The Coogan Law: Full Text

 

BILL NUMBER: SB 1162 CHAPTERED

BILL TEXT

 

CHAPTER   940

FILED WITH SECRETARY OF STATE   OCTOBER 10, 1999

APPROVED BY GOVERNOR   OCTOBER 10, 1999

PASSED THE SENATE   AUGUST 26, 1999

PASSED THE ASSEMBLY   AUGUST 23, 1999

AMENDED IN ASSEMBLY   AUGUST 18, 1999

AMENDED IN ASSEMBLY   JULY 8, 1999

AMENDED IN ASSEMBLY   JUNE 29, 1999

AMENDED IN ASSEMBLY   JUNE 9, 1999

AMENDED IN SENATE   APRIL 21, 1999

AMENDED IN SENATE   APRIL 12, 1999

 

INTRODUCED BY Senator Burton

 

(Coauthors:  Senators Costa, Solis, and Speier)

(Coauthors:  Assembly Members Havice, Kuehl, Washington, and Wildman)

 

FEBRUARY 26, 1999

 

An act to amend Sections 771, 6750, 6751, and 7500 of, and to repeal and add

Sections 6752 and 6753 of, the Family Code, relating to minors.

 

LEGISLATIVE COUNSEL'S DIGEST

 

SB 1162, Burton.  Minors:  contracts.

Existing law governs the earnings and accumulations of minors, as specified.

 

This bill would regulate the disposition of earnings or accumulations by an nemancipated minor by requiring a certain portion to be held in trust, as specified.  The bill would require the trustee of the trust to, among other things, prepare a specified written statement under penalty of perjury, thereby expanding the crime of perjury and creating a state-mandated local program.

 

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state.  Statutory provisions establish procedures for making that reimbursement.

 

This bill would provide that no reimbursement is required by this act for a specified reason.

 

 

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

 

 

SECTION 1.  Section 771 of the Family Code is amended to read:

 

771.  (a) The earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, while living separate and apart from the other spouse, are the separate property of the spouse.

 

(b) Notwithstanding subdivision (a), the earnings and accumulations of an unemancipated minor child related to a contract of a type described in Section 6750 shall remain the sole legal property of the minor child.

 

SEC. 2.  Section 6750 of the Family Code is amended to read:

 

6750.  This chapter applies to the following contracts entered into between an unemancipated minor and any third party or parties on or after January 1, 2000:

 

(a) A contract pursuant to which a person is employed or agrees to render

artistic or creative services, either directly or through a third party, including, but not limited to, a personal services corporation (loan-out company).  "Artistic or creative services" includes, but is not limited to, services as an actor, actress, dancer, musician, comedian, singer, stunt-person, voice-over artist, or other performer or entertainer, or as a songwriter, musical producer or arranger, writer, director, producer, production executive, choreographer, composer, conductor, or designer.

 

(b) A contract pursuant to which a person agrees to purchase, or otherwise secure, sell, lease, license, or otherwise dispose of literary, musical, or dramatic properties, or use of a person's likeness, voice recording, performance, or story of or incidents in his or her life, either tangible or intangible, or any rights therein for use in motion pictures, television, the production of sound recordings in any format now known or hereafter devised, the legitimate or living stage, or otherwise in the entertainment field.

 

(c) A contract pursuant to which a person is employed or agrees to render services as a participant or player in a sport.

 

(d) Where a minor renders services as an extra, background performer, or in a similar capacity, through an agency or service that provides one or more performers for a fee (casting agency), the agency or service shall be considered the minor's employer for the purposes of this chapter.

 

SEC. 3.  Section 6751 of the Family Code is amended to read:6751.  (a) A contract, otherwise valid, of a type described in Section 6750, entered into during minority, cannot be disaffirmed on that ground either during the minority of the person entering into the contract, or at any time thereafter, if the contract has been approved by the superior court in any county in which the minor resides or is employed or in which any party to the contract has its principal office in this state for the transaction of business.

 

(b) Approval of the court may be given on petition of any party to the contract, after such reasonable notice to all other parties to the contract as is fixed by the court, with opportunity to such other parties to appear and be heard.

