Compensation Protection Service

The Compensation Protection Service is a special unit within Wrigleys Solicitors LLP which was founded by Wrigleys partner David Coldrick in 2000. David is head of the Compensation Protection Service. His textbook for Solicitors 'Coldrick on Personal Injury Trusts' (Ark 2007 - 3rd Edition) is the standard work on the subject area.

The service is designed to enable compensation related issues to be addressed simply and efficiently.

For a person not able to make the decision to set up a trust themselves, it is a trust executed with the authority of the Court of Protection.

A Compensation Protection Trust (Personal Injury Trust or Disabled Trust) is created when the injured person (or rather their duly appointed representative) with the agreement of the Court of Protection signs a specially drafted trust deed, setting out the powers and provisions for the use of the trust funds in a form approved by the Court.

If a Deputy or a Receiver has not been appointed their appointment may, in some circumstances be necessary before the trust can be applied for. We can deal with any such preliminary applications and also act as Deputy or Receiver as necessary.

The trust deed appoints trustees whose duty it is to look after the compensation award (the "trust fund"), on behalf of the vulnerable person.

The trust deed also explains how the money is to be invested and otherwise looked after for the benefit of the injured person, (the "beneficiary").

Usually the injured person would be the only person who should benefit, "the sole beneficiary", under the terms of the Compensation Protection Trust (Personal Injury Trust or Disabled Trust).

It is up to the trustees appointed under the deed as to how the money in the trust is spent for the benefit of the beneficiary.

Obviously care should be taken not to fritter the award away. It should be put to the best possible use in the interests of the vulnerable person.

Sometimes accrued debts need to be repaid or a house needs to be adapted or purchased. Sometimes a holiday needs to be paid for. The possibilities are endless.

In most cases there is no reason why any expenditure from the trust fund, which is for the benefit of the vulnerable person, should cause a problem. However, means tested benefit issues always need to be considered as explained below.

4.1 A cost effective way of getting free from the alternative which is administration by the Court itself.

A Compensation Protection Trust (Personal Injury Trust or Disabled Trust) represents a valid alternative to the Court for vulnerable persons. It has the key benefits of reduced costs, reduced delays and maximum flexibility.

The administration of a vulnerable person's affairs by the Court itself is far from ideal:

• Administration by the Court of an award made in compensation for a personal injury tends to involve extra costs, delays and inflexibilities. If suitable risk assessment has taken place and risk management processes are instituted the administration of those financial affairs can more appropriately be dealt with by means of a Compensation Protection Trust (Personal Injury Trust or Disabled Trust) at less overall cost.

• Importantly there has usually been a long litigation process and it is often considered to be undesirable to continue a link with the Court if it can be avoided. That is for the psychological benefit of all concerned.

• At the same time as the trust application, an application is usually made for the discharge of the Deputy or Receiver. This will eliminate the annual Court related costs. Arrangements may need to be put in place with the Department for Work and Pensions and for the signing of tax returns but this discharge should not create any serious difficulties that cannot be dealt with cost-effectively outside the Court system.

4.2 Secure management.

The Compensation Protection Trust (Personal Injury Trust or Disabled Trust) represents an established, secure and personalised vehicle for the financial management of the affairs of vulnerable persons.

The trust arrangement is the most practical and effective holding vehicle for funds to be invested outside the Court system. This might be summarised as follows:

• Trusts are a long established means of administering the financial affairs of a whole range of different people, those whose affairs come under the jurisdiction of the Court of Protection. The system of trusts has long since been recognised by the English Courts as a faster method of safeguarding the assets of vulnerable or mentally incapable people as well as persons too young to administrate their own affairs. The Court's approval will normally only be given when it is satisfied that an experienced trust professional is acting as a trustee.

• The Compensation Protection Trust (Personal Injury Trust or Disabled Trust) should be drawn up in the simplest form. It is usually a "bare trust". The vulnerable person should for all practical purposes be unaffected by its existence. This simplicity also keeps costs down.

