If you are receiving means tested benefits and currently are making a claim for compensation under the CICA criminal injury scheme you may need a Personal Injury Trust if your award is likely to exceed £6000. This will be particularly relevant for those involved in sexual abuse claims as the awards tend to be higher than this threshold.
The reason put simply is that the Department of Work & Pensions (DWP) have the option to review or possibly withhold your means tested benefits if they believe that you have significant capital assets in your personal bank account.
If you think that you might escape their attention and spend the money quickly, transfer it to another account or simply give it away – think again. Your means tested hard won benefits could be at risk if you act in such a way and do not take steps to protect your money and your rights. The amount of £6000 also includes any interim (advance) payments.
How do you set up a Personal Injury Trust
To set up a Personal Injury Trust you will need a deed or legal document setting out the details of the settlement – most personal injury solicitors will be able to provide this service and they should advise you of the process upon settlement of your claim. Your deed will allow a local bank to set up the required account for you into which the compensation payment should be made.
If you have not had a discussion with your representative regarding the need for a Personal injury Trust we would recommend that you seek advice before agreeing to settle the claim and receive the funds. Your solicitor or legal representative should be able to explain the technical points to you in order to ensure your benefits are fully protected.
There is a period of time post settlement for you to set up the trust – this is known as the 52 week disregard which runs from the date of receipt of an award payment (bear in mind this can include an interim award as well as any final award). However this period of grace is often mistakenly deemed to be a spell during which you can spend the money freely and without fear of drawing the attention of the DWP. That is not correct. The 52 week disregard is there to provide you with sufficient time to set up a Personal Injury Trust.
If you are in any doubt you must speak to your representative or speak to the DWP themselves before any payment is made to you.