Hi everyone,
I have a client who recieved Criminal Injuries Compensation as a result of offences committed agaist him when he was a child. The money has been held by solicitor, effectively in a trust I suppose, but when he reaches eighteen it will be released to him in full without any further overview or any restrictions on how it can be used.
I imagine this money will be treated as capital as it would no longer be held in trust and is available to the client in full with no restriction but does he have a year's grace to set up a Trust fund as per Sch.10 para12A of the IS regs? If he does this does he risk falling under the 'deprivation' rules.

I've looked at the regs but the more i read the less clear it seems to be!

thanks

Pete.

it should have been put in a PI trust the moment it was received by the solicitor . and certainly that should be done before he gets to be 18! although ( i will have to double check...) I rather think the 12 month grace might have already expired...depending on exactly when he got it. get his authority to write to the solicitor to get that sorted out, and if you get no joy, he'll have to change solicitor (any APIL member in his/your area shoudl be able to assist or point you in teh right direction)

Schedule 10 lists capital to be disregarded - ie capital that the claimant actually does have, but is treated as not having. "Deprivation" - or notional capital - involves the opposite process; the claimant does not have the capital in fact but is treated as though they still possessed it. Thus if your client can legitimately bring himself into one of the provisions in schedule 10, the notional capital rules cannot apply.

As Claire suggests, the 52 weeks' grace begins to run from the moment payment is first received - and this may already have expired. It's also important to grasp the full import of para. 12; funds held in trust that are "derived from a payment made in consequence of any personal injury to the claimant...." are ignored. Thus even if your client is caught by para 12A (2)(a) when he turns 18, the moment the funds are once more put in trust, they are ignored.

Thank you both for your replies.

Although details are rather vague I understand that the money is effectively or actually held in trust at present as it is held by solicitors on the young person's behalf and he has no access to it.

It seems that the issue is therefore when did the claimant recieve the money, he hasn't had it yet as it is in trust until his 18th birthday so it would appear that he should have 12 months grace from his 18th birthday to set up a further trust which would ignored, subject to the usual rules, for benefit purposes

I take the point about deprivation, my concern is that he could go ahead and puts the money in a discretionary trust which doesn't allow it to be used for regular household expenses like rent and so forth and is then denied IS/HB on the grounds that he has deprived himself of capital by locking it away in a trust after the 52 week grace period has already expired.

The notional capital reg requires a 2 stage inquiry. Did he possess capital that he now does not? If yes then he has deprived himself of it.

Second was there a (as opposed to the only) significant operative purpose behind the deprivation to gain or increase entitlement to benefit? If the answer is yes then the reg will bite and if the answer is no, then it won't

It largely comes down to intention. The reg is largely (although not exclusively) concerned with not what a person does but why.

Am I missing something here? Or maybe it's just I'm a bit thick......

The scope of para. 12, Sch 10 is wide - it covers payments made "in consequence of any personal injury....." and is surely wide enough to cover payments from criminal injuries compensation? If those payments ("funds") are held in a trust they are disregarded as capital. The funds of the trust have to "derived from a payment made in consequence of any personal injury......" - which means that you can buy a house with the compo, later sell it and place the proceeds of the sale in trust and then have the funds in that trust disregarded as capital.

Unless criminal injuries compo cannot count as personal injuries compo for the purposes of para. 12, I cannot see how deprivation can be an issue here.

"I cannot see how deprivation can be an issue here".

I agree and the trust point had clearly been answered. However, as PC raised the deprivation point as a concern then further info' on the point was clearly needed.

Fri 13-Jun-08 02:25 PM by past caring 1

Sorry if you thought I was having a go - I really did wonder if I was missing something.

Did not think you were having a go at all. No worries. Just thought I should explain myself better, thats all. Have a nice weekend! Its now time for a beer or six!

Thanks everyone for an interesting debate.

pete.