Protecting Your Compensation
Updated: Sep 29
Once you have finished your personal injury claim and got your compensation, what then?
Most cases are, fortunately, for relatively modest injuries. Painful, upsetting and disruptive to be sure, but the sort of thing where the compensation money is easy to spend, on things like making up for the pay lost when off work, or on a bit of medical treatment.
But what about the more serious, life-changing injuries? In cases where someone cannot realistically go back to work again, or where they need to pay for nursing care for the rest of their life, the money they get from their compensation claim is important. It is there to pay for these lifetime needs, to put the injured person, so far as money can, back in the position they would have been had they never been injured.
The money is not there just to pay back the injured party for their losses. Imagine if, in your family, the main earner was suddenly unable to earn, left to live on state benefits. Imagine if as well as them being unable to work, their husband or wife also had to give up work because they have to look after them. Would the family survive financially? Would the family be able to afford to live where they live? To pay for holidays, cars and all the other things families spend their money on?
When someone is awarded compensation for lifetime losses, that money is supremely important. They only get one chance to get the right money, they can't go round again and claim twice. But the danger lies not just in getting the right amount of money in the first place, but how to protect that money once you have it.
This sad story of a man who received compensation after a medical accident left him unable to work illustrates the point. His money was there to replace his earnings and to pay for his care. Instead he used it to gamble, losing around £500,000.
Whatever you might think of whether he should blame himself (and one would think he almost certainly does), or whether the bookmakers concerned ought to have saved him from himself, the fact is that most people will never have £500,000 in their lives. Suddenly having that sort of money is a huge responsibility, one which many struggle to deal with. A certain number of people suffer from problems with gambling or drinking or whatever it might be anyway. On a modest income that might not be too much of a problem, but give them a pot of money that is supposed to be there to see them through the rest of their lives and temptation can be too much.
Sometimes the reason someone might be vulnerable to gold diggers or scams or unwise spending can be the very injury for which they have been given compensation. Psychological injuries or brain injuries can leave people vulnerable to exploitation, or unable to tell what they ought and ought not to be spending their money on.
But there are steps that can be taken to protect accident victims' money. A personal injury trust is often used to handle compensation either during or after a claim. Part of the reason for using a personal injury trust is that it allows someone to continue to receive certain means tested state benefits even after receiving a lump sum of compensation. But it also means that the person who owns the money (the accident victim) is not the person actually in possession of the money. Instead they appoint trustees to look after it, usually some trusted family member, or sometimes a professional such as a solicitor.
If they need money for anything they ask their trustees, and almost always the money can be released without a problem. But if the injured person needs protection, for example if they are spending a lot of money on gambling, or it appears to the trustees they are about to be scammed, the trustees can say no. The injured person can then say to their new friend who seems so keen to get them to invest in their too-good-to-be-true venture, "Sorry, the money's in trust, I can't get it."
In other cases, especially where the victim of the accident is injured badly enough that they don't have mental capacity to handle their own money, an application can be made to the Court of Protection for a trustee (known as a deputy) to be appointed. The trustee, who can be a solicitor but could also be a family member, is required to report regularly to the Court of Protection so the court can make sure the money is being properly looked after.
Another option can be to avoid taking a lump sum in compensation at all. It is possible to have an order for periodical payments, where compensation for the injuries and losses up to date are awarded as a single payment, but some or all of the future losses for things like earnings and care costs are awarded as regular payments, a bit like a pension.
Whichever course you intend to take, it is important to have a solicitor who can give you some guidance on your options, and who doesn't assume the case ends as soon as the damages are paid.