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.

A Compensation Protection Trust (Personal Injury Trust or Disabled Trust) is created when the injured person signs a specially drafted document called a trust deed. The deed states who must look after the compensation monies on the injured person's behalf and the uses to which the money may be put.

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

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

Obviously care should be taken not to fritter the award away. It should be put to the best possible use.

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 injured person, should cause a problem. However, means tested benefit issues always need to be considered as explained below.

The following are just a few of the advantages of a Compensation Protection Trust (Personal Injury Trust or Disabled Trust), for people who receive a payment for an injury. They tend to be different for each invidiual.

4.1 Receipt of compensation resulting from a personal injury need not cut entitlement to means-tested benefits. However, there are limitations which you should be aware of:

Injured beneficiaries can retain the advantages of having had the payment for their personal injury and (provided that money is placed within a properly constituted trust), a beneficiary can retain means-tested benefits entitlements. Usually, if a compensation award is received and held directly by the injured person, the rules only allow "a period of grace" before entitlement to benefits is adversely affected and this is only available in limited circumstances.

Retention of means-tested benefits is perfectly legal and acceptable to both the Department for Work and Pensions (for instance in respect of Income Support) and Local Authorities (who deal with such things as means-tested Council Tax benefit and care packages).

Why lose entitlement when it is not necessary to do so? The cost of losing means-tested benefits can really mount up as it not only applies to Income Support but to Housing Benefit, Council Tax Benefit, free prescriptions and so on.

But remember:

• For most means-tested benefits purposes claimants must not have more than £6,000 in any form of assessable capital outside the Compensation Protection Trust (Personal Injury Trust or Disabled Trust) arrangement at any time. This is important otherwise valuable entitlements can be lost.

• This £6,000 limit applies to the 'benefits household' or 'claimant unit' as a whole. Therefore it is the sum of the capital between your client and any spouse or partner outside the Compensation Protection Trust (Personal Injury Trust or Disabled Trust) that can affect entitlement.

• In practice this should not cause any problem in securing the maximum use of the trust fund. This is something that our Trust Administration Team can help your client with.

4.2 The existence of the trust can reduce the cost of care at home.

Care in the injured person's own home, as opposed to in a care home, supplied by a Local Authority is subject to Local Authority discretions as to what they base their charges upon. However, they should, in our view, disregard the award if it is put in a Compensation Protection Trust (Personal Injury Trust or Disabled Trust) under the government's 'Fairer Charges Guidance’.

4.3 The trust can protect the compensation award from the high cost of long-term care fees.

4.4 Even if the injured person does not get means-tested benefits now, putting the award into a Compensation Protection Trust (Personal Injury Trust or Disabled Trust) can be of great value to them and their loved ones in the future. It can give future flexibility and secure the family's inheritance.

4.5 It can safeguard the compensation for your client and their family.

If at some point in the future the injured person becomes incapable of looking after their own financial affairs, they can rest assured that the money in a Compensation Protection Trust (Personal Injury Trust or Disabled Trust) will be looked after properly for them and their loved ones.

4.6 Your client will have peace of mind with less hassle.

We can help administer the amount received into the Compensation Protection Trust (Personal Injury Trust or Disabled Trust) if you and your client wish. If your client needs help with making investments, budgeting, filling in a tax return and continuing to claim benefits we can help you.

4.7 We can shield your client from unwanted approaches.

There are always worries about third parties putting pressure on the recipient of a large award to use the monies otherwise than for the benefit of the injured person. We can help your client resist such approaches and guide your client generally as to the best use of their money.