DWP Benefits after compensation

[RV30]

A lady I care for received a very large sum of compensation for mental illness caused by historic child abuse. This was from the Criminal Injuries Compensation Authority.

She received the compensation via her solicitor in March this year. She has been unwell and unable to do anything with the money so it is just sat there in an account.

She is still in receipt of disability benefits.

I am trying to get her to see a solicitor to set up a Personal Injury Trust.

Is it correct that there is a 52-week period set in law when the DWP will not consider the compensation and will ignore it?

It has been very daunting for her to receive such a large amount of money when having been on benefits for many years.

[des8]

You are correct there is a 52 week grace period during which the award is ignored by DWP, which enables the recipient to set up a PIT

[RV30]

Thank you for responding.

Will it not look a bit odd to the DWP that the lady has had a huge amount of money sat in her account for a few months, whilst continuing to claim disability benefits, when she didn't protect it in a Personal Injury Trust? Could this start a fraud investigation?

She had a solicitor and barrister who obtained the compensation for her from the CICA, but she was too overwhelmed by the amount of money awarded to protect it when it was first awarded and paid in March. The 52-weeks will run out in March 2024. Thanks.

[des8]

They shouldn't query it.
It takes time to come to terms with a sudden windfall, and it is accepted that recipients need time to deal with it

However it is better dealt with sooner, rather than leaving it to the last minute.

Speaking from a friend's experience (£500,000 award) I would suggest the appointed trustees are professional people (solicitors perhaps)
Yes, they will charge for their services but appointing family members can turn out to be a disastrous choice

[RV30]

Thanks, Des8.

The award was for £200,000 and obviously she can't spend that amount in such a short time, and has not even been able to contemplate what to do with such a huge amount of money, especially after having been on benefits for most of her life.

Once a personal injury trust is set up, does that mean the benefits may continue? These are legacy benefits, such as Employment and Support Allowance, Disability Living Allowance and Housing Benefit. Her last review with the DWP was in 2013.

Can the Personal Injury Trust invest the money, in things like active savings accounts etc?

She suffers from paranoia and so is worried about having such a sum in her account whilst claiming benefits. My understanding is the compensation shouldn't replace the benefits.

Many thanks for your help.

[des8]

The compensation for injury is recognition of the ongoing effects of that injury and is to help with daily costs etc.
As such it is disregarded by DWP when calculating entitlement to benefits (altho' they need to be informed about it)

If the recipient spends the whole amount within the 52 week period, the DWP will look to see if it was done to enable recipient to continue claiming.

To preserve rights to benefits, and preserve the capital sum your friend really does need to set up a PIT asap.

[RV30]

Does a Personal injury truat protect housing benefit as well?

Thanks for your help

[des8]

yes, my understanding is that all means tested benefits exclude personal injury compensation when calculating eligibility

[RV30]

Thanks for all your advice, you have been extremely helpful

[des8]

your welcome