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Children leaving care should be given access to a targeted independence trust fund. This would provide them with a nest egg to invest in their futures and enable them to take opportunities. It would allow young care leavers to think longer-term, feel more secure and help them with the transition into independent adulthood.

This proposal builds on existing thinking about the role that wealth, or assets, can play in improving people's life chances. Increased interest from policy makers has focused on asset-based welfare. Already the government has announced the Child Trust Fund (CTF) or baby bond as part of this new agenda.

The CTF is intended to provide an asset for all young adults. It will provide all newborn children with an endowment paid into an individual account. This money will then accumulate with the aid of state tops-ups and contributions from account holders and their families, and after 18 years will be available to spend.

Empirical evidence supports the proposal that having an asset in early adulthood will improve life chances. There is a strong relationship between possessing financial wealth in early adulthood and later life outcomes.

Financial assets also help people cope with transitional stages in life. There can be no more difficult transition than moving from being in care to fully independent adulthood.

The CTF will be available to all newborn children. Eligibility will be triggered by the initial claim for child benefit, meaning that children in care will have a CTF. But does the policy reflect the needs of especially disadvantaged groups?

Children in care, with their significantly poorer life chances, might be in the most need of an asset in their early adulthood. They are more likely to be homeless soon after leaving care, less likely to be employed and less likely to have educational qualifications. However, at the same time they might not be able to accumulate as much as other children in the CTF. This is because there are likely to be less family and individual contributions. Paradoxically those who need the nest egg most might actually receive the smallest fund at 18.

So it is important to develop an adapted policy for care leavers, which supplements and complements the CTF. Current support for care leavers comes from three sources: income-based provision; service delivery (such as education); and guidance from personal advisers. A specifically tailored asset-based policy could complement these.

Many children leave care with nothing they can call their own. A specific trust fund would provide flexible support that would enhance the autonomy of these young adults. This group would also benefit particularly from the psychological benefits of asset holding and the ability of an asset to help with the transition into independent adult life.

An independence trust fund could be implemented in several ways. Funds could be accumulated though the strategic issuing of lump sums or endowments at certain ages, through ongoing payments into accounts or through a hybrid of the two. Weekly payments could be linked to child benefit, which is currently not received by children in foster care or local authority homes.

The advantage of lump sums is that support could be targeted better at those making the transition into independent adulthood. Their disadvantage is that it would not ensure an engagement in the accumulation of the fund. Weekly payments would not present this problem, but they might not target those in the most need, as they effectively equate length of time spent in care with need.

Irrespective of the method used, there are other important policy questions. Although care leavers would remain eligible for the basic CTF on the same terms as their contemporaries - that is they would have access to it at 18 and there would be no restrictions on spending - a specifically tailored care leavers trust fund could be different. The most appropriate age of access to the fund could be older and some form of control over expenditure could be introduced. These are important questions, requiring further research and thought.

The advantages of this policy seem clear. A fund that complements existing support and is additional to the CTF would be a powerful tool in enhancing the opportunities of some of society's most disadvantaged people.

As the corporate guardian of children in care, the state has a duty to provide what should be expected from a reasonable parent. Providing a financial asset would represent a fuller and more enabling interpretation of the rights of young care leavers, and would play an important part in improving their life chances.