Compensation payout - On benefit due to injury so Solicitor advises Ring Fencing

von

This is from the guidance relating to compensation payments:

Payment for personal injury
29509 Any lump sum payment made because of a personal injury to the claimant or partner and not placed in trust immediately is disregarded for a period
1. beginning with the first date of receipt by the claimant or partner of such a payment and
2. ending when
2.1 the claimant or partner no longer has any part of the payment
remaining (including where the claimant or partner has used any part of the payment to buy an asset) or
2.2 52 weeks have elapsed whichever is the sooner

29510 This 52 week disregard does not apply to
1. any subsequent lump sum payments made as a result of the same injury in DMG 29508 above, whether it is made by the same person or another
1 (but the remainder of the existing 52 week period could still be applied) or
2. lump sum payments made from a trust where the funds of that trust come from a personal injury payment to the claimant or partner

So basically the payment can be disregarded for 52 weeks from the date of receipt and from the 53rd week if it is put into a Trust Fund.

Redman_2

Not dodgy in the least, and as previously stated, a solicitor could be classed as being negligent for failing to inform a client of this option.

Here is another thread on the same, with a response from myself.

http://forums.moneysavingexpert.com/showpost.php?p=44562590&postcount=10

satarical

AnxiousMum wrote: »

Isn't the compensation payout paid so that a person can help provide for themselves whilst not working due to the problem they have incurred? It's not a rainy day savings account - it's money that is supposed to help make her days more bearable and manageable in a financial sense.

Your friend is able to volunteer 25 hours per week but not work?

Don't know anything about the 'ring fencing' or the costs involved........but her life would be alot more stress free I'm sure if she had use of the money for her day to day expenses rather than having to rely on handouts when she has received compensation.

Compensation is paid for 3 things. The loss of income already suffered, the injury itself and the loss of income for the future.
You can't very well take the first two into account as (a) it will be used to pay back the overdraft or debt that you have incurred in living without an income for the 2 years and (b) it is compensation for the injury suffered.

Yes you have a point about the future income as being used to support yourself.

Putting the money into a trust is a very sensible move. Well to be honest if it is good enough for most of the current government ministers, senior civil servants, bankers and tv personalities etc to have it done to protect their wealth and assets, surely it should be good enough for ordinary people like us.

rogerblack

One wrinkle.
The DWP have the right to reclaim a loss of earnings element for the period any sickness benefits due to the PI up to the date of the award.
So, if you've claimed ESA for 2 years, then got a PI payout for being injured at work, you may have to repay that 2 years ESA.

justlooking2012

Oh great, another way to get benefits but still have thousands hidden

CharmCaster

I'm not sure that I understand the 52 week disregard, does this mean that if a person gets say £20K compensation and spends it within 52 weeks they are still eligible for benefits both during and after the 52 weeks?

rogerblack

CharmCaster wrote: »

I'm not sure that I understand the 52 week disregard, does this mean that if a person gets say £20K compensation and spends it within 52 weeks they are still eligible for benefits both during and after the 52 weeks?

As I understand it, you may still deprive yourself of disregarded capital.
So, if you spend it on a really nice holiday on week 12, you are entitled from week 1-52.
From week 53, they may look at the way you spent it, unless it has been placed in trust during this period.

rogerblack

justlooking2012 wrote: »

Oh great, another way to get benefits but still have thousands hidden

Yes.
Just get a massive payout for a personal injury.

kazzah60

Actually the "payout" will have been carefully calculated to comprise of an amount of general damages, pain and suffering, past costs and future costs associated with the injury - so for example the cost of providing adequate wheelchairs over a life time -

it is quite correct that this money SHOULD be placed in a personal injury trust so that it is available to PURCHASE the items needed for the injured person in the future - including care and nusring etc- this in fact SAVES the country money.

ALL benefits received by the injured person will be repaid out of the amount of compensation - so the "Government and the Tax payer" do not lose out totally as any monies used to support the injured person up to the point of the payout WILL be repaid.

It is also a safe way to prevent the persons compensation being counted as joint assets in case of a divorce- there was a case a couple of years ago of a man awarded a large sum of compensation for life altering injuries he received in a crash before meeting his wife
this money was for his FUTURE care needs - but because it was not in a trust fund when they divorced the wife got 50% of his compensation - that can NEVER be morally correct

there are a myriad of reasons to protect compensation with a trust fund not just to protect benefits entitlement

SuziQ

I havent been rude to anxious mum, I answered her questions, Cant understand Dave!!

For someone who was so rude to another poster,I'm surprised you let these mistakes through!