Compensation awarded to a minor

A minor is under 18 years old. If you’re a minor awarded money by a court, the money isn’t paid directly to you. The Court Funds Office holds and manages the money for you. The court will also appoint a guardian to act on your behalf.

Court-appointed guardians

The court appoints a guardian to act on the minor's behalf and deal with the Court Funds Office. If you're a court-appointed guardian, you're responsible for:

  • keeping the Court Funds Office aware of any changes in the minor's circumstances
  • updating name, address and minor's contact details of the minor
  • looking after the tax affairs of the minor

To change a court-appointed guardian, you need to get a Court Order. You need to contact the court where the award was made.

Management and investment of funds

The amount held on a minor's behalf is their ‘fund’.

When an award is made, the Court Funds Office will assess how the fund should be managed. 

The assessment is based on:

  • the size of the award
  • the length of time the fund is likely to stay in court
  • the needs and circumstances of the minor (for example the cost of health care or educational needs)

As part of the assessment, a guardian may be asked to provide additional information to make sure that all needs have been considered.

Once the assessment is complete, investment proposals will be drawn up to be presented to the court for formal approval. Contracted stockbrokers assist the Court Funds Office to make sure of a professional investment service.

A guardian will be advised of the investment proposals presented to the court, but the final decision on investments rests with the court.

It is important that any request for additional information is returned quickly, as a delay in making the initial investment may significantly reduce the potential return on the fund.

Find out more about the work of the Court Funds Office.

Some of the fund may be invested in government stocks (gilts) or company shares (equities). A portion of the fund will always be maintained as a cash deposit to cover any short-term spending requirements or unexpected needs.

Government stocks (gilts)

Gilts are regarded as very low-risk investments, with a guaranteed return. Fixed interest gilts will not provide any capital growth (an increase in the value of the initial award). Interest is paid on the amount of money invested and is lodged into the deposit account.

Company shares (equities)

Investments in equities can produce high returns over a period of time but also carry greater risks, as the value of the investment can decrease as well as increase.

Investing in equities aims to achieve long-term capital growth for the minor, as well as entitling them to income in the form of share dividends. Any dividends received are lodged into the deposit account.

Stocks and shares are held by the stockbroker in electronic form. This means there is no need to hold physical share certificates.

Find out more about how the funds are invested

Fees

A management fee is charged by the stockbroker for each fund that holds investments in gilts or equities. The fees are based on an amount of the funds held and are deducted from each individual’s funds twice a year.

Each time the stockbroker buys or sells an equity or gilt, there may be a transaction charge. These charges are either deducted from the sales proceeds or included within the buying costs. A guardian won't see a direct charge being made to the minor’s funds.

For further information on the current fee rates contact the Court Funds Office Investment Team.

Tax and benefits

Minors, like adults, may need to pay tax on their income and any capital gains that arise from the sale of investments. This includes those within their fund, if these exceed their personal tax allowances.

The minor's court-appointed guardian is responsible for:

  • knowing if a tax return is needed
  • making sure a tax return is filed on the minor's behalf before the deadline

For information about personal tax allowances, go to:

To complete a tax return, you may need to request certain information from the Court Funds Office about the minor’s funds. The information will be issued within 15 working days of the request being received.

If the request is being made by a third party, for example, an accountant, the Court Funds Office will require a signed third party correspondence authority to let them to deal directly with the third party.

Affect on benefits

The annual income and overall value of the fund may affect the minor's entitlement to certain means-tested state benefits.

If you have any queries about entitlement, you should contact your local Jobs and Benefits office.

Safety of the funds

The Court Funds Office is required by law to lodge cash deposits with the UK Debt Management Office (DMO), which is a government agency. It's possible to invest cash deposits in high street banks.

The funds held as cash deposits are fully guaranteed by HM Treasury. Funds invested in gilts and equities are not guaranteed. However, as they are backed by the government, they are viewed as safe investments.

Any funds invested in equities will fluctuate in value. However, investments will only be made in equities to achieve long-term gains (greater than five years).

Getting updates on the fund

Notification of funds being received into court will automatically be sent to the legally-appointed guardian within five working days of lodgement of the funds.

A statement of account detailing the current value of investments will be sent to the guardian annually. If investments include equities, a statement will be issued every six months.

The guardian may request a Certificate of Funds at any time by sending a written request to the Court Funds Office, or by calling in person. Identification must be provided if calling in person.

Releasing funds before the minor turns 18

The guardian can apply for payment out of the fund for the benefit of the minor. This can be done by contacting the court where the award was made.

The Court Funds Office doesn't decide if a payment is granted. The court where the award was made decides. 

A fee is payable for each application. 

Requests for payments to help with the minor’s education and development are generally approved by the court, but each application is considered individually. 

Once the Court Funds Office has received the court order, the payment should be made within 10 working days.

The quickest and safest way for the Court Funds Office to make a payment is electronically, directly into a bank account.

If a guardian provides their eight-digit account number and six-digit sort code, payment will be made this way. If not, a cheque will be issued, which must be lodged in a bank account in the name of the cheque payee.

Releasing funds when the minor turns 18

When you turn 18, the Court Funds Office will send you the forms needed to release your funds. An information leaflet explaining how to complete the forms will be enclosed. These will be issued by post on the day before your 18th birthday.

You cannot sign the form until you're 18 years old.

You should sign the form with a witness. They must also sign the form. The witness can be:

  • a social worker
  • a barrister/solicitor
  • a dentist
  • a judge
  • a medical doctor
  • a Justice of the Peace
  • a qualified accountant
  • an officer of the armed forces
  • a teacher/lecturer
  • a probation officer
  • a police officer
  • a prison officer
  • an elected official (for example, MP, MLA, local councillor)
  • a bank manager (including assistant managers)

You'll also need to provide two forms of identification.  

An original birth certificate must be provided, as well as one of the following additional proofs of identification:

  • driving licence
  • student card
  • passport
  • electoral ID card
  • medical card

Any identification provided must be original. If you are unsure, you should visit the Court Funds Office in Belfast where staff will check the documents in your presence, make a copy and give them back to you.

If you have changed your name since the date of the award, you will also need to include evidence of the change with the completed form.

You should return the completed form with the proper identifications to the Court Funds Office.

Getting the payment

If all the information is right, payment should be made within 10 working days.

Depending on how the funds have been invested, you may have a number of options that will be shown on the form. For example if the fund:

  • is held in the deposit account, this sum will be paid out when the completed forms have been received
  • contains investments in gilts or equities, you may choose to sell these investments and receive the money from the proceeds of the sales, alternatively, you may choose to transfer the investments into your own name

You should get independent financial advice before deciding whether to sell or transfer stocks and shares in your fund when you reach 18.

If you choose to sell the investments, transaction charges may be deducted from the sales proceeds.

If you choose to transfer the investments, then the stockbroker will transfer the gilt or equity into your name and send you a certificate. The stockbroker may charge a fee for this transfer. You will then receive future dividend payments directly and can keep or sell the shares in the future as you wish.

If the minor is incapable of managing their funds

If the minor is not capable of managing their own funds when they're18, because of mental incapacity, the Office of Care and Protection may manage the funds on their behalf.

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