Parents’ child fund victory
THE Government has moved to ease the plight facing thousands of youngsters with learning difficulties who have been blocked from accessing money held in Child Trust Funds ( CTFs).
Money held in these tax- free savings plans automatically belong to the child once they turn 18 and parents or guardians have no say over how they spend it.
However this has caused problems where children have impaired mental capacity and cannot manage the money themselves. Parents could only take charge if they applied to the Court of Protection to become a deputy but this takes months and costs up to £ 350, often more than the value of the money saved.
Yesterday Justice Minister Alex Chalk said most parents can now apply for deputyship without paying court fees. Those who have already paid can apply for a refund in a move campaigners called a step in the right direction.
This is good news for the 180,000 potentially affected, and many more families that are now saving into Junior Isas on behalf of children who lack mental capacity. The problem came to a head in September when the first children to receive CTFs turned 18, but those who lack mental capacity could not access their money because arranging deputyship cost more than it was worth.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said this was an unintended oversight that affected some of the most vulnerable young people. She said: “Families were encouraged to save for their future in CTFs, and if their children received the Disability Living Allowance they received an extra payment from the government too.”
She said yesterday’s move means that most parents no longer have to pay these fees: “That is a great start but they still have to go through the administrative process.”
Coles said this still means needless stress and hassle for parents who may already have enormous caring responsibilities: “A working group will now look at how to make this easier, but it would actually be better if providers were allowed to apply exclusions to the need for deputyship, to spare parents stressful admin.”
Darius McDermott, managing director of Chelsea Financial Services, said some parents previously got round this by investing in a standard account instead of CTFs and Junior Isas. He said: “They did not enjoy the same tax advantages but at least kept control of the funds.”
Myron Jobson, personal finance campaigner at Interactive Investor, said other families set up a Lasting Power of Attorney ( LPA) to take control of their child’s finances, which was cheaper than going to the Court of Protection: “However the child must consent to the LPA and many with mental disabilities are unable to do that.”
Some providers have not been waiting for the Government to take action. On Monday, BMO Global Asset Management announced that it has adopted an “exception process” to help parents.
Coles said: “Yesterday’s change is a good start but more needs to be done.”