 

(c) Approval of the court given under this section extends to the whole of the contract and all of its terms and provisions, including, but not limited to, any optional or conditional provisions contained in the contract for extension, prolongation, or termination of the term of the contract.(d) For the purposes of any proceeding under this chapter, a parent or legal guardian, as the case may be, entitled to the physical custody, care, and control of the minor at the time of the proceeding shall be considered the minor's guardian ad litem for the proceeding, unless the court shall determine that appointment of a different individual as guardian ad litem is required in the best interests of the minor.

 

SEC. 4.  Section 6752 of the Family Code is repealed.

 

SEC. 5.  Section 6752 is added to the Family Code, to read:

 

6752.  (a) A parent or guardian, as the case may be, entitled to the physical custody, care, and control of a minor who enters into a contract of a type described in Section 6750 shall provide a certified copy of the minor's birth certificate indicating the minor's minority to the other party or parties to the contract and in addition, in the case of a guardian, a certified copy of the court document appointing the person as the minor's legal guardian.

 

(b) (1) Notwithstanding any other statute, in an order approving a minor's contract of a type described in Section 6750, the court shall require that 15 percent of the minor's gross earnings pursuant to the contract be set aside by the minor's employer in trust, in an account or other savings plan, and preserved for the benefit of the minor in accordance with Section 6753. The court may also require that more than 15 percent of the minor's gross earnings be set aside in trust, in an account or other savings plan, and preserved for the benefit of the minor in accordance with Section 6753, upon request of the minor's parent or legal guardian, or the minor, through his or her guardian ad litem.

 

(2) The court shall require that at least one parent or legal guardian, as the case may be, entitled to the physical custody, care, and control of the minor at the time the order is issued be appointed as trustee of the funds ordered to be set aside in trust for the benefit of the minor, unless the court shall determine that appointment of a different individual, individuals, entity, or entities as trustee or trustees is required in the best interest of the minor.

 

(3) The trustee or trustees of the funds ordered to be set aside in trust shall promptly provide the minor's employer with a true and accurate photocopy of the trustee's statement pursuant to subdivision (c) of Section 6753.

 

(4) The minor's employer shall deposit or disburse the funds as required by the order within 15 business days of receiving the order and receiving the trustee's statement pursuant to Section 6753. Notwithstanding any other statute, pending receipt of the trustee's statement, the minor's employer shall hold for the benefit of the minor the percentage ordered by the court of the minor's gross earnings pursuant to the contract.

 

(5) When making the initial deposit of funds pursuant to the order, the minor's employer shall provide the financial institution with a copy of the order.

 

(6) Once the minor's employer deposits the set aside funds pursuant to Section 6753, in trust, in an account or other savings plan, the minor's employer shall have no further obligation or duty to monitor or account for the funds.  The trustee or trustees of the trust shall be the only individual, individuals, entity, or entities with the obligation or duty to monitor and account for those funds once they have been deposited by the minor's employer.  The trustee or trustees shall do an annual accounting of the funds held in trust, in an account or other savings plan, in accordance with Sections 16062 and 16063 of the Probate Code.

 

(7) The court shall have continuing jurisdiction over the trust established pursuant to the order and may at any time, upon petition of the parent or legal guardian, the minor, through his or her guardian ad litem, or the trustee or trustees, on good cause shown,order that the trust be amended or terminated, notwithstanding the provisions of the declaration of trust.  An order amending or terminating a trust may be made only after reasonable notice to the beneficiary, to the parent or guardian, if any, and to the trustee or trustees of the funds if the beneficiary is then a minor, with opportunity for all parties to appear and be heard.

 

(8) The trustee or trustees of the funds ordered to be set aside shall promptly notify the minor's employer in writing of any change in facts that affect the employer's obligation or ability to set aside the funds in accordance with the order, including, but not limited to, a change of financial institution or account number, or the existence of a new or amended order issued pursuant to paragraph

 

(7) amending or terminating the employer's obligations under the original order.  The written notification shall include the information set forth in paragraph (3) and shall be accompanied by a true and accurate photocopy of the new or amended order.

