Compensation for Injury at Work and Protecting State Benefits

What's a "Disability Fund" for injury compensation

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Prospective client receives injury compensation >£200k for smashing both arms at work. He will never work again. Solicitor who dealt with his claim recommended the compensation should be put into a "disability fund". This solicitor said the £200k would then not be taken into account for his Housing benefit, Disability Living Allowance (DLA) or Sickness benefits. This solicitor said he could not advise on "disability funds" because it is not his area.

I have a feeling that DLA is not means-tested, however.

Can anyone explain how these "disability funds" can be set up, how do they work, what type of professional would set one up and the set up/annual costs. Also, how do they work for tax purposes.

Any pointers in the right direction would be much appreciated.

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By LyneT
18th Oct 2016 19:02

It is called a PI trust, or personal injury trust. Essentially, instead of paying the damages to the individual, the damages are paid to a discretionary trust so that there is no outright entitlement to funds, and so means tested benefits are protected.
There are a few things which appear on Google search. Here is one of them. www.personalinjurytrusts.co.uk.
Best though to go to a solicitor who will set up the right sort of trust. I am surprised the PI solicitor could not do it. Its fairly common.
You are right DLA is not means tested, so it is unaffected by the outright award, but things like housing benefit, universal credit, tax credits are means tested.

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By penelope pitstop
19th Oct 2016 09:37

Thanks for this response. I will get on to a solicitor straight away.

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