Campbell, Jane --- "Lump sum compensation for injury: What your clients love and hate after settlement" [2022] PrecedentAULA 44; (2022) 171 Precedent 50

Only a fraction of Australians with disability are able to secure lump sum compensation.

Those who are able to pursue a claim often find the process long and stressful. They look forward to when it will finally be over.

At the end of the day, a personal injury claim delivers money. Money will not cure the disability, but it can make a big difference to the life of the injured person and their family.

Lawyers cannot give financial advice, but your clients certainly look to you for guidance.

As a financial adviser, here is what I see and hear from your clients and their families regarding the money post-settlement. I hope it helps you to prepare them as best you can.

After you have guided your clients through the legal maze, some of these insights may assist you in informing them that although life after settlement is not always smooth sailing, the lump sum that you have helped to secure will make a big, positive difference.

Note that for clients without financial capacity the systems work slightly differently in all states and territories. In all jurisdictions except Victoria, clients have the option to select the government public trustee or a private alternative. In Victoria, the settlement funds are managed by the court.

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What clients hate

Those with financial capacity

• Unexpected delays in getting the settlement funds, especially if Centrelink has already been cut off.

• Ending up with less money than expected due to surprise repayments, or higher than expected legal fees.

• Hearing that Centrelink carer payments will likely cease due to the injured person’s settlement.^[1]

• Discovering that getting a million dollars doesn’t mean you can ‘live like a millionaire’.

• Realising that money doesn’t, and will never, make up for what has happened.

Those without financial capacity

• Hearing late in the piece that they won’t be able to manage the money themselves.

• Being advised that they will not be able to use all the money to buy a house or invest all the money in the property market.

• Discovering that public trustees do not help clients who want to prove capacity or change trustee.^[2]

• Discovering that some private trustee companies actively resist a quest by their clients to change trustee.

• Finding out that a trustee company does not necessarily provide sound, clear information about investments or fees being paid.

• Finding out that the tribunal might not be able to remove or change protective orders made by a court.

• Discovering that financial management orders usually cover all of the injured person’s estate, not just their settlement funds.^[3]

• Not being able to borrow money while a protected person.

What clients love

Those with financial capacity

• Knowing that they do not have to tell and re-tell their story anymore.

• Having more options now that they have money.

• Finding out about the special investment rules that benefit those who have received personal injury compensation.^[4]

• Hearing that they are able to invest the settlement money tax-free, forever – if they meet the superannuation definition of permanent incapacity.^[5]

• Hearing that they are still entitled to Medicare and (usually) the NDIS.

• For some, being able to buy a home.

• Being able to retain or later regain access to a Centrelink Disability Support Pension.^[6]

• Being able to relax and focus on building a future.

Those without financial capacity

• Knowing that part of the settlement funds (damages claimed for funds management) was to pay for the funds to be professionally managed.

• Being empowered to select the providers they feel comfortable with to manage the money.

• Finding caring professionals who will be with them on the rest of their life journey, and who have their best interests at heart.

• Not having to fill in forms or attend to money administration.

• Hearing that if the protected person dies the money will not go back to the defendant or the government, but will pass according to their will or to family under the laws of intestacy.^[7]

• Knowing that their child who gains capacity at 18 won’t need the trustee anymore, but will have the option of keeping the financial adviser.

• Being assured that, if and when they can prove capacity in the future, the protective orders can be removed.^[8]

• Knowing that their choice of trustee is not ‘forever’ – that judges and tribunal members respect the right to change trustees (even the public trustee) in the best interests of the protected person.

• Knowing that the system is designed to protect and prioritise the best interests of those without financial capacity.

Jane Campbell is the Principal of Aeran, an independent financial advice practice that specialises in personal injury financial advice. Jane is a Certified Financial Planner with a legal background. She is a long-time member of the Australian Lawyers Alliance, and a member of its NSW Committee. EMAIL jane.campbell@aeran.com WEBSITE www.aeran.com.

Precedent (Australian Lawyers Alliance)

Campbell, Jane --- "Lump sum compensation for injury: What your clients love and hate after settlement" [2022] PrecedentAULA 44; (2022) 171 Precedent 50

^[4] See Income Tax Assessment Act 1997 (Cth), s54.1.

^[8] Australian Law Reform Commission, Equality, Capacity and Disability in Commonwealth Laws (Issues Paper No. 44, November 2013), 29–32 <https://www.alrc.gov.au/wp-content/uploads/2019/08/whole_ip_44.pdf>.