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Child Trust Funds: what happens when a young person doesn’t have capacity to make financial decisions?

The Child Trust Fund scheme was launched in 2005 with the aim of enabling parents to put away funds, which would then be released to their child upon reaching the age of 18. However, with many millions of pounds belonging to around 80,000 young people without capacity to make financial decisions being locked in such funds, Amy Floater, an associate in our Tax and Trusts team, considers how families can navigate their way through the legal process.

Child Trust Funds (CTFs) are a long-term, tax-free savings account for children who were born between 1 September 2002 and 2 January 2011. Children born within this period were given between £250-£500 by the then Labour Government in a bid to boost savings, with the option for families to add their own contributions for their child, and to give all children a pot of money when they reached 18.

There is a main contact appointed to manage the CTF called the “registered contact”, who manages the account until the child turns 18, or until the child takes control of their own account, which could be from 16 years old, provided they have the mental capacity to do so. However, the funds remain in the CTF until the child reaches 18 years old, if this option is taken.

Unfortunately, a significant and costly issue has arisen for those families whose children are entitled to the proceeds of a CTF and do not have the mental capacity to manage their own property and financial affairs when they reach the age of 18.

Currently, a family in this situation must apply to the Court of Protection to become appointed as their child’s property and financial affairs Deputy, enabling them to have access to the CTF and manage the funds ongoing.

Many parents find themselves having to apply to Court and waiting for well over a year for the application to be dealt with. This not only creates a significant delay for the families in question, but the application fee of £371, along with any associated legal costs, can be off putting. In some cases, the Court Fee may be waived, but this will be considered on a case by case basis and will mean more forms to complete with no guarantee that eligibility for this fee being waived being successful.

A small payments scheme was proposed by the government in November 2021 to try and help families access child trust funds in small amounts. However, this has not been implemented due to the Mental Capacity Act, a ground-breaking piece of legislation which was introduced after CTFs, which protects the person who lacks capacity against fraud and abuse. Ironically, most of the families affected will be managing that person’s welfare benefits as an “appointee” authority being granted to them by the Department of Work and Pensions. The appointment and position of responsibility does not extend to the management of private funds of an individual.

The Court of Protection has introduced an online portal to receive applications for the appointment of property and financial affairs Deputies with the hope that this will reduce their current timescales of between 12-18 months. The Court of Protection has also advised that it has aimed to simplify the application process for those requiring an Order of this nature. This may provide some assistance to those families needing to apply to the Court of Protection to access their child’s CTF.

Once appointed, Deputies have a lifelong legal duty and will have to account for every penny they spend to the Office of the Public Guardian in an annual account. This is also via an online portal which has been made ‘user friendly’ for those who need to utilise this platform.

There are various ongoing fees that Deputies must pay each year. These are the responsibility of the person for whom they are acting, which will be very frustrating to families, as it will eat into the capital sum they are managing, which may be quite small.

It is thought that by 2029 all the CTFs will have matured and significant amounts of funds will be locked away in the CTF accounts.

There are still families campaigning for change, so it will be interesting to see what the future holds in relation to gaining access to the CTF.

For now, the position remains that an application must be made to the Court of Protection to access these funds.

Amy Floater has over a decade’s specialist experience in Court of Protection matters and has extensive experience as a professional Deputy for many of our clients.

For help and advice in this complex area, please contact Amy on (01482) 325242 or email

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