Personal Injury Compensation

Ginger182

Hi,
I was wondering if anyone can advise. My Mother (75) has recently been awarded a significant Personal Injury Compensation award. Her Solicitor has put her in touch with a Trust company who advised that she should put the money in a Trust.

She spoke to the Trust company recently and advised once she received her compensation she'd like to buy a camper van as something she'd always wanted so her and my Dad can go round the country on short breaks etc. Apparently the lady at the Trust said she'd advise against this as 'the Local Authority' 'may investigate why' she bought it. Is this correct? Would they look in to this? Surely there is an element in the award not just for Future Care but to enjoy herself too?

For sake of background, my parents own their own home outright, don't collect any benefits and both have good pensions and a comfortable lifestyle. She wants spend some of her compensation on things that make her happy and not have to get it 'approved' every time she does. Anyone else experience this?

The_Unready

It sounds like the trust recommendation is designed to get round any future deprivation of assets claim.

However, please note that a) this doesn't always work, and b) there may not be a claim anyway!

All in all it sounds a bit too complex for what it may or may not achieve. I wouldn't bother.

How much is the award?

Ginger182

Yes that's what I thought it would be about. The award was over 6 figures but their house is worth much more than this so I don't see the point in restricting using this award when she's got more substantial assets elsewhere

eskbanker

Ginger182 said:

Her Solicitor has put her in touch with a Trust company who advised that she should put the money in a Trust.

Doesn't sound like impartial advice to me - they would say that, wouldn't they?!

I'd suggest she discusses her situation with a couple of independent financial advisers....

https://www.moneysavingexpert.com/savings/best-financial-advisers/

xylophone

Below may be worth a look - in how far would any of these reasons be worth your mother's consideration?



https://www.vwv.co.uk/legal-services/private-client-law/personal-injury-claims/personal-injury-trust

Five Reasons Why You Should Hold Your Compensation in a Personal Injury Trust

Have you received compensation from a personal injury or medical negligence claim? If so, you should consider setting up a personal injury trust to protect this. 

Please see five good reasons to set up a personal injury trust below as well as some personal injury trust FAQs.

1. Future Care Costs
2. Planning for Inheritance Tax
3. Means-Tested Benefits
4. Protection on Divorce
5. Safeguarding Your Compensation for the Future

Ginger182

Thank you xylophone. Yes we saw this earlier and the only one that stands out is 1. If she needs to go in to a carehome in the future however they own their house outright and she has a final salary pension so she should be quite financially stable in later years

MX5huggy

Camper vans Hold their value compared with cars or cruises it can be sold if required. 

Malthusian

Ginger182 said:

She spoke to the Trust company recently and advised once she received her compensation she'd like to buy a camper van as something she'd always wanted so her and my Dad can go round the country on short breaks etc. Apparently the lady at the Trust said she'd advise against this as 'the Local Authority' 'may investigate why' she bought it. Is this correct? Would they look in to this? Surely there is an element in the award not just for Future Care but to enjoy herself too?

There can be good reasons to set up a Personal Injury Trust, but if she is going to she should do it with another form.

As described the statement is nonsense - local authorities don't investigate people who live by their own means and spend their own money. They might investigate their finances if she needed local authority care funding - but that isn't relevant and isn't likely to be from what you've described.

Professionals tell their clients the best way to achieve their goals within the rules (like buying a camper van), they don't tell them that they can't spend their own money because "something something deprivation of assets and it will reduce the amount we can charge fees on".

xylophone

If your mother has no compelling reason to set up a Trust, then it seems to me that she would be well advised to think very carefully before proceeding.

Have your parents considered their situation in regard to inheritance tax? 

Would your mother/father wish to consider taking expert independent advice?

https://adviserbook.co.uk/

They would tick "confirmed independent" and such other specialisms required.

Ginger182

Hi guys, thanks for your help. She's going to sort out appointments with a couple of independent advisors and see what they say. It seems crazy that she has to get every purchase 'authorised' by the Trust company! I'll let you know how she gets on.

Sandtree

Ginger182 said:

Hi guys, thanks for your help. She's going to sort out appointments with a couple of independent advisors and see what they say. It seems crazy that she has to get every purchase 'authorised' by the Trust company! I'll let you know how she gets on.

You can't have it both ways... its either yours to do what you want with in which case its considered when you need care, part of your estate for IHT when you die etc or its a trust fund in which case trustees must fulfil their obligations to ensure the trust is used for the purpose its intended etc.