benefits or require care funded by a local authority, is to set up a personal injury trust.

Compensation is usually received as a lump sum and just like any other capital, must be declared in an application for means tested benefits or local authority care. Most benefits have an upper and lower capital limit and for most means tested benefits you will not be entitled to the benefit at all if you have capital exceeding £16,000. Of course, if you are already in receipt of a means tested benefit when you receive your compensation and that compensation payment exceeds the capital threshold the benefit payment will cease until the capital falls below the threshold.

Even if you are not in receipt of means tested benefits, that situation may well change in the future, but that future eligibility may well be affected by a compensation payment, often received many years beforehand.

Simply spending the compensation quickly won’t allow you to keep your benefits as there are very strict rules on depletion of capital.

Setting up a personal injury trust is an easy and inexpensive way to ring fence your compensation so that you do not lose your entitlement to benefits. Indeed, it is the only legitimate means of achieving this.

Of course, it’s not just the final compensation payment that may affect your entitlement to benefits as interim compensation payments must also be declared upon receipt. It is imperative therefore that a solicitor should advise a client of the importance of setting up a personal injury trust at an early stage in their claim.

Sadly, in practice, this rarely happens. We are contacted regularly by people who have received compensation payments following a personal injury or clinical negligence claim, who received little or no advice from their solicitor on setting up a personal injury trust. In some cases, this failure by the solicitor has cost them tens of thousands of pounds and will potentially cost them substantially more in the future.

We have helped many people in this situation recover those losses from their solicitor on the basis of the solicitor’s failure to properly advise them.  This failure by the solicitor amounts to professional negligence.  If the solicitor has been negligent, the solicitor must compensate them for the losses sustained as a result of that negligence.

Should you wish to discuss informally and confidentially anything in this article, please call us on 01225 462871 or complete the contact form.

Richard Lowes
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