At our recent rehabilitation conference, held at the Principal Hotel in York, we were joined by Thom Harrison DipPFS, financial planner from Perspective Financial Group.

The conference, which followed the story of ‘Steve’, explored the litigation journey that may be experienced by a road traffic accident survivor. It also explored the multidisciplinary team that would be put in place, to ensure the needs of the client are met.

Financial planning is a big priority in all personal injury cases. Immediate needs assessments outline the cost forecast for recommended care and therapy plans. The role of the financial planner is to help ensure funding obtained through compensation meet the identified needs effectively.

In Thom’s role as a holistic financial advisor to clients with complex needs, he has a wide experience of dealing with survivors of catastrophic injury. He spoke of his role in providing advice which would help clients plan for the future and manage their compensation to try to ensure that their damages last throughout the course of their life.

Thom pointed out that, often, survivors of catastrophic personal injury claims can no longer earn money to fund their lives and their needs. Instead, they need to ensure that the compensation they receive because of their personal injury claim is used and spent wisely to allow the client to benefit from the compensation for the rest of their life.  

Decision making and tax planning

To ensure the compensation received provides the support it was intended to, Thom spoke of the importance of decision making and tax planning. He used a cashflow model to demonstrate the effect different decisions would make on the longevity of the payment. This is often a tool that financial advisors can use to easily demonstrate the effects of different decisions on the client’s long-term financial situation. The chart shows the amount of the compensation decreasing over time and predicts when the damages may run out, dependent on the different decisions made.

 In relation to the story of ‘Steve’, Thom considered the wider journey of the client. Relating this back to the cashflow model, he explained how financial planners will consider someone’s past and present to predict their future. Thom described the cashflow model as a weather forecast, explaining that it was easier to predict what may happen in a few days and much harder to predict what would happen in years from now. Using the cashflow model could be used as a predictive tool to try to plan carefully, with the ultimate aim of spending the last penny on the client’s very last day.

Benefits of personal injury trusts

In the aftermath of a catastrophic injury, survivors are often confronted with numerous challenges, not least of which is securing their financial future. The impact of such injuries extends far beyond physical recovery, often leaving individuals facing a lifetime of medical expenses, loss of income, and ongoing care and therapy needs. In navigating these complexities, one invaluable tool stands out in a situation where a client has the capacity to decide to set one up: the personal injury trust.

A personal injury trust serves as a crucial mechanism for safeguarding compensation awarded to survivors of catastrophic injury. This legal arrangement enables individuals to retain control over their assets while simultaneously protecting their eligibility for means-tested benefits and ensuring financial stability for the long-term.

Thom explored the many benefits of personal injury trusts. These trusts can help clients to retain entitlement to benefits they may be receiving, whilst also allowing them to obtain financial advice from their trustees. Furthermore, Trusts have several tax benefits which protect the client from, as Thom described, the “enemy” of the story, the taxman!

Empowering independence and control

Beyond its practical benefits, a personal injury trust affords survivors a sense of independence and autonomy over their financial affairs. By retaining control over trust assets and decision-making authority, individuals can assert greater agency in shaping their future and pursuing their goals and aspirations. This empowerment fosters a sense of dignity and self-determination, allowing survivors to navigate the challenges of recovery with confidence and resilience.

With the assistance of trusted advisors and legal professionals, individuals can develop personalised strategies for managing compensation funds. These can help to maximise investment opportunities, and plan for future contingencies. Thom spoke of the pleasure of unwise decisions. Generally, in life, it’s the financial decisions that we know may be unwise that bring happiness. These might be large investments such as buying a high spec car, going on holiday, or giving monetary gifts to family. They are not purchases that are wise or necessary but purchases that will bring joy and these should be factored into cashflow models. Equally a cashflow model is a useful tool to show the client the long-term effects that a short-term unwise decision can make, to better assist the client to make the correct decisions for them.

Conclusion

Thom Harrison's insights at the rehabilitation conference underscore the critical role of financial planning in personal injury claims. His expertise highlights the importance of decision-making, tax planning, and the use of tools like cashflow models to ensure long-term financial stability for survivors. Personal injury trusts emerge as essential mechanisms for safeguarding compensation and preserving benefits eligibility, where a client has capacity. Beyond practical benefits, these trusts empower clients with autonomy and control over their finances, fostering dignity and resilience. Overall, Thom's perspective emphasises the holistic approach needed to navigate the complexities of financial planning, ensuring survivors can confidently pursue their future goals.

If you'd like to speak to one of our personal injury specialists, call us on 01302 320621 or email help@switalskis.com

Interested in attending one of our conferences? You can find more information on our events page.