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Goin’ Down

October 12, 2006

*I finally got around to watching my Tivo shows from September and one stood out: Behind The Cameras: The Unauthorized Story of Different Strokes.     Here was my chance to finally find out what was really Goin’ Down (Yung Joc, 2006).  Why did three insanely successful child actors have such a hard time in adulthood?    Are child actors just doomed? 

      I must admit, I flirted with getting my three year-old acting gigs.  It seems everywhere we go, people tell me that he ought to be in pictures.   One day, at a party, I overheard a guest commenting to another mom about how cute her child was and suggested that she get that boy some headshots.  The only problem was, this kid made Old D.B. look fine. 

      Don’t get me wrong, I still think my kid is the cutest kid you’ll ever see, but now I’m Dreamin’ (Vanessa Williams, 1990) of a different career choice; like one that starts with going to the University of Virginia, or the United States Naval Academy (yeah, shameless plugs for the schools my husband and I attended).  

      Back to the unauthorized biography:  It was certainly entertaining, and it revealed that if you are at all looking at pimpin’ out your child, you had better go into it with your eyes wide open.   Here’s the “For The Love of Money 411” on the child acting game.
Coogan’s Law

      Coogan’s Law is the law meant to protect the financial assets earned by child actors.  It’s named after Jackie Coogan, a young child actor in the 1930’s, who later became famous as Uncle Fester in the Addam’s Family TV show during the 1960s.   As a child actor, he made over $4 million dollars, only to have it all used up by his parents.  You don’t need to be good at math to know that $4 million dollars was a whole lot of money back during the Great Depression!

      There are two sides to this argument.  Some believe that parents should actually get all of the money; after all they do give up their life to support the child actor’s new schedule.   Others think that since the child worked hard for it, there should be something left of the money by the time they turn 18. 

      Whatever you think, Coogan’s Law settles the dispute.  It requires that a portion of the child actor’s earnings must be put away in a trust.   For example, the California version of Coogan’s Law requires that 15% of the child actor’s gross earnings must be put aside until the child is 18.  Other states, like New York, have adopted similar laws. 

      A Coogan trust account can be set up at most major banks, savings and loans, credit unions and other financial institutions.   Also, you will typically need to provide evidence of this account to obtain and/or keep your child’s work permit.  Finally, if you don’t provide an account statement, the studio, production company or other person paying your child, might have to send 15% of your child’s gross earnings into an account with the Actors’ Fund of America.  

      For a list of banks that offer Coogan Trust Accounts visit www.childreninfilm.com .

      Is 15% Enough?

      This depends.   In Gary Coleman’s c ase the answer is no.  It’s estimated that Coleman made $18 million in the late 70’s and 80’s for his role in “Different Strokes;” earning some $70,000 per episode.  However, in his infamous lawsuit against his parents and former manager, he claimed (and proved) that they squandered most of the money away.   The unauthorized biography indicated that the parents used loan-out companies (see next week’s column for more on these) in which they paid themselves large salaries that likely attributed to this.   In the end, he won $1.28 million in his lawsuit (February 23, 1993). After a few failed business investments and large medical expenses (Coleman has a congenital kidney disease and requires constant dialysis), he was flat broke by 1999.   

      Whether it’s acting, singing or simply entering your kid into the local beauty pageant at the state fair, remember that work is work, and when there is income, there are rules.   Coogan’s Law is the just the tip of the iceberg.  In order to truly protect your child, consider putting away more than just the customary 15%.   You, as the parent, are in the best position to help protect their future. 

      Next week, I will discuss how to set up a loan-out company for your child actor or entertainer. 
Shannon King Nash is the author of the award-winning book entitled, “For the Love of Money: The 411 to Taking Control of Your Taxes and Building Your Net Worth.”  She uses song lyrics and entertaining stories ripped from the headlines to teach readers how to manage their finances and taxes.  Shannon is a CPA, Tax Attorney, and regular expert commentator on KJLH FM Radio in Los Angeles, and has appeared on national television. Contact the Nash Management Group at 818-986-2665 or visit www.nashgroup-usa.com .

Make Shannon one of your friend’s on MySpace!   Click here: www.myspace.com/shannonnash . 

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