Wednesday, July 13, 2016

Did You Know...Protection for Earnings of Child Performers

According to New York State law, 15% of a child's earnings from performing (including print modeling) must be deposited into a trust account.  It can be very confusing navigating the requirements of the child performer laws!  You need to have a permit on hand to work, you need the school and the pediatrician to sign off on it...and provide all sorts of bank documents?  Whaaaaa?  Just take the pictures!

But seriously, this has all been designed to protect the earnings of child performers so that they will have access to some of that money when they become adults.  California has a much more specific structure of protecting children's earnings...probably because California is the epicenter of the film industry and there have been significant problems over time with parents, um, losing track of their children's earnings.  (The California blocked-trust account in named the Coogan account after a child actor, Jackie Coogan, whose parents lost the equivalent of several million dollars in today's money.)

This can be difficult to navigate, though, since you have to be able to imagine a child making anywhere between $100 (total) or millions of dollars over the course of the child's career.  The law requires 15% (gross) to be deposited into a trust account for the child, so how do you decide what kind of account to get?  Do you do just the 15% or more?  How can the money be used?  It's a LOT!  And if you're at all like me, when the subject of money and banking come up...well, my eyes just glaze over and I can't even deal with all the options.  Sad example: my 401(k) money from my first job that I left in 2003 is exactly in the same configuration of whatever sad fund allocations as the day I left it.  I get the statement every three months and put it in a file.  I would not even begin to know how to do anything with it -- and I sure as heck don't want to pay someone to figure it out for me.  I REALLY AM THAT IGNORANT.

However...when it comes to my kid's account and career, I wanted to figure out exactly what the law requires.  What I cannot help you with are the things that make me go apoplectic, like, what banks have the best interest rates?  How should I invest for college?  No, no, no...I can just tell you about the basic types of trust accounts and how they need to be matched up with the type of work your child will do.  You get to choose your bank based on convenience and what minimum balance requirements are and interest rates or whatever...I will, however, mention which one I understand to be the most convenient.

Most states offer UTMA or UGMA accounts as a way to put money aside for youth until they reach the age of majority (18 or older, depending on your state and if you want lawyers to draw stuff up). Those accounts are structured so that a kid can inherit money, receive a gift of money -- or earn money in this case -- and claim ownership to it when they are an adult. With UTMA and UGMA accounts, there are guardians -- an adult on the account with the child who is specified as a GUARDIAN but not the owner of the account. That means I do not need to count that money as an asset of MINE, but I can have say over what happens to it while my child is under 18. (See how that is different from a joint account?)  Also note: that money is, in fact, an asset of the child and the child will need to claim such asset for things like college financial aid forms.

Now here is what the big difference is: with UTMA and UGMA, there are some semi-specific guidelines why a guardian could withdraw money in the best interest of a child. Basically, you can use money from that account to provide things beyond the necessities. YOU -- not your child -- are obligated to provide food, shelter, clothing, and basic necessities like access to school. If your child has money in those trust accounts, you could use it to provide acting lessons or ballet summer intensive or something like that...AND, the expenses related to the acting/modeling CAN come out of those accounts.  If you use the money for lavish family trips to Monaco, that doesn't really fit the definition of something in the interest of the child.  Maybe.  Who knows.  Talk to your accountant.

NYS accepts those types of accounts -- UTMA and UGMA -- as the "trust accounts" necessary for deposit of the 15% of the child's earnings.

NOW: there is the Coogan account which is the required trust account for child performers in California (and a few other states, such as Louisiana).

The Coogan accounts are 100% blocked trusts, meaning NO ONE can withdraw money from them until they become the property of the adult child. Coogan accounts can be hard to open if you are outside of California, but that's only because banking laws are done on a state basis and banks are not obligated to open any old account from any old location. There are financial institutions geared just toward performers (such as the Actor's Federal Credit Union and the SAG Credit Union) that can help you open a Coogan account from basically anywhere in the country. If you work AT ALL in CA or anywhere in the world that uses a CA production/payroll team, your child MUST HAVE A COOGAN. Any account that is a 100% blocked trust counts as a Coogan -- and because they are not common, for anyone other than child performers, they tend to be called Coogan accounts.

Since NYS also accepts Coogans as a form of "trust account" some parents may want to start with a Coogan since it can be used anywhere. However, that may not be the best option if you foresee wanting to use some of the monies deposited toward career-related expenses.  That is where you need to think seriously if you will stick with the 15% deposit required by law or deposit more.  And you can change your mind on this -- the 15% is written in stone, but the rest is up to your discretion.  Just remember that if you use the Coogan, you cannot later go in and withdraw money for, say, SAG joining fees.  Or headshots.  Period.

I have gotten into debates with parents about whether or not you need to be present IN CALIFORNIA to open a Coogan. NO -- you just need to open it from a bank that offers it (a 100% blocked trust) and will allow you to open it. Some banks make it realllly hard -- like, there's a Bank of America on every corner in the U.S., but to open a Coogan with them from CT is like a crazy highly orchestrated bicoastal procedure. (Plus I basically think they kind of stink based on them losing stuff when they bought and sold my traditional, highly desirable mortgage.)  Some banks in CA make you bring in a contract to prove that you are actually going to be paid as a child performer before you can open one. Those are the policies of the BANKS THEMSELVES and not the law regarding the type of account.  I'm guessing that Coogans in general are not advantageous to banks, because they don't tend to roll out the red carpets and give out toasters to get you to come in and open one.

Chances are, if you go into a bank that does not deal expensively with child performers, you can ask for a Coogan and they will have never heard of it and convince you that you must be talking about a UTMA. But if you are told you need a Coogan for a California job, you NEED a Coogan and get one from AFCU (I have heard this is super easy and can be done over the phone and fax from ANYWHERE in the country -- we do not have a Coogan yet but that is where I would open one), SAG CU, some bicoastal bank arrangement, or in person somewhere in CA.

And when I say you NEED a Coogan -- you will need proof of that account before you take a step on set.  I know people who have traveled to CA for a gig and needed to hire a car to take them from a studio to a bank before they could start working.  Bear this in mind if you are planning a trip for pilot season...and I would say there are more and more print gigs hiring in NYC and then going on location these days.

Hopefully, that helps...

Feel free to ask questions here (remember, I just know about the types of accounts -- not the nitty gritty about who has the best interest rates and stuff...), email me at, check out my Instagram @theBizzyMama or like my Facebook page so you can see when I post on the blog.

This is a direct copy and paste from the NYS Child Performer Permit FAQ page:

Q: Do I need to set up a Child Performer Trust Account in New York State?
 A:  A trust account may be set up anywhere, as long as:
  • It is set up as required by New York State Law
  • The employer can complete the required transactions
  • It meets the standards required by a New York State Uniform Transfer to Minors Act Trust Account (UTMA) or a New York State Uniform Gift to Minors Act Trust (UGMA) account or is a blocked “California Coogan” type account.


  1. 100% agree that AFCU is the way to go with a Coogan. I did it from New York over phone and email scans

  2. This was the only helpful article on this topic online. Thank you!