 

(c) (1) Notwithstanding any other statute, for any minor's contract of a type described in Section 6750 that is not being submitted for approval by the court pursuant to Section 6751, or for which the court has issued a final order denying approval, 15 percent of the minor's gross earnings pursuant to the contract shall be set aside by the minor's employer in trust, in an account or other savings plan, and preserved for the benefit of the minor in accordance with Section 6753.  At least one parent or legal guardian, as the case may be, entitled to the physical custody, care, and control of the minor, shall be the trustee of the funds set aside for the benefit of the minor, unless the court, upon petition by the parent or legal guardian, the minor, through his or her guardian ad litem, or the trustee or trustees of the trust, shall determine that appointment of a different individual, individuals, entity, or entities as trustee or trustees is required in the best interest of the minor.

 

(2) A parent or guardian, as the case may be, entitled to the physical custody, care, and control of the minor shall promptly provide the minor's employer with a true and accurate photocopy of the trustee's statement pursuant to subdivision (c) of Section 6753 and in addition, in the case of a guardian, a certified copy of the court document appointing the person as the minor's legal guardian.

 

(3) The minor's employer shall deposit 15 percent of the minor's gross earnings pursuant to the contract within 15 business days of receiving the trustee's statement pursuant to subdivision (c) of Section 6753, or if the court denies approval of the contract, within 15 business days of receiving a final order denying approval of the contract.  Notwithstanding any other statute, pending receipt of the trustee's statement or the final court order, the minor's employer shall hold for the benefit of the minor the 15 percent of the minor's gross earnings pursuant to the contract.

 

(4) Once the minor's employer deposits the set aside funds in trust, in an account or other savings plan pursuant to Section 6753, the minor's employer shall have no further obligation or duty to monitor or account for the funds.  The trustee or trustees of the trust shall be the only individual, individuals, entity, or entities with the obligation or duty to monitor and account for those funds once they have been deposited by the minor's employer.  The trustee or trustees shall do an annual accounting of the funds held in trust, in an account or other savings plan, in accordance with Sections 16062 and 16063 of the Probate Code.

 

(5) Upon petition of the parent or legal guardian, the minor, through his or her guardian ad litem, or the trustee or trustees of the trust, to the superior court in any county in which the minor resides or in which the trust is established, the court may at any time, on good cause shown, order that the trust be amended or terminated, notwithstanding the provisions of the declaration of trust.  An order amending or terminating a trust may be made only after reasonable notice to the beneficiary, to the parent or guardian, if any, and to the trustee or trustees of the funds if the beneficiary is then a minor, with opportunity for all parties to appear and be heard.

 

(6) A parent or guardian, as the case may be, entitled to the physical custody, care, and control of the minor shall promptly notify the minor's employer in writing of any change in facts that affect the employer's obligation or ability to set aside funds for the benefit of the minor in accordance with this section, including, but not limited to, a change of financial institution or account number, or the existence of a new or amended order issued pursuant to paragraph (5) amending or terminating the employer's obligations under this section.  The written notification shall be accompanied by a true and accurate photocopy of the trustee's statement and attachments pursuant to subdivision (c) of Section 6753, or a true and accurate photocopy of the new or amended order.

 

(d) Where a parent or guardian, as the case may be, is entitled to the physical custody, care, and control of a minor who enters into a contract of a type described in Section 6750, the relationship between the parent or guardian, as the case may be, and the minor is a fiduciary relationship that is governed by the law of trusts, whether or not a court has issued a formal order to that effect.  The parent or guardian, as the case may be, acting in his or her fiduciary relationship, shall, with the earnings and accumulations of the minor under the contract, pay all liabilities incurred by the minor under the contract, including, but not limited to, payments for taxes on all earnings, including taxes on the amounts set aside under subdivisions (b) and (c) of this section, and payments for personal or professional services rendered to the minor or the business related to the contract.  Nothing in this subdivision shall be construed to alter any other existing responsibilities of a parent or legal guardian to provide for the support of a minor child.

