Local Offer: A Quick Guide to Child Trust Funds and the Mental Capacity Act - WNC

What is a Child Trust Fund (CTF)?

A child trust fund (CTF) is a long-term, tax-free savings or investment account for young people. The scheme was launched in In 2005 by the then-government. Children born between 1 September 2002 and 2 January 2011 were eligible for a CTF account. Parents/carers received a £250 voucher from the government to deposit in the account. The money belongs to the young person, and they can only take it out when they turn 18.

The creation of new CTF accounts, and the vouchers, were brought to an end by a new government in 2011. New accounts can no longer be created, but existing accounts can still receive new money.  Child trust funds were replaced by Junior Individual Savings Accounts (JISAs).

What is a Junior ISA (JISA)?

A junior ISA (JISA) is a tax-free savings or investment account. Any money put into a JISA will be locked away until the child turns 18. at which point it will become theirs. The account will also change into a standard (adult) ISA.

What Happens if an 18-Year-Old Cannot Manage Their Money Because of a Disability?

Some young people with a disability might not have the mental capacity to manage the money in their Child Trust Fund or JISA. However, the money will still belong to them when they turn 18. In those cases, the young person’s parent(s)/carer(s) will need to apply to the Court of Protection to act as the young person’s Deputy. A Deputy is someone (usually a family member) who is appointed by the court to manage and make day-to-day decisions about someone’s finances.

Applying to the Court of Protection can be expensive. There is a court fee of around £365. There will also be legal costs if a solicitor is used. However, parents/carers of young people who lack mental capacity can ask for court fees to be waived or refunded when seeking access to a Child Trust Fund. 

Toolkit

The Government has published a toolkit to help parents and carers better understand their rights in this area. It explains what they need to do (under the Mental Capacity Act) to manage the finances of their child if they don't have the capacity to make decisions for themselves.

• Making Financial Decisions for Young People Who Lack Capacity: A Toolkit for Parents and Carers (Link)