Managing the Compensation Settlement
At the conclusion of the claim and once damages are received, a client may need assistance with managing the compensation settlement for a number of reasons. These can include:
- protection from pressures to use the damages in the wrong way
- being unable to deal with the settlement due to a mental capacity
- inexperience/being unable to deal with vast sums of money in the correct manner
- protecting a right to receive means tested state benefits
- requiring investment of damages to secure an income for the remainder of life
A settlement can be managed in a number of ways but the 3 main options are:
- Personal Injury Trust;
- Court of Protection Deputyship;
- an investment portfolio
Personal Injury Trust
As the law stands at present, there is a 52 week period of grace where personal injury compensation is disregarded for the purposes of assessing means-tested benefits, and this runs from when damages (or part thereof) are received.
It is important to note, however, that once the 52 week period expires from the date, any damages first received (including an interim payment), any further payments received thereafter, and any compensation that remains, will be taken into account when means tested benefits are assessed.
This may have a seriously detrimental effect on the amount of benefits that could be received. In order to try to protect the right to means tested benefits, the client will need to set up a personal injury trust. Control of the compensation will remain with the client but will not be taken into account when means tested benefits are assessed.
Court of Protection Deputyship
Where the settlement is significant, it may be that the client or a family member is not comfortable with making decisions and dealing with such large sums of money. It may therefore be worth considering instructing a professional deputy or trustee who is experienced in managing larger sums of money for people with more complex needs. The extra costs of these professionals are recoverable as part of the claim and therefore it is important to consider whether this would be required at as early a stage as possible. Contact us at Clear Law to see how we can help.
Investment portfolio
It is important that large sums of compensation are carefully invested, so that a client is able to benefit from the income from the investments, as well as the capital. The investments can be in a number of formats, including purchase of and rental of property and investment in trusts.
We at Clear Law acknowledge that difficulties do not disappear once a claim has settled and compensation been awarded. It is extremely important to us that our clients and their families understand that they are not alone during this process. Once you are a client of Clear Law, you will always be a client of Clear Law, even beyond the conclusion of the case.
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