Concerns raised over access to Child Trust Funds

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Back in 2002, the Government introduced Child Trust Funds (CTF). Since that time, around 6.3million CTFs have been set up, roughly 4.4million by parents or guardians and a further 1.8million by HMRC.

Under the scheme, which eventually closed in 2011, an initial sum of £250 was placed in each fund by the Government and parents were then invited to continue paying into the fund as their child got older. When the child reaches the age of 18, the CTF matures and they can access the money paid in.

In the twelve months from September 2020, the first 700,000 of these CTFs will mature. However, due to their child having a degenerative condition which has caused them to lose mental capacity, some parents have discovered that they can only access the funds on their child’s behalf by making an application to the Court of Protection.

There was provision made in the original legislation allowing short-cut access to a Child Trust Fund if the child experiences physical illness before reaching 18. However, no such option applies for situations in which the child loses mental capacity.

Calls are being made for the current Government to address the situation amid concerns that children are missing out on access to CTFs and parents are being forced to pursue lengthy and costly legal action as a result of this anomaly.

Meanwhile, the Court of Protection, already stretched as a consequence of the COVID-19 pandemic, may potentially face the extra burden of thousands of CTF applications being made.

In September, campaigners were urging the Government to allow CTF providers to allow family members who could prove they were ‘fit and proper’ to look after a young disabled person’s finances to access funds up to around £5,000.  As recently as last week, this issue was raised again during Prime Minister’s Questions.

At this stage, the Government appears unwilling to make any change to the rules surrounding Child Trust Funds, arguing that to do so could leave vulnerable young adults and their CTFs open to fraud.  Instead, it is encouraging parents facing this situation to seek Power of Attorney or to make a costly application to the Court of Protection. However, with more and more young disabled people coming of age and becoming entitled to access their Child Trust Fund over the next few years, the issue is unlikely to go away.