Child Trust Funds & Capacity

In around 2002, the then Labour Government set up the Child Trust Fund scheme, designed to enable parents to put away funds which would then be released to their child upon reaching majority age.

However, in cases involving children who lack the capacity to manage their property and affairs, upon reaching the age of 18, an application must be made to the Court of Protection for the funds to be released. Quite often, this will be tied in with a deputyship application by one or both of the child’s parents or guardians.

The media has reported on this recently as many parents find themselves having to apply to Court, and waiting for well over a year for the application to be dealt with. This is not only causing a significant delay for the families in question, but the application fee of £371 and any associated legal costs (should the family employ solicitors) can be a real disincentive. Due to the Mental Capacity Act 2005 (MCA), introduced into law after the formation of the Child Trust Fund scheme, it is mandatory to seek the Court’s permission when trying to access or deal with a trust fund for a child who lacks the capacity when reaching majority age.

The Government is proposing a reform to the system which will eradicate Court fees for smaller trust funds (currently proposed to be £3,000 or less) with discretion to waive fees for larger trust funds. Whilst this will reduce the costs involved in smaller cases, it will not tackle delays The Court of Protection’s caseload is very high. Greater education across the board in relation to mental health and the protections afforded by the MCA have resulted in a larger volume of Court applications over a period of 15 years or so, and this does not look like declining unless there is either a change in the law, thus relaxing the requirements (which appears unlikely) or additional investment for the Court of Protection so that applications can be turned around more efficiently.

The Court has developed ways of running itself more efficiently and reducing delays for applicants – including the upfront notification pilot scheme which became mandatory following a successful trial period. This involves notifying “interested parties” ahead of applying to become a deputy, giving them 14 days to respond if they wish to object, and then submitting the application to Court online via a portal for it to be reviewed by a Judge. It has cut delays by more than half. However, in the long run, for the Court of Protection to deal with more complex matters that need to go to hearing (such as applications for permission to sell properties, invest monies, deal with litigation, and deal with financial abuse), pilot schemes such as this will only be of limited help and for applications to be dealt with efficiently, it is hoped that more funding will be made available.

Comment

Many deputies have found it difficult having to account to the Office of the Public Guardian (OPG) for every aspect of spending of a Child Trust Fund. Whilst this can feel rather invasive, and can add both an administrative burden and stress for a parent, supervision by the OPG has been known to identify and prevent financial abuse.

Whilst thankfully this happens in a small minority of cases, without the obligation on deputies to account to the OPG it would be much more widespread and people without a voice or the capacity to understand what is happening would lose out. It is sometimes helpful in larger estates or trusts funds to employ case managers to deal with receipts, statements, and completing forms because parents who take on the role of deputy already have a busy and challenging enough time without the added administrative burden.