Child Trust Funds – parents need to take action now
In 2016, Renaissance Legal launched a campaign to highlight the problem of accessing Child Trust Funds by those who lack the mental capacity to manage their financial affairs when they reach 18 years old.
All children born between 1st September 2002 and 2nd January 2011 were given funds to open a Child Trust Fund. The aim of the scheme was to ensure that all children had some savings in place when they reached the age of 18.
However, the funds can only be accessed by the child when they are 18 if they have the ability to understand and sign the documents that are required. For those children that do not have the required mental capacity, the Child Trust Fund providers will only be able to release funds to a person, known as a Deputy, authorised by the Court of Protection to manage their financial affairs.
Since the campaign launched we have spoken to many families whose children have a Child Trust Fund but the money will be trapped as their child will be unable to take the necessary steps to release it. For many this could mean a significant amount of money cannot be accessed and made use of.
There are over 3500 signatures on an online petition calling for change. Hundreds of parents have shared their feelings:
“It’s outrageous to discriminate against these young people and their families in this way! Why should they endure an expensive fight to access their own money?
“I consider it discriminatory that parents of disabled children will need to pay hundreds of pounds to access their child’s CTF on their behalf”.
“As parent carers we cannot afford to pay £400 to get power of attorney to access funds for our disabled kids”.
What’s happening now?
We will continue to campaign and raise awareness of this issue as the current rules place an unexpected and unnecessary burden on families. However, we are realistic that any change in the near future is perhaps unlikely due to recent events.
However, the 1st September 2020 will see the first wave of children who were given a Child Trust Fund being able to access their funds as they reach 18 years old. This is a critical time for parents of disabled and vulnerable children who are turning 18 and we would urge you to review your situation and take action now.
What to do if your child is turning 18
As mentioned, the first children to receive a Child Trust Fund will be 18 on the 1st September 2020. In preparation for your child becoming 18, it is important to check where their Child Trust Fund is held, how much it is worth and how the funds can be accessed. This also applies to any Junior ISAs, either opened separately or transferred from a previous Child Trust Fund.
If you don’t know which provider holds the Child Trust Fund then you can check with HM Revenue & Customs by logging in or registering on their Government Gateway. Details can be found at https://www.gov.uk/child-trust-funds.
The Child Trust Fund provider will provide their own requirements for releasing or managing the funds and we suggest contacting the provider directly to get all of the details.
What if my child is not able to access and manage their Child Trust Fund?
We are very aware, from the research we have done and the families we talk to, that a large number of children will not have the mental capacity to manage their Child Trust Fund at the age of 18. This will mean that the provider will only deal with a Deputy appointed to act on behalf of the Child Trust Fund holder. For parents and carers, their only option will be to apply to the Court of Protection to become their child’s Deputy.
The Court of Protection deals with decision making issues for people who are unable to make their own decisions. The Court has the power to appoint a Deputy or Deputies who are then able to manage the financial affairs of the person who lacks mental capacity.
To become a Deputy the parent or carer will need to make an application to the Court to demonstrate that their child is unable to manage their financial affairs. The Court will then decide if it is appropriate to appoint a Deputy and will set out the powers that the Deputy will have to deal with any financial matters.
The process can take many months to complete and, until a Deputy is appointed, it will not be possible to access the funds. It is vital that parents or carers consider taking early action to start this process and ensure that they obtain the Court’s authority to deal with their child’s Child Trust Fund or Junior ISA.
For further information about the Court of Protection, the following may be helpful:
How Renaissance Legal can help:
We understand that families may find the issue of Child Trust Funds daunting, and that applying to the Court of Protection is something that you may not have considered until now. Please contact us for an informal discussion about your individual family’s circumstances.