Proposal for Child Trust Fund access reforms

UK Government proposes access to Child Trust Funds without the need for a Lasting Power of Attorney or Court of Protection Order

Under the Mental Capacity Act 2005 (MCA), accessing a Child Trust Fund requires that a family member or guardian of a young person lacking capacity must apply to the England and Wales Court of Protection  so that they may manage their finances.

Following the MCA, applying to the Court of Protection is currently an expensive and timely process. Many applicants have complained about the time-consuming forms, complex process and excessive fees. This is particularly problematic where only small funds are being kept in Trust as the cost of the application can outweigh the funds they need to access for the benefit of the young person.

An application to the Court of Protection itself requires the submission of several forms and a capacity assessment by a medical practitioner to ensure the young person lacks capacity to manage their own finances.

With delays caused by the impact of Covid-19, the process on average takes around 6 months with an application fee of £371.

The UK government now proposes a simplified, accessible way of entry to these funds. It aims to create a clearer structure to be followed by all in order to make the process easier for the families and carers of those who lack capacity.

This could involve introducing a ‘Mental Capacity Small Payments Scheme’ which will allow third party access to these limited funds without the need to obtain a Lasting Power of Attorney or a Court of Protection order for deputyship.

Some of the proposals being made include:

• Funds accessible would be allowed up to a maximum of £2,500
• Access to funds would be permitted for 6 months from one account
• An extension of 6 months to this access period may be permitted where the value of £2,500 has not been reached

Applicants would be able to access the scheme through building societies, banks and other financial services firms.

However, it should be noted that once the account has been accessed, it can not be accessed again by the same or a different applicant. The same applies for any other accounts held by the individual who lacks capacity to manage their finances.

Applicants will be asked to consider whether a deputyship is required and are only encouraged to apply to the Court of Protection where it is deemed a necessity. Applicants do not just have to be family members, they can be anyone who is deemed appropriate and suitable to hold a deputyship.

Despite the scheme being portrayed as a ‘small payments scheme’, it could potentially refer to both direct consumer payments as well as cash withdrawals on behalf of the person who lacks capacity. It has been stated that the scheme would apply to all people who lack the mental capacity to manage their finances (not just young people) but it has not covered whether this will be inclusive of people who may temporarily lose capacity.

We await further developments regarding Child Trust Funds.

Further reading

For more information about the different kinds of Trusts available and what they are, read our resource here.

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