Having a child suffer a catastrophic disability is horror enough for any parent without having to worry about whether the little support they get from the State is vulnerable. But such is the nature of welfare support, tightly constrained as it is by rules to avoid potential for abuse.
The means test rules on capital for the disability allowance are more generous than for most other welfare payments in that they do not take into account the first €50,000 of savings The assessment of your income will not look at any welfare income that you are receiving. Certain other State payments are also excluded – a full list is available. Where relevant, any rent you receive from a second property you own will be ignored provided the capital value of the building has been assessed on the capital side of the means test.
I checked with the Department of Social Protection to make sure we had the most up-to-date position. It confirmed that compensation payments such as that received by your daughter are generally treated as capital for means-testing purposes.