Your child doesn’t have to land a leading role in a Broadway show or a part in a movie to start making some serious money in the entertainment business. A local advertisement or a YouTube series could bring them more income than you’d ever imagine.
In addition to child labor laws, there are also laws regarding how that money is handled. A few states, including New York, have variations on what’s commonly called the “Coogan Act.” That law is named for a child star, Jackie Coogan, who got his start back in the silent movie days. Despite his fame and success, when he reached adulthood, he learned that his mother and stepfather had spent all his money.
“Coogan” trust accounts are designed to protect children’s money
His lawsuit led to the Coogan Act in California and similar laws that protect the money of child performers (as well as athletes, models and authors) with blocked trust accounts and help ensure that it’s properly invested. Now parents or guardians are required to open what New York law calls a child performer trust account before they can obtain a work permit and accept a job for their child.
Under New York law, employers are “required to transfer fifteen percent of gross earnings to the custodian of the…child performer trust account” every time they’re paid. The account’s custodian can request that more than 15% of their earnings go into the account. A parent or guardian can be the custodian until the balance in the account reaches $250,000. At that point, “a trust company shall be appointed as custodian of the account.” The child has the option to terminate the account and withdraw their money once they turn 18.
Even if your child performer doesn’t dream of a Tony or Oscar, they can have enough money to pay for college by the time they turn 18 if it’s carefully invested. If you need to open one of these accounts, it’s wise to have financial and investment advice. Experienced legal guidance is also important. The law and its requirements can be confusing. As the entertainment field spreads farther into social media and streaming platforms, you can also expect the law to be modified.