CHILD TRUST FUND ISSUES FOR YOUNG PEOPLE WITH LEARNING DISABILITIES

Back in 2005, the Government introduced the Child Trust Fund (“CTF”) and gave parents a gift of at least £250 to put into the CTF, so forming the basis of a nest egg for the child when they reached 18.  Parents and other relatives could add to the CTF.  Children born on or after September 2002 were eligible.  For children from low income families, a further £250 was added by the Government.  

The vouchers could be invested with one of a number of providers and many parents took the opportunity to invest for their child’s future, knowing that the funds were safe until the child reached adulthood. The scheme was scrapped in 2011 and so no new Child Trust Funds could be created after that time.  However existing Child Trust Funds continued and in many cases were converted into Junior ISAs. 

The amount which could be paid into these savings accounts has steadily increased, so that as of the 2020/21 a maximum of £9,000 can be paid into the account on a yearly basis.  It is therefore quite possible for these accounts to have built up a very healthy balance if parents continued to add to the initial deposit.

The money in a CTF or Junior ISA belongs to the child and can only be withdrawn by that child upon reaching the age of 18.

An unintended consequence of this scheme is that young adults with learning disabilities or who otherwise lack the capacity to manage their financial affairs are not able to withdraw their money from these accounts.  Furthermore, since only that young adult can access the funds, nobody else can withdraw the money on their behalf.  This creates a real problem for families who may have diligently saved into their child’s Trust Fund or ISA and are now unable to access and use the money for their child.

Despite some publicity and pressure on the Government to change the system to make accessing these accounts easier for such families, currently the only way in which the funds can be accessed is through an application by their parents to the Court of Protection for a Deputyship Order.  This is a time consuming and complicated process (taking at least 6 months) with ongoing administrative responsibilities.  However, it is the only option for families who have invested for their children in one of these funds and who wish to access their child’s savings.

The Ministry of Justice have stipulated that if a Deputyship application is made for the sole purpose of withdrawing funds from a Child Trust Fund or Junior ISA they will waive the Court fee (currently £365).  If the young adult has other assets which need to be managed on their behalf (for example other savings accounts or investments) then the fee is still payable.

The Court of Protection will also waive fees for a Deputyship application made for any reason when the young person is under the age of 18 (but they must be over the age of 16).  A capacity report by a medical practitioner will also be needed in either case and there will be a charge for this, which could range from £300-£500.

We recommend that families with children who will be unable to manage their finances once they are 18 consider applying for a financial Deputyship Order before their child reaches the age of 18.  The transition from childhood to adulthood is sometimes a trying one, but for those families with learning disabled children this is often even more true.  A Deputyship in place already will help smooth some aspects of the transition, and of course, will ensure that funds held in a Child Trust Fund or Junior ISA can be withdrawn on the young person’s behalf and used for their benefit.

We can help you to apply for a Deputyship and can discuss its implications for you and your child with you.  Please contact a member of the Private Client Team for an initial discussion.