Coogan Accounts, also known as Blocked Trust Accounts and Trust Accounts, are required by the states of California, New York, Louisiana and New Mexico. The laws require an employer in the entertainment industry to withhold 15 percent of the minor child’s gross wages and deposit the money into the Coogan Account within 15 days of employment. In most instances, parents must supply proof of the Coogan Account number to the employer before they receive a work permit for their child.
Coogan Accounts are named in honor of Jackie Coogan, who, as a child, acted with Charlie Chaplin in some of Hollywood’s earliest movies. One of the first truly huge child stars, Coogan earned over $4 million, which in today’s dollars would total between $48 and $65 million. However, his mother and step-father’s taste for diamonds, luxuries and expensive cars left him with only the equivalent of $2,000 when he turned 21.
Coogan eventually sued his mother and former manager for his earnings and got back what was left of the squandered money—$126,000.
The notorious injustice led to the passage of the Coogan Law in 1939 to protect future young actors. However, the original incarnation of the Coogan Law was flawed and left open various loopholes. Industry groups were finally successful in 2000 in closing many of the loopholes that made the original Coogan Law ineffective. Changes in California law affirmed that 100 percent of earnings by minors in the entertainment industry are the property of the minor, not their parents.
This change in California law requires that 15 percent of all minors’ earnings must be set aside in a blocked trust account commonly known as a Coogan Account until the child is 18. The balance of the child’s earnings—after the 15 percent is secured in the Coogan Account—does not belong to the parents or family.
California
Parents in California are required to open a Coogan Account with a California bank. A Coogan Account is a special blocked trust fund account found at a bank, credit union or brokerage firm.
New York
Parents in New York are required to open an UTMA or UGMA compliant trust account. This account is similar to the “Coogan,” but differs regarding rules of withdrawal. The account may be opened with any bank in any state, if it meets UTMA or UGMA requirements.
Louisiana and New Mexico
Parents in Louisiana are required to open a Blocked Trust Account with any bank in any state. Parents in New Mexico are required to open a blocked trust account only if their child earns more than $1,000 per each employment contract.
See the Labor Department website in each state for more detailed information.
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