There have been plenty of stories of actors in Hollywood who go from being really big stars to really big tragedies. The work dries up, the big paychecks stop coming in, and then they find themselves owing way more than they are worth. A recent article in USA Todaynames Lindsey Lohan, Nicholas Cage and Lionel Ritchie among many others as owing quite substantial amounts of money to the IRS.
One particular subset among Hollywood stars that seem to have it even rougher is child actors. One of the major reasons that their earnings dry up is because what made them marketable when they were children doesn’t necessarily stay the same when they get older. It is a difficult transition for many of them to make, and some of them don’t make it at all. But it is certainly not as bad for them as it used to be.
There are horror stories from the early days of Hollywood of parents of child actors who simply squandered all of their children’s earnings. One in particular was Jackie Coogan, who some of you might remember as Uncle Fester from the Addams Family, but who got his start as a child actor who worked with the likes of Charlie Chaplin. He was also one of the first faces to be internationally merchandized, with his face appearing on all sorts of products. In other words, he made a great deal of money.
But according to the laws of the day, every single penny of that money went to his mother and his stepfather, who viewed the money as rightfully theirs, and treated it that way. By the time Jackie Coogan was old enough to claim it, there wasn’t anything left. It had all gone to jewels, cars and vacations. For her part, Coogan’s mother had absolutely no guilt or regret about her actions. “No promises were ever made to give Jackie anything. Every dollar a kid earns before he is 21 belongs to his parents. Jackie will not get a cent of his earnings.”
As a result of this case, the California passed what was called “The Coogan Bill,” which required that a certain percentage of the money that a child actor earns is put into a trust fund. Since then the law has been amended to include the majority of the child’s earnings, which can be accessed when the child turns 18. Most states have equivalent laws on the books, and the principal is the same. If your child either earns or is awarded money, that money belongs to the child. It is not yours.
The reason we are bringing this up is because sometimes there is confusion over how financial judgments and settlements won by children are supposed to be handled in Maryland. The answer to that is pretty simple. If it’s under $5000, the money goes to the parents to use for the child’s benefit as they see fit. If it’s more than that, it is to be placed into an interest bearing account and it is not to be touched. Parents, grandparents, uncles, aunts, cousins, foster parents or other legal guardians can’t get near it, under most circumstances.
If you have a child who has been injured in an accident, and he or she receives a financial judgment or settlement, you should view the money as not existing at all.
It’s important to separate yourself from it. Money earned in a settlement or judgment should not be considered a “windfall” or a “jackpot.” In the first place, that money is there not because your child was Jackie Coogan, or MacCauley Kulkin, or Justin Beiber for that matter. That money is there because something awful happened to your child due to someone else’s negligence or incompetence. If the damage that happened to your child is lasting (in other words, if there was brain damage or permanent physical disability,) then he or she will most definitely need every penny of that money for therapy, care, and other related expenses. Taking away from those funds because you might need to fix the roof on your house is not a good way to go about handling the money, and fortunately in Maryland, it is nearly impossible for the parents to get the money.
We are sure that every one of our clients has the best interests of their children at heart, but we are also certainly mindful of the dim economic climate that exists out there. Everybody could use more money. And if times get tough, it is only natural for your mind to start drifting towards a settlement that your child received. But believe us when we tell you that even if it were possible to get the money, it would not be worth it to know that you have taken directly from your child’s future.
Greenberg and Bederman is a personal injury law firm located in Silver Spring, Maryland. We are currently offering legal assistance for those who have been injured due to no fault of their own. If you or a loved one has been injured in a car accident or due to medical malpractice, contact Greenberg & Bederman for a free legal consultation.