Child Trust Funds

Why might it be of interest?

Child Trust Funds can be released to the young person when they turn 18.  If your young person has a CTF and has mental capacity there’s no problem – they can access the fund at 18.  But if your young person does not have mental capacity to complete the information needed to access the funds when they turn 18 you might have some difficulty accessing the money.

The following information has been gleaned from the government website about CTFs and from parental personal experience.

If your young person was born between 1 September 2002 and 2 January 2011 you are likely to have a Child Trust Fund (CTF) for them.  Many people will have added little or nothing to the pot but some of you might have added a significant amount.  Either way, when the young person turns 18 the pot becomes theirs and they have the option to take the money out or moving it to an ISA.

The provider will usually write to the young person a couple of months before their 18^th birthday asking what they would like to do with the money.  Money can’t be added at this point but if the young person doesn’t do anything the fund may be converted to an adult cash ISA or an adult stocks and shares ISA (depending on the type of fund it is) or if the fund provider isn’t authorised to offer the relevant ISA the money will be held in a ‘protected account’ until such time as the young person contacts the provider.

There is no problem here if the young person has the mental capacity to be able to complete – or at least sign – the paperwork to access the money.  The money becomes theirs to do what they like with it.

The problem arises when the young person DOES NOT HAVE mental capacity to complete or sign the paperwork.  In that case you may have to apply to the Court of Protection for a one-off deputyship order to enable you to access the fund.

Some fund providers appear to be open to allowing parents to access the fund on their young person’s behalf without a court order, others will not allow access.  You’re not going to know which way your fund provider will go until you ask.  The amount of money in the account is likely to be a factor.  In accounts with little or no money added the fund provider may be willing to release the money with some evidence but if you have added to the fund and it amounts to a more significant amount you may find that your only option is to get a court order.

I recommend that you approach your fund provider and as the question:  what evidence to you need to release the fund to me?  I think you may as well start with the assumption that they can release the money to you and while asking the question may get you nowhere it might also cause the fund provider to consider what they can do.

A parent recently accessed their young person’s fund without a property and affairs deputyship by providing the following:

• Health and welfare deputyship order
• A letter from social care – written to support their Universal Credit application saying that they didn’t have capacity to work
• Their passports
• The DWP Appointee letter
• The young person’s hospital passport and a long letter explaining their disability, that they don’t understand money, what they would like to use the money for

Another parent had the fund released based on their being the DWP Appointee.

The parent received a cheque in their name which they paid into an account they use for the young person’s benefits.  It’s difficult to say whether the health and welfare deputyship order had any particular influence here – it is a court order but not the right one for this financial transaction.

I would think about all the evidence you have about your young person and their abilities and disabilities and collate it.  I would certainly add:

• the young person’s PIP award letter (and the most recent update to confirm they are still in receipt)
• any letters about their Universal Credit. As UC is managed online it might be a matter of printing off evidence
• any reports – independent, consultant, etc – that demonstrates the young person’s disabilities and needs
• possibly their EHCP if other documents are in short supply

The aim being to demonstrate clearly why the young person can’t manage the money themselves.

Other things to know

Amount in the account:  If the amount in the CTF exceeds £6,000 this will affect their Universal Credit and the amount they receive will be reduced until the total is under £6,000.  If the amount in the CTF exceeds £16,000 their UC will stop until the total is under £16,000 and will not be reinstated in full until it is under £6,000.

Social care:  If the amount in the CTF account exceeds £23,250 social care will not fund the young person’s care package.  If the amount is between £14,250 and £23,250 they will fund some of it – but the whole amount will not be funded again until the total is reduced below £14,500.

PIP is not means tested so is not affected by the amount in the CTF but other benefits your young person receives could be.  Housing Benefit, is, for example, means tested.

Property and Financial Affairs Deputyship:  If your fund provider won’t release the money to you your only option is to apply for a Property and Financial Affairs Deputyship.  You can apply to the Court of Protection for an ongoing deputyship to manage all of your young person’s financial affairs or for a one-off decision – accessing the CTF, for example.  Do be aware that even if you apply for a one-off decision the court could decide to grant an ongoing deputyship.  This is not necessarily problematic but it does mean annual reporting of your young person’s financial affairs.

The process is the same whether you are asking for a one-off decision or an ongoing deputyship.  There’s about 50 pages of documents to complete in total and it can take up to a year to be authorised.  There is a cost but that should be refunded (if it has to be paid upfront) based on your young person’s assets.

Reducing the amount from the CTF:  The obvious thing to do if your young person’s CTF breaches the above thresholds would be to reduce the amount quickly.  Do be careful – you do not want to reduce the amount and then find that the expenditure is considered as a deprivation of assets, ie that you have deliberately reduced your young person’s assets so that their benefits or social care package won’t be affected.

That’s not to say that you can’t spend the money – just do it wisely!  You may have put off buying some specialist equipment (like a bike or tablet and software) that would benefit your young person because of the cost.  You may not have been able to take a family holiday because you need additional carers or very specific accommodation.  Your young person’s room might need a good refresh.  Your young person might have their own ideas!

If you are successful in getting your young person’s CTF released to you without a court order please let me know how you went about it so we can support other parents to do the same.