A recent report detailing the discovery of Child Trust Funds (CTF) ('I got £955 from a Child Trust Fund I didn't know I had', BBC) has been in the news for all the wrong reasons.
The BBC news report in January 2025 notes that nearly a million young people have yet to claim their CTF, with over £1.7 billion sitting in CTF accounts waiting to be accessed. The Public Accounts Committee (PAC) blames a "failure in long term planning by HMRC", such that 42% of eligible 18-20 year olds have not drawn on their savings. This suggests that many young adults do not know their account exists.
The chair of the PAC, Sir Geoffrey Clifton-Brown MP, has told Radio 4 Money Box that he favours an automatic pay-out of CTFs at age 18, rather than relying on the current system which requires the CTF account holder to claim it, and that he will be pressing the Treasury and HMRC on this next time they appear in front of the PAC.
Another recent BBC report tells of a CTF which had been reduced to only £12 due to punishing management charges.
Around six million babies born between September 2002 and January 2011 received at least £250 in a CTF, a tax-free savings account introduced by the government of the time as part of a scheme to help children reach the age of 18 with some savings on which they could draw in adulthood. Vulnerable children with special educational needs or disabilities (SEND) received a higher amount, reflecting the additional challenges they might face in the future. The CTF was locked until the child reached majority. Parents and grandparents were able to add to the CTF to increase the pot.
The average CTF account contains around £2,000 at the point of maturity.
The recent adverse publicity around CTFs follows on from negative reports in recent years from affected families, charities and other stakeholders that SEND young adults who lack mental capacity are being refused access to their own CTF savings – money which could enable them to purchase important therapeutic treatments or equipment, for example - unless their parents or carers go through a lengthy and often costly court process to gain access to the account on their behalf.
This issue arose because, when the scheme was introduced, no consideration was given to setting up a fair and efficient system which would enable other suitable parties, such as parents and carers, to access the CTF on behalf of a young person lacking capacity when they came of age. Under the current system, already stressed and stretched parents may have to undertake the cumbersome and potentially expensive business of making an application to the Court of Protection for a financial Deputyship order for the sole purpose of gaining access to the CTF on their child's behalf.
A report issued in 2023 estimated that around 80,000 vulnerable young persons lacking capacity were being disadvantaged in this way. Despite a high-profile, parent-led campaign, widespread publicity by the media and other stakeholders, and the introduction of a Ministry of Justice toolkit designed to help parents navigate the complex current legal process to obtain a Deputyship order, a satisfactory solution to this painful conundrum remains outstanding. It would appear that the issue could only be adequately addressed by the introduction of new legislation or significant government investment to resolve the existing obstacles.
Last year, Hunters chaired a Society of Trust and Estate Practitioners (STEP) Roundtable discussion, which brought together a panel of experts from the legal, medical, financial and charitable sectors to discuss the challenges in gaining access to the CTFs of vulnerable young persons lacking capacity.
The discussion also included consideration of other options that might support parents in caring for a vulnerable child, including the creation of a trust with the parents as trustees. An appropriate trust structure might indeed provide a suitable framework and would be worth considering for the right circumstances. As always, appropriate professional advice should be sought on the matter.
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