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Child Trust Funds

ended 01. March 2023

A BBC journalist is writing a piece on Child Trust Funds, specifically how parents can get hold of the cash for their children (or facilitate it so that their children can get it). A growing number of these accounts are now maturing but a lot of people have apparently forgotten they existed. Few Qs:

  • In your experience, have clients/people in general forgotten about Child Trust Funds (I had until I received an email asking me to create this alert earlier)?
  • Do you raise them with clients, e.g. your children could be due a windfall - don't forget?
  • What should people do to find the Child Trust Funds they set up? Where do you even start?
  • Who's even managing Child Trust Funds these days?
  • What's the average value of that £200 original sum invested, if no other money was put in?

3 responses from the Newspage community

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Editor
Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
You were able to open a child trust fund (CTF) between 2002 and 2011 when they were replaced by junior ISAs. Any CTFs remained open and you can still contribute to them. Upon maturity, when the child turns 18, they can be encashed or transferred into an adult ISA. Like ISAs, any income or capital gains are tax-free and the money belongs to the account holder- the child it was set up for.

Just like ISAs, there can be various CTF providers and it is easy to find out if you have one by visiting the government website where you can search for an account.

Again, like ISAs, you could choose between cash or stocks and share CTF. You don't have to wait to make the switch to an ISA. If the account holder is still a child you can make the switch to a junior ISA and you will have more choices of investment and more competitive fees.
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Editor
Wes Wilkes
CEO at IronMarket Wealth
It's quite common for Child Trust Funds (CTF) to pop up in family wealth conversations. They are very much of the "Oh yeah also we have this thing for Jenny that the government gave us some free money for when she was born" and for the most part, they never advance from that. A lot of them still have a passbook, remember them?
If the child is still under 16 they can transfer the CTF into its replacement, a junior ISA, where there is a huge amount of choice from cash to stocks and shares. They can have a cheap online option right through to the same portfolio as Mum & Dad and Mum & Dad or even Nan & Grandad can contribute up to £9,000 per year to them.
CTFs were a good idea in principle, but I expect most still just have the free cash sitting in them with a passbook to access the account.
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Joshua Gerstler
Chartered Financial Planner at The Orchard Practice
"As most providers stopped caring about Child Trust Funds, where possible we have moved our clients CTFs into Junior ISAs for their children. There is a much wider choice of providers and investments and they are much easier for us to manage. When the child turns 18 they are automatically converted into normal ISAs in the childs name and after an informative conversation from us, the children tend to leave the money invested for their future."