 

(e) With respect to contracts pursuant to which a person is employed to render services as a musician, singer, songwriter, musical producer, or arranger only, "gross earnings" for purposes of this chapter means the amount paid directly to the minor pursuant to the contract, including the payment of any advances to the minor pursuant to the contract, but excluding deductions to offset those advances or other expenses incurred by the employer pursuant to the contract.

 

SEC. 6.  Section 6753 of the Family Code is repealed.

 

SEC. 7.  Section 6753 is added to the Family Code, to read:

 

6753.  (a) The trustee or trustees shall establish a trust pursuant to this section at a bank, savings and loan institution, credit union, brokerage firm, or company registered under the Investment Company Act of 1940, unless a similar trust has been previously established, for the purpose of preserving for the benefit of the minor the portion of the minor's gross earnings pursuant to paragraph (1) of subdivision (b) of Section 6752 or pursuant to paragraph (1) of subdivision (c) of Section 6752.  The trustee or trustees shall establish the trust pursuant to this section within seven business days after the minor's contract is signed by the minor and the employer.

 

(b) Except as otherwise provided in this section, prior to the date on which the beneficiary of the trust attains the age of 18 years or the issuance of a declaration of emancipation of the minor under Section 7122, no withdrawal by the beneficiary or any other individual, individuals, entity, or entities may be made of funds on deposit in trust without written order of the superior court pursuant to paragraph (7) of subdivision (b) or paragraph (5) of subdivision (c) of Section 6752.  Upon reaching the age of 18 years, the beneficiary may withdraw the funds on deposit in trust only after providing a certified copy of the beneficiary's birth certificate to the financial institution where the trust is located.

 

(c) The trustee or trustees shall, within 10 business days after the minor's contract is signed by the minor and the employer, prepare a written statement under penalty of perjury that shall include the name, address, and telephone number of the financial institution, the name of the account, the number of the account, the name of the minor beneficiary, the name of the trustee or trustees of the account, and any additional information needed by the minor's employer to deposit into the account the portion of the minor's gross earnings prescribed by paragraph (1) of subdivision (b) or paragraph (1) of subdivision (c) of Section 6752.  The trustee or trustees shall attach to the written statement a true and accurate photocopy of any information received from the financial institution confirming the creation of the account, such as an account agreement, account terms, passbook, or other similar writings.

 

(d) If the trust is established in the United States, it shall be established either with a financial institution that is and remains insured at all times by the Federal Deposit Insurance Corporation (FDIC), the Securities Investor Protection Corporation (SIPC), or the National Credit Union Share Insurance Fund (NCUSIF) or their respective successors, or with a company that is and remains registered under the Investment Company Act of 1940.  If the trust is established outside the United States, the financial institution shall be a first-class international bank.  The trustee or trustees of the trust shall be the only individual, individuals, entity, or entities with the obligation or duty to ensure that the funds remain in trust, in an account or other savings plan, in a financial institution insured in accordance with this section, or with a company that is and remains registered under the Investment Company Act of 1940 as authorized by this section.

 

(e) Upon application by the trustee or trustees to the financial institution or company where the trust is held, the trust funds may be handled by the trustee or trustees in any of the following methods:

 

(1) The trustee or trustees may transfer funds to another account or other savings plan at the same financial institution or company, provided that the funds transferred shall continue to be held in trust, and subject to this section.

 

(2) The trustee or trustees may transfer funds to another financial institution or company, provided that the funds transferred shall continue to be held in trust, and subject to this chapter and that the trustee or trustees have provided written notification to the financial institution or company to which the funds will be transferred that the funds are subject to this section and written notice of the requirements of this chapter.

