Timing of Trust Establishment – Part 2

Mr G was provided with interim payments, one of which was for £10,000 in 2014. In 2017, Mr G settled his personal injury claim for approximately £100,000.

We were asked to provide advice to Mr G on settlement of his claim and considered the three options usually relevant:

• Do nothing – if a Personal Injury Trust is not required;
• Utilise the 52 week disregard, where appropriate; and
• Establish a Personal Injury Trust.

Mr G has a range of means-tested state benefits and therefore doing nothing was not a viable option.

In relation to the 52 week disregard, Mr G received his first interim payment back in 2012, and consequently this disregard is not available.

Mr G was asked whether he had notified the relevant Benefits Agencies of any interim payments that took him over the £6,000 lower capital threshold; he had not.

As a result, Mr G had a duty to disclose a change in financial circumstances on receipt of the £10,000 interim payment in 2014 and, at that time, had the Benefits Agencies been notified, his benefits would have been reduced accordingly.Mr G was not advised of this when receiving the interim payment.

However, in order to avoid the risk of future complications, we are advising that Mr G makes the disclosure retrospectively and repay any benefits repayment requested.

Due to the time that has elapsed between the last interim payment and final settlement, Mr G has had little funds with which to support his financial needs and is understandably keen to access his award at the earliest opportunity.He had therefore asked his solicitor to forward funds directly to him in order that he could establish the trust at a later point, after having met his proposed expenditure.However, doing so would have led to an immediate loss of means-tested support and the additional complication of reinstating those benefits once the trust was established, allowing for the typical 13 week processing time for some benefit applications.

Whilst the solicitor was under some pressure to release funds, after some considerable explanation of the circumstances and implications, Mr G agreed it would be in his best interest to establish the Personal Injury Trust in the first instance and make planned expenditure subsequently.

Had we been in a position to advise Mr G at the time of the previous interim payments, the difficulties could have been avoided and the trust established pre-settlement in order to take receipt of settlement funds once available, without the anxiety of having to wait for the trust to be established before being able to access monies.