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 children and young people it is a trust agreed by the High Court.

A Compensation Protection Trust (Personal Injury Trust or Disabled Trust) is created when the Court appointed representatives of the child or young person, 'the trustees', sign a specially drafted trust deed. 

The trust deed appoints trustees whose duty it is to look after the compensation (the "trust fund") for the personal injury of the child or young person instead of the Court doing that. The trustees are charged with investing the money.

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

Our client for professional purposes is ultimately the child or young person. Our primary responsibilities are to them and the Court.

In practice in this situation we work with the litigation solicitors, a litigation friend, family members and other relevant persons to secure the best result.

As the situation involves someone who is under 18 who cannot contract for our services, the work involved in applying for and founding the trust is usually paid for as part of the litigation process. 

We usually act as consultants to the litigation solicitors who are contractually liable to meet our fees. Our fees are usually paid from the overall award made.

The litigation solicitors may want to claim our fees for founding the trust and any anticipated ongoing trust administration fees from the defendant in the litigation. We cannot advise on that claim as such because we are not litigators.

Wrigleys Solicitors LLP does not engage in any legal aid/public help related work but we do not believe trust work can be paid for under legal aid in any event. If you are in any doubt on this point then the litigating solicitors should be able to assist.

The charge for the foundation of a Compensation Protection Trust (Personal Injury Trust or Disabled Trust) for the child or young person is usually based upon a fixed fee. Our charge, assuming no visits, meetings or Court attendances are required, is £2,750 + VAT. This is the 'foundation fee'.

If extra work is required such as a Court attendance then the relevant hourly rate will apply to that work and associated time spent such as travel. We can often agree a fee related to that in advance.

In situations where unexpected extra work is required the foundation fee may be exceeded but that would only happen by agreement. Our aim is to keep costs under control for the benefit of the child or young person.

What we provide within the foundation fee:

• Bespoke paperwork in support of the application for a Compensation Protection Trust under Civil Procedure Rule 21.11

• The draft Compensation Protection Trust (Personal Injury Trust or Disabled Trust) to be placed before the Court for its approval. This will include discussion and agreement with the Court as to any amendments it requires.

• Such general advice and assistance in respect of foundation as is required. This will usually include liaison with a suitable financial adviser. It is considered advisable to place a financial report with recommendations before the Court along with the application. This helps confirm to the Court that all relevant matters have been thoroughly considered.

• Engrossed Trust Deed incorporating any amendments agreed with the Court.

Please note:

• Our foundation fee does not include ongoing administrative charges. If we act as a professional trustee then opting out of our administrative services is not practicable as it represents part of our quality control obligations as a professional trustee. Our trust administration team deal with most day to day matters. This is designed to reduce costs by way of efficient delegation.

• Our foundation fees are payable whether or not the application succeeds. In principle there is no reason why any application should fail. But naturally no guarantees can be given. The Court makes the decision and Courts can be unpredictable. It is in fact highly unusual for a well constructed, carefully expressed and suitably justified application to fail.

• We do not enter the application itself as that is part of the litigation process and we have no legal standing in the case. We do not usually make any Court attendances. Our attendance is rarely necessary or desirable in terms of costs. The supporting paperwork invariably proves to be sufficient. If the relevant Court requires further information then we can usually provide it as necessary.

• The personal injury litigator will usually deal with the application him or herself at the 'investment hearing' or at a similarly opportune point in proceedings.

• Our documentation is designed to be self-explanatory for the benefit and convenience of the litigator, the deciding Court and any family and other relevant third parties.

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

The administration of an award by the Court itself is far from ideal:

• The Court administration of an award made in compensation for a personal injury tends to involve delays and inflexibilities.

• 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.

• There is an advantage in securing financial advice and administrative matters properly at the outset. Getting a good financial and administrative team in place early can pay off into the long term. This is less practicable if the award is held within the Court system.

• Exiting the Court system by way of a trust may also help reduce long term costs.

• A new start will not be required at age 18. This can help in ensuring continuity.

6.2 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 the child or young person. 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. 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 child or young person, described as their "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 personally 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 child or young 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 child or young person, family and the professional trustee, to ensure that matters are dealt with in an efficient and speedy manner.

6.3 Enhanced choices in financial management.

External fund management may enhance the child or young 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. This 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 child or young person.

6.4 - 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.

Yes.

This is usually a big concern for those who care about the interests of the child or young person.

They often worry about:

• Whether or not 18 is a suitable age to obtain the money. They worry that when the injured person comes of age and can do what they like with the award, they will be too young and might fritter it away.

• 'Gold-diggers' after age 18.

• The vulnerability of the award to be shared with a partner or spouse following a divorce or similar settlement.

• Substance abuse.

• Whether having the money at 18 would deter the youngster from properly pursuing their studies or getting a job.

At least two trustees and preferably three are required. The professional trustee required by the Court counts as one.

Having an independent appointee such as ourselves is often not viewed as 'just something the Court required' but as a positive advantage:

• We fully understand the requirements of trust law.

• We have lots of experience which you may find helpful.

• It can help balance decision-making.

• We can help in the avoidance of mistakes. This can save money.

• It helps lift the burden from family and friends.

• We do not charge extra for the appointment itself but we do charge for any professional services we supply in the normal way. These are usually dealt with at trust administration rates (which are cheaper) unless specialised legal work is required.

This is a very important decision. The lay people chosen to work with the professional trustee should be:

• Over 18 years and mature.

• Fair minded.

• Sensible.

• Practical.

• Prompt at dealing with things.

• Good with money.

• Not under any adverse influence.

• Not in any financial difficulty.

• Not likely to 'fall out' with the beneficiary or the other trustees.

• Able to work with others as a team.

• Only interested in the child or young person's best interests.

• Not subject to any conflict of interest with the child or young person.

No.

Financial advisers advise on investments. We do not. We are neither qualified nor authorised to do so.

We often work with financial advisers to help our clients. We also frequently deal with investment related paperwork. However, we are entirely independent of all firms of financial advisers and neither give or receive any referral fee or have any commission, salary or similar arrangements with them. We cannot comment on the investment related content of their advice.

It can take time for the money to leave the Court. Sometimes the procedure adopted by the Court can be rather slow.

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

How are payment requests made?

The procedure is very simple and quick. Requests for funds will usually need to be authorised by a simple note signed by all the trustees. Bank transfer fees apply to bank to bank transfers. That is beyond our control and it is therefore advisable to ensure payment requests are sent in good time so that payments can be made by other methods eg. by cheque. Payments cannot be made based upon uncleared funds.  

Yes.

However, doing so will require experienced trust property solicitors. We have a specialist team of such professionals and would be able to assist as required.

The High Court 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 child or young 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 (Personal Injury Trust or Disabled 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 the 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, 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.

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. Discussion with the family and other carers may also be appropriate.

• Securing a suitable financial report.

• Putting together the paperwork in support of the application and drafting the trust documentation.

• Supporing the application to Court through the litigation solicitors who make the application itself, usually before the investment hearing.

• Assuming the application is successful and we are appointed as the professional trustee 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.  

Wills

• Until a person is aged 18 they cannot make a will and the Court cannot draw one up for them but once they reach that age it is important to put one in place.

• The need to bring the wills of others up to date to retain the beneficiary's right to means-tested benefits.

It is vitally important to note that if the child or young person inherits from a relative but is in receipt of means-tested benefits those benefits might be lost as a result. To enable them to benefit from the inheritance whilst still retaining benefits the relative involved might want to take our advice on the drafting of their own will. We would be happy to help. Please ask.

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.