Although Child M is severely physically handicapped his mental capacity has not been affected. His award would therefore be under the supervision of the High Court until he attained 18 years of age, at which point he would be able to access the funds. The parties in the case of M-v-P.H.A. agreed to compromise the matter in the sum of £3,118,019 and adjourned to examine the merits of a Structured Settlement.
Child M's care regime was in the region of £75,000 per annum. He also required a vehicle and other capital items every 5 years. We obtained annuity quotations on the following basis:-
1. To provide £35,000 every five years - £174,122
2. Immediate annual sums of £54,528 p.a. - £1.5million
The sums under a Structured Settlement are paid free of tax, fully RPI-linked and guaranteed for Child M's life.
Taking into account interim payments, immediate capital requirements and the cost of the Structured Settlement package, Child M's residual fund to invest was just over £1.75million. Frenkel Topping, together with the instructing Plaintiff solicitors (Alexander Harris), investigated the viability of setting up a Trust to include a portfolio of investments until M reaches 18. At this stage Child M would be able to dissolve the Trust, or to continue.
The advantage of setting up one of our Special Needs Trusts were that Child M's care needs could be met, using a portfolio of investment bonds, unit trusts and open-ended investment companies. Investment bonds are essentially a tool for capital growth. However, in certain circumstances, withdrawals of capital are permitted of up to 5% without incurring any further liability to tax, because income tax and capital gains tax are accounted for within the insurance company funds. A Special Needs Trust was the ideal vehicle therefore, because the investment products will produce enough clear income to provide for the Claimant's considerable annual care costs, while also allowing for capital growth to maintain the investments over his lifetime, which could be as long as 60 years. The final settlement was as follow:-
- Interim payments £250,000
- To the Compensation Recovery Unit £6119
- Past care to Claimant's mother £150,000
- To be invested £1,200,878
- The Structured Settlement was established in line with our original analysis: an immediate annuity providing £54,528 pa at a purchase price of £1.5million and a step annuity of £174,122 providing £35,000 every 5 years.
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When visiting me in Devon the solicitor put me at my ease from the moment we met - a credit to your firm: WD McLennon, Devon
