Jenny was injured in 2010. When her claim was settled in 2015 for £30,000 by way of compromise, Jenny had no savings and was receiving £100 per week Income Support, £50 per week Housing Benefit, and £15 per week Council Tax Benefit. Her damages would fall to be assessed as capital 52 weeks after first receipt of the award.
Apart from a holiday, Jenny did not have any significant spending plans for her compensation. If she kept the money in her account, Jenny would lose around £165 per week in benefits following the 52-week grace period. To replace that lost income, she would have to spend her compensation. As a result, most of her award would have been spent within three years. Once her award monies were down to £16,000 or under, Jenny would be able to re-apply for means-tested benefits, however, she could only expect full benefit entitlement to be restored when her balance was less than £6,000.
Jenny was reluctant to set-up a Personal Injury Trust as she believed that it would be too complex and that she wouldn’t be able to get her money as and when she wanted. To retain her benefits, she had considered allowing her son to hold the award on her behalf.
How Nestor Helped
We met with Jenny and discussed her situation. First, we pointed out that, if she gave her money to her son, the ‘capital deprivation’ rules would apply and she would still lose her benefits.
Nestor’s Independent Financial Adviser explained that, if she set-up a Personal Injury Trust, she would continue to receive £165 per week in benefits. The Trust would cost £500 plus VAT to set-up, which could be paid from her award – this is a Nestor one-off fee.
We explained that, if she put the remaining £29,400 in the Trust and spent none of the money for three years, during that period, she would receive all of her benefits totalling £25,740.
Jenny’s Trustees are two family members who live locally. She knows that, if her circumstances change, she can easily change her Trustees or stop the Trust. She does not need to keep formal Trust accounts or submit a Trust tax return, and finds her Personal Injury Trust simple to manage and financially effective.