Funds held on client account and the effect on means-tested support.

It is often necessary for interim payments to be held on client account. Sometimes this is to facilitate care and case management costs or to meet disbursements required during the course of litigation.

Some claimants have not had the financial experience in life to enable them to manage funds beyond a weekly allowance, and others in the early stages of recovery may simply be unable to manage their affairs in the short-term.

In such circumstances it can often be helpful for funds to be retained on client account with a manageable allowance forwarded to the claimant to meet their every day expenditure needs, and costs associated with the claim managed from client account.

However, Benefit regulations are clear on the point that funds held on client account are that of the claimant’s. Consequently, funds held on client account must be added to the claimant’s personal savings and, if exceeding the relevant capital threshold, be reported to the appropriate benefit department so that entitlements can be reduced accordingly.

The solution is simple. By establishing a Personal Injury Trust with a nominal amount from the interim payment, the trustees may simply make a declaration that funds on client account are being held on behalf of the trustees. This, in turn, will ensure that the funds are to be disregarded in relation to any means-tested support in payment.