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Written on 30th July 2024 by Alex Edwards

A Child Trust Fund (“CTF”) is a tax-free savings account for children that were born between 1 September 2002 and 2 January 2011.

A child can take control of their CTF at 16 and at age 18 the CTF matures meaning that no more money can be added. The funds can be withdrawn or transferred to an adult ISA but the child needs to arrange this themselves.

Children that lack capacity to manage their property and financial affairs are unable to withdraw the funds or transfer them to an adult ISA.

What happens next?

If a person is unable to manage their property and financial affairs, a deputy will need to be appointed for them. A deputy will take control of a person’s finances and property and manage them in the best interests of that person.

In order to be appointed deputy, the applicant would need to arrange for the person to have a capacity assessment completed. If the outcome of the assessment is that the person lacks capacity to manage their property and finances, the applicant would then need to fill in the relevant application paperwork and submit it to the Court of Protection. The Court then decides whether to make an Order authorising the appointment of the deputy.

There are many obligations deputies need to adhere to including putting in place a security bond, making decisions in the person’s best interests and providing an annual report to the Office of the Public Guardian.

There is only a small amount in the CTF, do I really need to do this?

Many  families of children who lack capacity to manage their property and financial affairs at 18 are finding themselves in a difficult position. They are unable to access the funds in the CTF without a deputy being appointed and sometimes the balance of these accounts is relatively small. In some cases, instructing a professional to complete the application papers could result in costs higher than the child’s assets.  

Families are then having to make an application to the Court of Protection themselves to be appointed deputy for their child which can be a time-consuming process. Even when making the application without the support of a solicitor, there may be a court fee to pay when making the application, and there are annual fees charged by the Office of the Public Guardian for supervising the deputyship. Applications can be made for a reduction or exemption from these fees, but these depend on the person’s financial circumstances and will not apply in all cases. If an application is being made solely for a parent to access a CTF, they should be able to request an exemption from paying the application fee. This does of course mean more work for the family.

Despite this issue being addressed several times in Parliament, unfortunately,  there is currently no other way to access a CTF if at 18 the person lacks capacity to manage their property and financial affairs.

Once I have accessed the CTF, can I be discharged as deputy?

If the child no longer has an estate to manage it is possible to apply to the Court to be discharged as deputy. You can apply to the Department for Work and Pensions to become appointee for your child and receive and manage their benefits for them, which may be sufficient if your child does not have any other assets or income.

To apply to be discharged as deputy you will need to complete the relevant forms and submit them to the Court of Protection to consider.

Is this the right choice for me?

It is worth considering your child’s current and future needs and their future financial position. For example, are they likely to be given a large gift or receive an inheritance? If your child is likely to only have benefits that can be managed as appointee, you may decide you want to be discharged as deputy.

I sat down with a colleague who has recently made an application to be appointed deputy for their disabled child. Their child has recently turned 18 and resides at a residential placement that is funded by an Integrated Care Board. I asked them if they are intending on remaining deputy for their child even with the ongoing obligations such as security bonds and annual reporting to the Office of the Public Guardian and they said that they are. They said that as their child is now 18, remaining as deputy enables them to be more involved in the discussions regarding placements and funding and particularly as their child will need to move to another placement at age 19, being appointed deputy means that they are completely involved in these discussions. Each family will of course make this decision based on their own individual circumstances.

If you have any questions about this article or if we can assist with anything, please get in touch with our team at cop@boyesturner.com