• The trustees have clear duties to fulfil. The Court imposes an obligation on the trustees of the trust always to act in the best interests of the vulnerable person, described as their as "fiduciary duty", a duty which is enforceable by the Court. These duties range from taking proper advice to engaging in good accounting practice.

• The trustees personaliy oversee the trust fund. The appointment of trustees relieves the Court of the more active burdens of managing and administering funds. That responsibility passes to the trustees. Individual trustees can meet the needs of vulnerable people in a practical and personal way, wherever they reside, in contrast to the centralised Court administration.

• The trustees, in agreement with the family, can provide the active, ongoing financial control needed in the situation. Sometimes a purely professional "board of trustees" is appointed but that is the Court's decision.

• Insurance. Professional trustees have the added advantage of professional indemnity insurance at an appropriate level.

• Face to face meetings with the vulnerable person. It is suggested that after a period of settling into the trust arrangements, formal trustees meetings will be held every 6 months or annually. It is likely there will be a degree of day to day interaction of varying sorts between the vulnerable person, key carers and the professional trustee, to ensure that matters are dealt with in an efficient and speedy manner.

4.3 Enhanced choices in financial management.

External fund management may enhance the vulnerable person's standard of living. This can arise:

• If funds are administered outside the Court system there is the possibility of an improved long-term return, as will be explained in the financial report prepared by the chosen investment adviser.

• A full survey of the financial options available to be outlined in the financial report might reasonably be expected to lead to a wider choice of investment and increased ability to meet individual needs. As the world financial markets and relevant techniques are complex and subject to change, this access to new financial products, as they develop, should assist in securing the right balance of investment situations for the particular circumstances of the vulnerable person.

4.4 Means tested benefits retention.

• The Compensation Protection Trust (Personal Injury Trust or Disabled Trust) does not disqualify the injured person from means tested benefits. Any payment for a personal injury to the vulnerable person is currently disregarded for means-testing purposes as to capital and income in the same way as if it was held directly for them at Court. This will help eke out the award. Careful handling is required but our team is expert at handling such matters.

The Court of Protection will not agree to the appointment of lay trustees only, that is people who have no professional legal experience in acting as trustees. They require at least one professional trustee who should usually be a trust lawyer with at least five years' post-qualification experience in trusts-related work.

This is designed to protect the interests of the vulnerable person and to ensure that the administrative burden is lifted from family and carers as far as possible.

As we specialise in Compensation Protection and have the facilities available to help, our clients usually continue to use our services after the Compensation Protection Trust is created. Indeed if we are appointed as a professional trustee the Court requires us to carry out our trusteeship duties in accordance with law.

The Court will expect us to deal with record keeping, administration of investments, liaison with the benefits people, tax returns, accounting, legal compliance, property work, will making applications and so forth. Only if a third party professional trustee, invariably an expert trust lawyer, is appointed will we not be expected to provide these services.

It can take time for the money to leave the Court of Protection. Sometimes the procedures adopted by the Court are rather slow. We will try to give you our best estimate of the likely timescale in individual cases.

After release we usually place the trust fund on deposit here pending investment decisions being taken by the beneficiary and the trustees. Often those discussions will already be well underway and funds will not stay here very long. In the meantime we can make such payments as are needed.

In many ways you do not need to worry about this as we will deal with all the paperwork. But the basic procedure involves:

• Outline assessment. We usually ask for relevant copies of case related papers from the personal injury solicitors.

• Ensuring a suitable applicant is in place if a Deputy or Receiver has not already been appointed.

• Further information gathering as necessary.

• Obtaining a suitable financial report from financial advisers.

• Drafting the application to the Court.

• Presenting the application to Court and liaising with the Official Solicitor who will represent the vulnerable person.

• Attendance at Court if required.

• Assuming the application is successful we would then obtain funds and deal with ongoing tax and administrative matters.

We shall be happy to work with such family members and professionals as are appropriate throughout our handling of the matter.  

If you decide that you would like to meet us then that is perfectly possible but there may be an extra cost for that. Most of our clients do not require it because they are happy with the postal, telephone and email service they receive.