The “Coogan Account” and Setting Your Little Performer Up for Financial Success
Photo by Steven Libralon
When your child finally breaks into the world of acting or modeling and lands that first exiting role, you’ll be swept up in determining next steps, such as choosing a good agent or manager (if you haven’t already secured one), deciding whether moving to a new address/state would help your child land more gigs in the long-run, choosing trainings and camps to keep your child “sharp,” or even the elephant in the room—how to handle your child’s newly-established income. Although all of these should be considered to set your budding star up for success, it’s important to understand the financial side of “the business” and some laws that may affect you and your family.
Texas, like many states, requires children under the age of 16 to obtain permits to work—this includes in acting and modeling jobs—and each permit is only good within the state that issued it. This means that if a child working primarily in Texas lands a role in a commercial taking place in Oklahoma, Arkansas, or Louisiana, then they will need to obtain another permit for that particular state.
California, Illinois, New York, Louisiana, and New Mexico further require minors to open and maintain a separate “Coogan Account” (also known as a Coogan Blocked Trust Account, Coogan Trust Account, or Coogan Bank Account), which is a blocked trust account for minors in the entertainment industry to ensure that their earnings are safeguarded from misuse (these accounts are also a prerequisite for securing a basic work permit in these states).
The primary purpose of the Coogan Account is to prevent the minor’s earnings from being spent by guardians who may otherwise have had a right to access the minor’s bank account and deplete the funds. After all, it only takes one “big break” to land a major payday, and a large influx of money may seem like a great way to pay the bills or fund a fancy vacation. Coogan Law policy works to protect kids in the entertainment industry from losing their earnings to sticky-fingered guardians, as the minor will own their earnings outright, with 15% of these earnings held in an account until they turn 18 or become legally emancipated.
The Coogan Account gets its name from Jackie Coogan, a child actor who began performing in 1917 and was discovered by Charlie Chaplin soon thereafter—quickly rising to fame and starring in several high-profile films. When he turned 18, Jackie discovered that his parents had spent up almost all of his earnings, and he had nothing to show for his years of hard work. He later sued his parents, but he ended up recovering almost nothing. Obviously, children suing their parents for stealing their money is bad, and the “Coogan states” decided to enact laws requiring Coogan Accounts to help prevent these kinds of situations from happening.
Here’s how the Coogan Account setup/payment process generally works:
as the guardian of the child performer, it is ordinarily your responsibility to open the Coogan Account immediately upon the signing of the child performer’s employment contract—the requirements for setting the account up vary by state (it’s also important to remember that the account should, in most circumstances, be set up in the state where the hiring company is headquartered), and the procedures vary by financial institution (not all banks offer blocked trust accounts)
to open a Coogan Account, you typically will need (1) the child’s Social Security number; (2) the child’s birth certificate; (3) a fee and initial deposit; (4) a proof of audition within the last 30 days, a copy of the child’s employment contract, or a copy of a paystub that shows the child is working for a company in the entertainment industry dated within the last 30 days; and (5) proof of your identity as the child’s guardian (note: a court order is no longer required to open a Coogan Account)
provide the Coogan Account number to the child’s employer
the employer will then be able to hire the child performer, and the employer or producer (or payroll company) will deposit 15% of the child performer’s gross earnings into the Coogan Account going forward
income taxes will need to be paid on the remainder
what’s left over is available for the child performer (hands off!)
As mentioned above, there are some state-specific requirements for opening a Coogan Account—here are some basics:
California: the account must be opened with a bank, credit union, or brokerage firm located in the state of California
Illinois: the account may be opened with any bank, credit union, or brokerage firm in any state
Louisiana: the account may be opened with any bank, credit union, or brokerage firm in any state
New Mexico: the account may be opened with any bank, credit union, or brokerage firm in any state, and a Coogan Account is only required if the child performer earns more than $1,000 on a job
New York: the account may be opened with any bank, credit union, or brokerage firm in any state, and the account needs to be a custodial account under the Uniform Gift to Minors Act or the Uniform Transfers to Minors Act (it does not need to be a true “Coogan Account.”
Production Companies are increasingly expanding outside of the major filming hubs like California, Georgia, and Louisiana, so the above information may not apply if a production takes you or your child to an unfamiliar state. It is therefore important to fully understand how a state’s child labor laws may affect your child’s rights, and it is always a best practice to either reach out to the appropriate state’s Labor Department to clear up any questions or concerns you may have before showing up on set, or touch base with an experienced entertainment attorney who can help you navigate these murky waters.
Either way, doing your due diligence ahead of time and following the above guidance will ensure your compliance with the law, enable your child to work as a performer in “the business,” and give you the peace of mind knowing that your child will be set up for financial success upon reaching adulthood.
More general information on Coogan Accounts can be found at here, and a general overview of the rules for child actors in Texas can be found at here.
For more information on this article and this topic, contact Charles Wallace.