Parents to get a direct route to Child Trust Funds for young adults who lack mental capacity
The government plans to let parents and carers deal with Child Trust Fund providers directly, instead of applying to the Court of Protection, when an 18-year-old cannot manage their own money. It estimates 63,000 to 126,000 young adults are affected.
Families of young adults who lack the mental capacity to manage their finances are expected to be able to go straight to the Child Trust Fund provider to get at the savings, under legislation the government announced on Tuesday. At the moment they have to go through the Court of Protection, a process the government describes as complex and often costly.
The Ministry of Justice and HM Treasury put the number of young adults affected at between 63,000 and 126,000. The Treasury said the funds are worth £2,600 each on average.
The current rules
A Child Trust Fund matures on the holder's 18th birthday. The account passes automatically to the young person, no more money can go in, and until they withdraw it or move it to an adult ISA nobody else can touch it.
When an 18-year-old cannot make financial decisions, GOV.UK guidance says a parent, close friend or relative has to apply to the Court of Protection for a financial deputyship order before they can manage the account. In Scotland the application goes to the Office of the Public Guardian, and in Northern Ireland to the Office of Care and Protection.
The scheme was introduced in 2005 and had no route for this group. It covers children born between 1 September 2002 and 2 January 2011, so the first accounts matured in September 2020 and the last will mature in January 2029.
The new route
The government will add an amendment to the Financial Services and Markets Bill to create the new process. Once Parliament has approved it, the detail will follow in secondary legislation.
Ministers will also work with campaigners, disability charities and the financial services industry on how the process should run, including:
- who will be allowed to access a fund on the young person's behalf
- what evidence they will need to provide
- what safeguards are needed to protect the young person without adding unnecessary cost
The Court of Protection will stay open as an alternative route.
No start date has been given. The charity Contact, which backed the campaign for the change, said it would work with families, the government and providers to make the new scheme straightforward.
