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Protecting your Benefits after a Claim Settlement

Receiving benefits and pursuing a personal injury claim? Protect your entitlement!

Most of us would expect to find that as our financial circumstances improve entitlement to state benefits would fall away. However what if the ‘improvement’ is a settlement following a serious injury?

Are you receiving means tested state benefits and pursuing a personal injury claim?  If so, then please be aware that when you have been awarded your compensation you may find that your benefits are reduced or even removed if your compensation exceeds certain limits.  It may also be the case that your future eligibility for certain benefits may be affected.

Means tested state benefits include Income Support, Jobseeker’s Allowance, Employment Support Allowance, Housing Benefit and Council Tax Support amongst others.

To prevent your benefits entitlement from being affected and to help protect your future then it may be possible to set up a Personal Injury Trust. This provision recognizes that an award of compensation is not a ‘windfall’ and is intended to cover pain and suffering as well as past and future losses. It would be unfair to treat it in the same way as an inheritance or gift.

If personal injury compensation paid in the normal way into your bank account takes your total capital to over £6,000.00 it will lead to a reduction in your benefits entitlement. If your compensation takes your capital over £16,000.00 then your means tested state benefits may be stopped entirely!  A Personal Injury Trust allows you to continue to receive these benefits.

It is important to bear in mind that this may also apply to any interim compensation awards you receive i.e. any payments you receive during your claim before the final settlement.

So, if you are receiving means tested state benefits and you are due personal injury compensation please make sure that you obtain appropriate advice. Of course there are costs associated with setting up a Trust and then restrictions on how the money may be accessed so this option is not right for everyone. We can help you determine whether this is the right course of action for you to ensure that your award is used for its true purpose.


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