The financial planning process
We are proud of the financial planning process that we have developed for Personal Injury and Clinical Negligence clients. Our experience allows us to focus on the issues that are most relevant and in many cases we are able to highlight areas to our clients that they may not have thought of.
We go through this procedure with each client, trustee or deputy ideally before the case is about to settle. It is at this stage that our clients are starting to make decisions about what to do with the award.
We discuss specific requirements at length (usually in the claimant's home). Risk is always our number one concern and this is where our experience and expertise makes our approach different to most financial advisers and investment managers. We know that safety and security are likely to be more important than taking high levels of risk in anticipation of high gains.
As part of our standard approach, we will forecast what can realistically be expected over the longer term. We will never try to influence decisions by promising unachievable results.
Once we know what an individual's requirements are, we can build on what has already been put in place (pension, trust, periodical payments) and fit together the remaining options in the most tax efficient and lowest risk way that results in meeting the needs of the individual and their family. We must always maintain the flexibility to change what we have done so that the award can adapt as circumstances change.
Our recommendations are given in a detailed report, which explains the reasoning behind the recommendations that we make.
Some of the most common issues we cover include:
The immediate purchase of a property and the effect this will have on the remaining monies
Whether to accept periodical payments as part or all of a settlement.
Whilst most claimants prefer to accept a lump sum, there are advantages that a periodical payment arrangement can offer. When available, we will make recommendations as to whether this should be accepted for a proportion of the settlement.
What are current and future entitlements to state benefits?
The issues here mainly relate to the entitlement to means tested benefits provided both by central government and the local authority. The problem is that once more than £6,000 is held in capital by the claimant, means tested benefits will start to be lost. We must examine whether it is appropriate to set up a Personal Injury Trust, which can offer protection from some of the means testing rules, whilst still allowing the claimant to retain control of their damages.
Is an interim payment likely to be received?
This is a particularly sensitive issue and often occurs in larger cases where a property has to be purchased or adapted to meet the needs of the injured party. Interim payments must be considered carefully. They DO affect benefits entitlement, the issue of periodical payments and more importantly the level of future income that the remaining award can produce.
If a claimant can no longer work, what can be done with existing pension arrangements?
As part of the litigation process, the solicitor will likely claim for the lost value of not being able to contribute to a pension. However, this is not the end of the issue. If a claimant is unable to work, any existing pensions should be reviewed to determine whether there is any advantage in continuing to make some pension arrangements going forward. Existing arrangements should also be reviewed to ensure that they are being appropriately invested and whether they should be used immediately or left untouched until a future date.
What are the claimant's responsibilities if carers are employed directly?
Many severely injured clients choose to do this in order to save costs. We will advise on issues such as your responsibilities as an employer, the need to get liability insurance, the provision of pension advice for staff and many other issues that are often essential to be aware of but too often get missed when setting up this type of arrangement.
