Asset protection - personal injury trusts

Miss A sadly suffered with ill health, made worse due to complications arising out of a medical negligence claim.

The nature of her illness meant that she was unable to work at various times and there is a risk that she may not be able to work in the future. She may need to claim various state benefits to supplement her income to look after her and her young child. We were able to advise her on setting up a Personal Injury settlement suitable for her circumstances to ensure she has the ability to retain the use of the funds to meet her needs but so that they do not prevent her from being entitled to state benefits if required in the future.

Background

Tees’ clinical negligence team successfully settled Miss A’s claim, the result of which was that Miss A was awarded a six figure sum in damages.  Miss A decided that she wished to purchase a home for her and her child which would enable her to live closer to her mother.  Our firm advised Miss A of the advantages of setting up a Personal Injury Trust.  This has the benefit of securing continuation of Miss A’s entitlement to means tested benefits, as damages placed into a Personal Injury Trust are treated as disregarded assets under the means testing regime.  

Issues faced

Having received a damages award as compensation Miss A had to deal with the risk that if she should require state benefits in the future they may be reduced by the extent of capital she owned. 

Our solution

We duly advised Miss A on setting up the Personal Injury Trust suitable for her circumstances to ensure the  monies continued to be available to her.  Miss A and her co-trustees were then able to deal with the damages for Miss A’s benefit.  Miss A then found a property to purchase with most of the damages awarded and which the trustees were happy to support.  However, Miss A, via the estate agents, was guided to another conveyancing firm to deal with the purchase of the property.  They began to proceed with the purchase of the property using the trust’s monies in Miss A’s sole name.  Not only were we able to prepare a suitable PI trust for Miss A, we were able also to advise her to ensure that the property was purchased in the names of the trustees so that it remains an asset within the Personal Injury Trust.  This should ensure that the value of the property remains ring-fenced and can also be controlled by the other trustees in the event that Miss A is not able to deal with the assets for herself.  If Miss A should require residential care in the future then the value of the capital of the fund held within the Personal Injury Trust should be disregarded from the local authority’s means test. 

Outcome 

We were able to put Miss A into a position where, via her PI trust she is able to provide a suitable home for her and her child, close to her family.  By setting up the trust and ensuring that the trustees owned the trust property, Miss A can be reassured that the trust can be used for her benefit but that it is set up in such a way that she can claim full benefits and nursing care from the state should the need arise.

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