How many people are paying for their own care because the Local Authority has said so? In most cases the Local Authority will be correct, but there are occasions when they may be wrong or when you have not given them the correct information. If assets being taken into account include compensation from an accident claim, have you or the Local Authority considered that it may be possible for some assets to be held under a Personal Injury Trust, or through the Court of Protection, to avoid their being taken into account?
A Personal Injury Trust is simply a trust that contains money received in compensation of a personal injury that was someone else’s fault. Unless the compensation award is held in trust, the injured person’s entitlement to either means-tested, or non-means-tested benefits, including their care entitlement, may be reduced or lost on receipt of the damages. This could result in the award being of little or no financial advantage to the recipient.
In appropriate circumstances, a compensation award can be protected by the setting up of a Personal Injury Trust. Money in the Trust is protected and cannot be taken into consideration when assessing the financial situation of someone whom the Local Authority has confirmed needs care. A Personal Injury Trust can be established at any point after compensation is awarded so long as an audit trail can be shown. This could prove helpful to an elderly person who received an award many years ago and has a need for care. It is best practice to prevent any compensation money being muddled up with other funds, and to prevent this, the compensation award should ideally be placed in a separate account.
Why would compensation money ever need to be held in the Court of Protection? This happens where the injured party does not have mental capacity to deal with his or her own affairs. In this event a ‘Deputy’ is appointed by the Court of Protection to deal with the ‘Patient’s’ affairs, and is supervised by the Court. The compensation awarded to the Patient will be held in Court or administered under its supervision. The rules about benefit assessments relating to personal injury money held in Court are similar those for Personal Injury Trusts, and the money in the Trust cannot be taken into account as the Patient’s capital when the Local Authority is doing an assessment for means-tested or care entitlement benefits.
If you, or someone you care for, has received personal injury compensation and would like more information about setting up a Personal Injury Trust please contact us. We can also advise you about Court of Protection proceedings and Local Authority care funding.
Laura Walker is a paralegal specialising in Probate, Wills and Trusts. To contact Raworths, telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate HG1 1HF. Alternatively you can contact her by email - laura.leach@raworths.co.uk
