Does Personal Injury/Medical Negligence Compensation affect Benefits?

Compensation and State Benefits

Hundreds of thousands of people are injured every year in England and Wales as a result of  personal injury or medical negligence. If this has happened to you, then you could be entitled to compensation.

Many people are often reluctant to make a claim for compensation because they don’t want the compensation to have an impact on their current state benefits.

How to Prevent This

Money received after an injury (for example, compensation, payment from accident insurance) is disregarded for an entitlement assessment for 52 weeks and this includes any interim payments you get.

If you’re currently in the process of applying for the above benefits, then for the first 52 weeks after any personal injury or medical negligence compensation has been paid to you it will be disregarded when assessing your entitlement to benefits.   This could be the first interim payment of compensation so a Personal Injury Trusts should be considered at an early stage.

How to Set Up a Personal Injury Trust

Firstly, you’ll need 2 people who are willing to act as Trustees and who would have control over the compensation. A Personal Injury Trust is similar to any other bank account and your compensation will be transferred into it in the exact same way.

The money in the Personal Injury Trust must come solely from the compensation that you are awarded and no additional funds can be added. You can make small, irregular withdrawals from the Trust to remain eligible for benefits, and you need to ensure that these are below the savings limits – but always remember the £6,000 rule.

The Trustees also have legal duties and must be at least 18 years of age. The Trustees must be individuals who you trust and haven’t had a history of money problems. Since the compensation is not the Trustee’s money, it won’t affect their benefits, tax position or anything income-related.

It can take several months to set up a Personal Injury Trust, so we recommend getting in touch with us before you receive your compensation, so our specialist Court of Protection Solicitors  can guide you through the process.

Our Court of Protection Solicitors will assist the Trustees to set up a separate bank account, in which they can deposit the compensation payout. Once the compensation is in the Trust, it can be accessed with consent of the Trustees.

You must approach with consideration and make sure that any withdrawals made don’t place your household income above the savings threshold, for means tested benefits. The money held in a Personal Injury Trust will usually be taxed in the same way as savings, and the type of Trust you need depends upon your individual circumstances. For more information get in touch with our Court of Protection Solicitors.

Even though your Trustee is appointed to deal with your funds, you can remove Trustees if you don’t think that they are using the money for your benefit or acting in your best interests.

A common disagreement is not being given permission to have money at a certain time, but there may be a good reason for this. It’s always worth talking things through with the Trustees to see if you can resolve the issues rather than removing them – if you have any questions relating to this, then do not hesitate in reaching out to our Court of Protection Solicitors for some tailored advice to your situation. 

How Much Does It Cost to Set up a Personal Injury Trust?

To set up a Personal Injury Trust, it can cost from £900 (VAT Included) depending on how complex the Trust is and whether you need a home visit.

Can a Personal Injury Trust affect Care Fees?

Should you need to move into a care home, a Personal Injury Trust can help safeguard your compensation and ensure you don’t have to use it to fund your long-term care home fees.

Contact Us

We’ve recovered hundreds of millions of pounds in compensation for people who have suffered because of medical negligence. We’ve also helped them access the specialist care, treatment and rehabilitation they need to start to rebuild their lives – and receiving benefits should never deter you from seeking the compensation that you deserve.

Whether you’re at the start of your journey, or nearing the end, we can help you every step of the way – just call us on 0808 239 6043 for a free claims assessment.