Armed Forces Compensation Trusts

Have you recently or are you about to receive an Armed Forces Compensation Scheme award?

Are you, or may you in future, be entitled to means tested benefits such as Employment and Support Allowance or Housing Benefit?

If the answer is "YES" then your entitlement to benefits may be affected, and you could be worse off when you receive your compensation!

Armed Forces Compensation Trusts are a legitimate and straightforward way of protecting your compensation. Any money held in such a trust will be ring fenced and disregarded for benefit calculations meaning you get to keep your compensation AND means tested benefits.

Why do I need an Armed Forces Compensation Trust?

If your savings, including your compensation, are over £6,000 then you are at risk of having your benefits reduced. If you have savings over £16,000 then you risk losing your benefit entitlement entirely. Therefore if you have, or you are going to be receiving more than £6,000 in compensation you should give serious thought to setting up an Armed Forces Compensation Trust.

It doesn't matter if you are not currently receiving means tested benefits and support; your circumstances may change in the future by which time it may be too late to set up a trust.

If there is any possibility you may need residential care at some point in the future then setting up an Armed Forces Compensation Trust will prevent you losing your compensation to the Local Authority in order to pay for your care.

What happens next?

The Trust must be set up within 52 weeks of receipt of your first payment under the claim for it to be effective in protecting your right to benefits.

The compensation will be paid into a Trust bank account and you will need to appoint trustees to administer the trust. The trustees are chosen by you and can even be you. The other person can be anyone over 18 years of age. The other trustee can be a family member acting with you. Any professional trustee appointed would charge for their involvement in administering your trust.

A Trust Deed would be prepared for you and then you and your chosen trustees will sign the deed in the presence of an independent witness who can be anyone over the age of 18.