Child Trust Fund Death UK (2026): What Happens When the Child or Parent Dies?

A Child Trust Fund (CTF) is a tax-free savings and investment account for children born in the United Kingdom between 1 September 2002 and 2 January 2011. The Government issued a voucher worth £250 (£500 for children from lower-income families, or £500 for children born in 2002–2003) to start the account; parents could add up to the annual subscription limit each year, and no tax is payable on interest or investment growth. Children born in this window will be aged between 15 and 23 in 2026. A CTF automatically matures when the child turns 18, at which point the adult child can withdraw the money, invest it elsewhere, or transfer it to an adult ISA. CTFs cannot accept new subscriptions after the child turns 18. The account is managed by a 'registered contact' — usually the parent or guardian — until the child turns 16, at which point the child can take over as registered contact and manage the account themselves.

If the child dies before their 18th birthday, the CTF cannot mature in the normal way. The fund forms part of the child's estate and passes either under any will the child may have made (unusual for a minor, though 16 and 17-year-olds can make a valid will in England and Wales) or under the intestacy rules. Under the intestacy rules, if the deceased child was unmarried and had no children, the estate passes to the parents in equal shares (if both alive), or to the surviving parent. The CTF provider must be notified of the child's death; they will freeze the account pending instructions from the administrator of the child's estate. The value of the CTF at the date of death is included in the child's estate for IHT purposes, though a child's estate is very unlikely to exceed the nil-rate band. The registered contact (parent) must produce a death certificate and, if required, authority from the probate registry (letters of administration) to deal with the fund.

The Child Trust Fund itself is unaffected by the death of the registered contact — the fund belongs to the child, not the parent. However, because the registered contact manages the account on behalf of the child, a new registered contact must be appointed. The process is: (1) Notify the CTF provider of the registered contact's death; (2) A new registered contact (typically the surviving parent, or a person with parental responsibility for the child, or a guardian appointed under a will) completes a new registered contact declaration and sends it to the CTF provider with a copy of the death certificate. The new registered contact then takes over responsibility for managing the account — making additional subscriptions, changing the type of account (cash or stocks and shares), or switching providers. If the child is 16 or over, they can apply to become their own registered contact directly with the CTF provider without needing an adult to do so.

No — the CTF belongs to the child, not the registered contact (parent or guardian). The fund is an asset of the child, held in the child's name, and does not form part of the registered contact's estate for any purpose, including IHT. The registered contact's role is purely administrative — they manage the account on behalf of the child until the child is old enough to take over. When the registered contact dies, the fund is not included in their estate accounts, does not appear on the IHT400, and does not need to be dealt with by the executor of the registered contact's estate. The executor's only obligation is to notify the CTF provider of the death so that a new registered contact can be appointed. There is no need for the estate to take any further action — the fund continues as the child's asset.

A CTF matures automatically when the child turns 18. The CTF provider will write to the now-adult child with options for what to do with the money: (1) Withdraw the full balance in cash; (2) Transfer the money tax-free into an adult ISA (stocks and shares or cash ISA) — this is treated as a matured CTF transfer and does not count against the standard annual ISA subscription limit of £20,000, so the child can transfer the full CTF balance regardless of size; (3) Leave the money in the CTF account, which rolls over as a 'matured' account — no further investment growth guarantee and no new subscriptions are accepted, though existing holdings remain. Option 2 (transfer to an adult ISA) is generally the best approach as it preserves the tax-free wrapper. The child must proactively make a decision — the account does not automatically transfer without the account-holder's instruction. If you do not know your CTF provider, use the HMRC CTF finder service at the government website.

Yes — since 6 April 2015, CTFs can be transferred to a Junior ISA (JISA) without incurring any tax charge. A JISA typically offers more competitive interest rates and a wider range of investment options than most legacy CTF providers. The transfer process: the registered contact (or the child if aged 16+) contacts the JISA provider and initiates the transfer — do not close the CTF account directly or the money will become inaccessible for tax-free reinvestment. The JISA provider handles the transfer from the CTF provider. The CTF balance transferred to the JISA does not count as a new JISA subscription — it sits alongside the normal annual JISA limit (£9,000 in 2025/26). Like a CTF, a JISA matures on the child's 18th birthday and can be transferred to an adult ISA. The JISA has slightly different rules from a CTF: withdrawals before 18 are not permitted (CTFs could allow withdrawals in limited terminal illness circumstances).

A CTF belongs to the child. IHT is only relevant if the child dies before age 18 and has an estate that exceeds the nil-rate band (extremely unlikely, as a child rarely has assets approaching £325,000). In that scenario, the CTF value at the date of death is included in the child's estate and IHT is assessed in the normal way. The CTF is not subject to IHT in the parent's estate because it belongs to the child — even if the parent manages it as registered contact. Regular contributions into a CTF made by a parent from normal post-tax income may qualify as normal expenditure out of income (IHTA 1984 s.21) and therefore be exempt from IHT as transfers out of the parent's estate. Lump-sum contributions from capital are potentially exempt transfers (PETs) — they leave the parent's estate immediately but remain within the IHT estate for 7 years if the parent dies within that period.