How to protect compensation payments from care fees

How to protect compensation payments from care fees

Many people are unaware of the ways you can protect compensation payments from care fees. In this article Fiona Burne from Osborne, Morris & Morgan Solicitors in Bedfordshire looks at what to do with a compensation award so that you actually benefit from the money.

As part of her work, Fiona runs about 50 Personal Injury Trusts for clients who have been awarded compensation due to either an accident or clinical negligence.

Fiona Burne - protect compensation payments from care feesShe explains more…

There are various things that can be done to protect compensation payments from being taken at a later date to pay for care.

As long as the compensation relates to a personal injury, the claimant can put the money in trust and it is then treated as ‘disregarded’ capital as far as means tested benefits are concerned.

The only caveat to this is that if care is funded through NHS Continuing Healthcare or through direct payments. The rules on this are more fluid, and each local authority can have their own rules and ‘fairer charging policies’.

It means that it’s not always possible to guarantee how each individual will be dealt with – and of course we also can’t predict whether the law about this may change in future.

What I can say, though, is that we have many clients who have over £1M in trust and who also receive means tested benefits such as Housing Benefit, Council Tax Benefit and direct payments.

One vital thing to keep in mind at all times is that the compensation mustn’t be ‘muddled’ with other money. There should be a clear audit trail showing where the compensation funds are. For that reason it really is important that you take advice as soon as possible – and certainly before paying the compensation into your normal bank account.

If a person receiving compensation lacks mental capacity, then a trust may not be the best option, and in this situation it’s important to take advice relating to Court of Protection matters.

Osborne Morris & Morgan logoFor a helpful factsheet about receiving compensation and the impact on your benefits, contact Osborne, Morris & Morgan here.

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