 

(3) The trustee or trustees may use all or a part of the funds to purchase, in the name of and for the benefit of the minor, (A) investment funds offered by a company registered under the Investment Company Act of 1940, provided that if the underlying investments are equity securities, the investment fund is a broad-based index fund or invests broadly across the domestic or a foreign regional economy, is not a sector fund, and has assets under management of at least two hundred fifty million dollars ($250,000,000); or (B) government securities and bonds, certificates of deposit, money market instruments, money market accounts, or mutual funds investing solely in those government securities and bonds, certificates, instruments, and accounts, that are available at the financial institution where the trust fund or other savings plan is held, provided that the funds remain in trust at a financial institution insured by the FDIC, SIPC, or NCUSIF if within the United States or maintained in a first-class international bank if not within the United States; provided that those purchases have a maturity date on or before the date upon which the minor will attain the age of 18 years, and provided further that any proceeds accruing from those purchases be redeposited into that account or accounts or used to further purchase any of those or similar securities, bonds, certificates, instruments, funds, or accounts.

 

SEC. 8.  Section 7500 of the Family Code is amended to read:

 

7500.  (a) The mother of an unemancipated minor child, and the father, if presumed to be the father under Section 7611, are equally entitled to the services and earnings of the child.

 

(b) If one parent is dead, is unable or refuses to take custody, or has abandoned the child, the other parent is entitled to the services and earnings of the child.

 

(c) This section shall not apply to any services or earnings of an unemancipated minor child related to a contract of a type described in Section 6750.

 

SEC. 9.  No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.

 

SETTING UP A COOGAN ACCOUNT

A Coogan Trust Account is Required by Law

 

(For information about unclaimed Coogan Account funds, please refer to: www.unclaimedcoogan.org)

 

 

A trust account established under the revised Coogan Law is required for all minors working on any job in the entertainment industry under contracts executed on or after January 1, 2000.

  a.. Within 7 business days after the minor's contract is signed by the minor and mployer, the trustee(s) are required to establish a trust at a bank, savings and loan nstitution, credit union, brokerage firm unless a similar trust has been previously stablished.

  a.. You only need to set up one Coogan account, which can be used for all the minor's current and future entertainment employment.

 

All minors who work on any entertainment job in California, even though their residence may be in another state or even another country, are required to comply.

 

All California companies are required to comply even if the work is done outside of California.

 

Main Requirements of a Coogan Account

  a.. The account must be established at a financial institution (i.e., bank, brokerage firm, savings and loan institution, or credit union, or company registered under the Investment Company Act of 1940,) that is insured by the FDIC, SIPC or NCUSIF

  a.. The minor is the beneficiary

  a.. The parent, guardian or court designee is the trustee

  a.. No withdrawals are allowed until the minor turns 18, but the trustee may transfer funds

  a.. A court order is no longer required (unless it is a court-approved contract - usually a feature film or television series)

  a.. A Coogan account is not the same as a custodial account or an account that falls under the Uniform Gift to Minors Act;

  a.. If a Coogan account is already established in connection with a court-approved contract entered into prior to January 1, 2000, it may be used for this new law as well, but parents may choose to set up a separate account to simplify annual accounting requirements set forth in the California Probate Codes, and to freely transfer funds under the new Coogan law requirements.

  a..  Note: Residuals connected to work performed or contracts signed prior to January 1, 2000, do NOT fall under the new Coogan law.

 

Where You Can Establish a Coogan Trust Account

 

If the trust is established in the U.S., it shall be either with a financial institution that is and remains insured at all times by the Federal Deposit Insurance Corporation (FDIC), the Securities Investor Protection Corporation (SIPC), or the National Credit Union Share Insurance Fund (NCUSIF) or their respective successors, or with a company that is and remains registered under the Investment Company Act of 1940. If the trust is established outside the U.S., the financial institution shall be a first-class international bank

 

We cannot endorse or recommend you to a particular financial institution.

 

Once the account is established, you will be required to provide each employer with the Trustee's Statement to the Employer. Attached will be a deposit authorization sheet which should include the:

 

 

  a.. Name of account holder

  a.. Address of account

  a.. Account number,

  a.. Minor's name as the owner of the account

  a.. Trustee's name (the parent, guardian or the appointed trustee)

  a.. Institution's tracking number for direct payroll deposits

 

The minor's earnings are the separate property of the minor under the law. Parents/guardians are charged with keeping complete and accurate records of income and expenditures. You may want to set up a second simple checking account, that is not funded from the Coogan Trust account, to track the minor's expenses.