QUESTIONS REGARDING THE SETTING UP A CUSTODIAL TRUST ACCOUNT FOR YOUNG PERFORMERS
Although Equity cannot anticipate all of the questions and concerns parents and guardians might have regarding the custodial trust account provision contained in the Child Performer Education and Trust Act of 2003, which is a state law in New York; however, we will attempt to address some inquiries. If you have additional questions or need further assistance please feel free to contact Willie Boston at 212-869-8530 and/or the Department of Labor’s website, which is being revised to address questions about trust accounts.
What is a Custodial account?
In addition to a percentage of your child’s salary, other assets such as stocks, bonds, and life insurance policies and annuities can also be transferred or gifted to a custodial trust account.
Under most state laws minors would not be permitted to own assets like mutual funds, real estate or stocks but the establishment of a custodial trust allows parents, guardians, grandparents, and others to transfer assets to this trust, which will become the property of the minor once he/she reaches majority.
What types of custodial account(s) will the state of New York currently accept to fulfill the requirements of the law?
What are the differences between these three accounts?
The Blocked Trust Account is offered by a fewer number of financial institutions, the Actors Federal Credit Union being one of those institutions that offers this type of account.
Although the original intention was to have the trust component of the New York State law mirror California’s Coogan Account, an UGMA/UTMA account, which are currently acceptable under the Child Performer Education & Trust Act, will permit the custodian of the account to remove deposited funds if it will be used directly for the benefit of the minor, while funds deposited into a Blocked Trust account are held in abeyance until the child reaches his/her majority.
My child does not live in New York State do we still have to set up a trust account?
My child already has a Coogan Account set up in California. Do we have to open up another trust account in New York or does the trust account have to be in New York?
Where can I go to open up one of these custodial accounts (UGMA, UTMA or a Blocked Trust Account) and how much money do I need to deposit to open up one of these accounts?
What happens after I open up the account?
Will my child still owe taxes on the 15% that goes directly into the trust account?
What happens if I do not open up a trust account?
The New York State law requires that 15% of my child’s gross income be deposited, by the employer, into his/her trust account but can that amount be increased?
I have two young actors in my family. Can I just set up one custodial account for both children?