The Coogan Law is a California law named for child actor Jackie Coogan. Jackie was a very famous and busy actor in the 1920s and 1930s (adults today might know him as Uncle Fester in the Addams Family series).
When he became an adult, he found that despite making millions as a child, he was broke. His mother and step-father had used his earnings, which was legal at the time. As a result of his sad story, the original Coogan Law was passed in California in 1939.
Today, there are various versions of Coogan-inspired laws around the nation and in Canada. The laws mandate that a percentage of a child actor’s gross income be set aside for them in trust. In the United States, the common percentage is 15%. In Canada, it is 25% after the child has made $5,000.
California’s law is the most far-reaching and has been updated several times, most recently in 2013. California’s law is also the most restrictive in the nation. Since many of the major entertainment employers are based in California, this “safest for kids” version of the law is usually the one that employers use. Parents should be aware that different laws may apply depending on where your child lives and works. New York, Louisiana, New Mexico, New Jersey and Pennsylvania have fairly recent Coogan-inspired laws, and several more states are working on new legislation.
A Word About Unclaimed Coogan
Parents need to be aware that Coogan money often goes “missing” (unpaid) and does not make it to the child’s bank account. That is why careful tracking is necessary! If you think your child may have unpaid Coogan money, be sure to check the Unclaimed Coogan List at the Actors Fund.
12 Things You Need To Know About the Coogan Law
1. All the money belongs to the kid. Section 771 of the Family Code, (b): …the earnings and accumulations of an un-emancipated minor child related to a contract of a type described in Section 6750 shall remain the sole property of the minor child. This is unique to California: the money is your CHILD’S, not yours.
2. Background actors do not have to keep Coogan accounts. Bizparentz sponsored AB533, and update to the Coogan law, in 2013 because so much of the “unclaimed funds” at the Actors Fund (see below) was small amounts generated by background actors. It wasn’t worth it for the actors to spend money opening an account, considering that the deposits were so small and infrequent.
3. This law re-defines your relationship with your child and gives you a fiduciary relationship that is governed by the law of trusts. You must pay all the bills related to their contract (with their money). Section 6752 of the Family Code, (d): …the relationship between the parent and guardian, as the case may be, and the minor is a fiduciary relationship that is governed by the law of trusts, whether or not a court has issued a formal order to that effect. The parent or guardian, as the case may be, acting in his or her fiduciary relationship, shall, with the earnings and accumulations of the minor under the contract, pay all liabilities incurred by the minor under the contract, including but not limited to, payments for taxes on all earnings and payments for personal or professional services rendered to the minor or the business related to the contract.
4. Even though you have a trustee relationship, you must still provide support for the minor (housing, education, food). Section 6752 of the Family Code (d): Nothing in this subdivision shall be construed to alter any other existing responsibilities of a parent or legal guardian to provide for the support of a minor child.
5. A court can replace you as the child’s trustee. Do not make mistakes. Section 6752 of the Family Code, (b) (2):…at least one parent or legal guardian, as the case may be, entitled to the physical custody, care, and control of the minor….be appointed as trustee of the funds ordered to be set aside in trust for the benefit of the minor, unless the court shall determine that appointment of a different individual, entity or entities as trustee or trustees is required in the best interest of the minor.
6. You need to do an accounting EVERY YEAR of the trust money and it must adhere to the Probate Code (similar to the executor of a will) Section 6752 of the Family Code, (b) (6): The trustee or trustees shall do an annual accounting of the funds held in trust…in accordance with Sections 16062 and 16063 of the Probate Code.
7. You CAN invest the funds in the Coogan account. Section 6753 of the Family Code(e)(3): The trustee or trustees may use all or a part of the funds to purchase, in the name of and for the benefit of the minor (A) investment funds…broad based index fund…not a sector fund…, or (B) government securities or bonds, certificates of deposit, money market instruments, money market accounts, or mutual funds.
8. Don’t wait to find late payments. You have 180 days from the first day you WORKED before the funds can be sent to Actor’s Fund. Section 6752 of the Family Code,(b)(9)(A) “If a parent, guardian, or trustee fails to provide the minor’s employer with a true and accurate photocopy of the trustee’s statement pursuant to Section 6753 within 180 days after the commencement of employment, the employer shall forward to The Actor’s Fund of America 15 percent of the minor’s gross earnings….”
9. The employer only has 15 days to pay you the Coogan money if you did your job correctly. Section 6752 of the Family Code (d)(3): “The minor’s employer shall deposit 15 percent of the minor’s gross earnings pursuant to the contract within 15 days of receiving the trustee’s statement pursuant to Section 6753”.
10. If your money ends up at Actor’s Fund, they must pay imputed interest, but they can also charge reasonable fees. It is NOT a good idea for you to leave our child’s money there. They can’t charge fees for the first year they are holding your money though. Section 6752(g) (1)(2) : “The beneficiary of an account held by The Actors Fund of America pursuant to this section shall be entitled to receive imputed interest….The Actors Fund of America may assess and deduct reasonable management, administrative, and investment expenses…including fees for initial set-up…No fees may be charged to any beneficiary’s account during the first year that the account is held by The Actor’s Fund of America.”
11. This law creates a private escheat system (no State Unclaimed Funds). Section 6752 (i) “All funds received by The Actors Fund of America pursuant to this section shall be exempt from the application of the Unclaimed Property Law…”
12. Your trustee statement must be attached to the work permit and it must say “Coogan Trust Account” on it. If you don’t do this, your work permit is not valid. Section 1308.9 of the Labor Code, (a): “If the Labor Commissioner provides written consent pursuant to Section 1308.5 for the employment of a minor….that consent shall be void after the expiration of 10 business days from the date written consent was granted unless it is attached to a true and correct copy of the trustee’s statement evidencing the establishment on behalf of the minor of a “Coogan Trust Account” pursuant to Chapter 3….If the written consent is attached to a true and accurate copy of that trustee’s statement, the written consent shall be valid for a six month period.”
For more “how to” information, please click this box to see our article: Trust Accounts