Q&A - Will my benefits stop when I get the compensation awarded for my accident?

Q: I am shortly expecting to receive a large compensation award as a result of a personal injury claim. Due to my accident and the long term effects of the injuries I sustained I am not able to work and I currently receive Income Support. Life has been very difficult for me since the accident and now I am worried that if anyone finds out about the compensation award I will lose my benefits. Is there anything I can do to prevent this?

A: If your compensation award takes your total capital above £6,000, then your means tested benefits are likely to be affected. If your capital exceeds £16,000 your Income Support will cease completely.

There is however a way around this problem which will enable you to preserve your entitlement to Income Support and other means tested benefits, and that is to have a Personal Injury Trust established to receive your compensation award. This is a legal arrangement which allows appointed persons chosen by you (your "trustees") to receive and look after on your behalf the compensation monies awarded to you for your injuries. Once the Trust has been set up your trustees can invest the money, pay some of it to you or use it to pay for something for your benefit. They must, however, always act in your best interests.

If you change your mind about such an arrangement after it has been put into place you can write to your Trustees at any time asking that the Trust be closed and the monies be paid back to you.  If you do this, however, you do then run the original risk of losing your entitlement to means tested benefits.