In 2005 the Labour government introduced tax free savings accounts known as Child Trust Funds for children born between 1 September 2002 and 2 January 2011. The aim of this scheme was to teach children the benefit of saving money.
The government gave each child £250 at birth and a further £250 when they reached the age of 7. This amount was doubled for children of low-income families. Family members and friends are also able to contribute to the savings; the maximum yearly contribution began at £1,200 per year and now stands at £9,000 per year.
Child Trust Funds can only be accessed once the child turns 18 and legally becomes an adult, and therefore the first set of Child Trust Funds matured in September 2020.
However, children without the mental capacity to manage their finances are unable to access their accounts. To do this, they require a power of attorney or deputy to manage funds on their behalf.
A power of attorney can only be appointed by an individual who has capacity, and it then comes into force once they lose capacity. However, an individual must be over the age of 18 to sign a power of attorney. This is therefore not an option for these families.
Those who have never had mental capacity, or who have lost capacity without appointing a power of attorney require a deputy to be appointed by the Court of Protection. The application can be a time-consuming and costly process and requires someone willing to take on the ongoing obligations of a deputy.
The costs for deputyship begin at £365 for the application, followed by annual Office of the Public Guardian costs, potential solicitor fees, payment towards a security bond and ongoing costs. This can result in a large bill to access what may be relatively modest savings.
Furthermore, once appointed the deputy has various obligations including submitting annual reports detailing the individual’s finances. This can be a significant commitment to simply withdraw savings from an account.
Currently, there is also the potential for delays to the deputyship application process due to the coronavirus pandemic.
The requirement to jump through these hoops to access money that belongs to their child will be frustrating for many families, especially for those who have supplemented the savings with their own money. Without a deputyship, the only way these families can access the savings is once the beneficiary, their family member, dies.
This situation is very much a balancing exercise for the families involved: is access to the savings worth the time, cost and obligations of appointing a deputy?
