Don’t let your compensation affect your benefits entitlement

Many personal injury clients receive means-tested state benefits such as Employment and Support Allowance and Housing Benefit, especially those who suffer serious injuries and are unable to work.

Currently, savings above £6000 reduce the amount of means-tested benefits they are able to receive, and if their savings rise to more than £16,000, they will lose those benefits altogether.

Clients receiving more than £6000 in compensation often worry that they will have to spend their award on everyday living expenses until they are entitled to full benefits again. However, we are able to assist by offering them a Personal Injury Trust, which will allow them to keep the compensation (known to us as damages) and still receive their means-tested benefits.

How does it work? A Personal Injury Trust is set up and the damages are paid into the Trust and remain there until they are paid out to the Claimant who is known as the beneficiary of the Trust. The Trust must have at least 2 Trustees, neither of which can be the injured person. Often they are family members, friends, or solicitors at our practice.

The compensation is treated as being owned by the Trust and not the injured person, as although it can only be paid out to the beneficiary, the Trustees have a discretion as to whether they pay the money out. It is not taken into account when assessing the beneficiary’s entitlement to means-tested benefits.

Such a Trust can save a person thousands of pounds a year in benefits. The cost of running a Trust is a few hundred pounds a year, so they are well worthwhile.

If the beneficiary wants some of the money, such as for a car, holiday or other purpose, they ask the Trustees who will usually agree to pay the money out, or in some cases, pay for the item on behalf of the beneficiary.

This is just part of the comprehensive service we offer to all our personal injury clients. If you would like advice about an injury claim or a Personal Injury Trust (which we will be able to set up for you even if you didn’t use us for your original claim), please call me on 0114 218 4049 or email me at jonathan.stittle@tayloremmet.co.uk.

This weekend will include a belated birthday meal for me and taking daughter number one back to University, not forgetting Sheffield United’s game against Preston tomorrow. I hope you enjoy yours!

Jonathan Stittle

Article written by

Jonathan Stittle

Our Personal Injury partner at Taylor&Emmet LLP. 0114 218 4049.

2 Responses

  1. Scott Hitchen
    Scott Hitchen at | | Reply

    I’m due a £2000 whiplash pay out I am on esa and dla benefits and iv been told that the benefits people will take the £ 2000whiplash payout from my benefits?I don’t have any savings or even a bank account please advise me thank you Scott Hitchen

  2. elizabeth clarke
    elizabeth clarke at | | Reply

    recieved £12,000 but on means tested benefits how do i set up a trust to protct the money it was from a disrepair case

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