How to Open a Blocked Trust Account or Coogan Account For Your Child
Inspired by Jackie Coogan, a child performer whose parents stole his entire earnings, four states -- California, New York, New Mexico and Louisiana -- have enacted legislation requiring child entertainers to have a "blocked trust" account. Referred to as a Coogan account in California and a Child Performer Trust account in New York, this type of trust safeguards 15 percent of the child's earnings until the age of 18. The trust account must be established within seven days of commencing employment in the entertainment industry -- 15 days for New Yorkers -- and without it, a child's work permit is invalid.
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Instructions
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Identify the bank, brokerage or credit union you will use to open the account. Interest rates vary between institutions, as do the monthly fees and minimum deposit requirements, so conduct research to identify the best option for your child. California parents are legally mandated to open the Coogan trust account with a California financial institution, but New York parents are permitted to open an account in any state, as long as it meets the requirements of a UTMA or UGMA trust. Parents in Louisiana or New Mexico may open an account in any state, but New Mexico residents are required to open the account only once the child amasses more than $1,000 in earnings.
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Gather documentation required by the financial institution -- the specific requirements will vary by institution. Some banks will require a certified copy of the child's birth certificate, although it is possible to open the account without one. Obtain proof of your child's employment, audition, or membership in an entertainment union if required by the bank.
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Complete the application form. You might be able to obtain the form online, or you may need to visit bank for information. Not all banks offer a Coogan account, and even at the branches where blocked trusts are offered, there may only be one or two individuals who are knowledgeable about the process.
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Return the completed application form to the bank. You do not necessarily need to go to the bank directly; many financial institutions have options for opening the account by mail or online. Because the money is not available to the child until the age of 18 and the employer is responsible for all deposits, having a local bank you can visit in person is not essential.
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Notify the employer if you want to transfer a higher percentage of earnings directly into the trust. The parent can specify the desired percentage, but it must be more than 15 percent.
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Appoint a trustee or trust company to oversee the amount once your child has sizable earnings. New York residents, for example, must appoint the company once the minor's earnings reach $250,000.
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Tips & Warnings
If you do not provide a copy of your child's birth certificate at the time of opening the account, he will need to present this in addition to a valid driver's license or passport to withdraw the money at age 18.
After the age of 18, if your child's California Coogan account remains untouched for a three-year period, the funds will be escheated to the state.
