Why would a credit union want to offer little-known, highlyspecialized accounts that often carry very small balances, couldsit on the books for more than a decade, and aren't a real profitcenter?

The answer from credit unions that offer Coogan accounts, asthey are called in California, reflects classic credit unionphilosophy-because our members need them and we're here to serveour members.

California's Coogan law dates back to 1939 and was named afterchild actor Jackie Coogan, who discovered when he turned 21 thatthe money he had earned as a top movie star was gone. Under the lawat that time, his earnings had belonged to his parents.

Coogan wasn't the only performer whose earnings disappeared. Forexample, during her 19 years of stardom Shirley Temple earned anestimated $3 million to $5 million. All that was left was$44,000.

Coogan accounts, also known as child performer trust accounts,blocked trust accounts and trust accounts, are required inCalifornia, New York, Louisiana and New Mexico. Fifteen percent ofthe gross earnings of a child actor, athlete or other performermust be deposited in the account and can only be accessed by thechild when he or she turns 18.

Few financial institutions offer these accounts, because thetypical credit union or bank may not have a single member who needsone. But they're important for credit unions such as AFTRA-SAGFederal Credit Union, First Entertainment Credit Union and ActorsFederal Credit Union.

AFTRA-SAG FCU has approximately 4,000 Coogan accounts, which thecredit union considers very significant. Donna Hurst, assistantmanager of operations/Coogan account expert at AFTRA-SAG FCU,identified two big challenges in handling those accounts.

“First, a lot of production companies, studios and managementcompanies would like the parents to open a Coogan account prior tothe child getting work when in fact they don't actually need anaccount until they're working,” she said. “So parents sometimes getcaught on a Coogan carousel, and they're not sure where to get onand where to get off.

“Another significant problem is that not all states have aCoogan law. I believe four states do. It's not called the samething in each of those states, and the laws are not reciprocal.That can be very confusing for a parent. California has some of thestrictest standards, and other states tend to recognize aCalifornia Coogan account, so if a child living in New York opens aCoogan account in California, it meets New York legal requirements.But the reverse is not true.”

Hurst said that even in the Los Angeles area, availability ofCoogan accounts has become more limited. Originally most financialinstitutions did offer them, and they often levied high minimumbalance and fee requirements to open an account.

But at AFTRA-SAG FCU, “It really is our niche market,” Hurstsaid. “It's not a money-maker for us, and I think that's why a lotof institutions have shied away from it. The payoff for us, if youwill, is building long-term relationships.”

First Entertainment Credit Union, which also serves the film andrelated industries, has more than 2,000 Coogan accounts.

“The Coogan Act here in California covers all minor performerswhether in film, television, music, dancing and so on,” explainedRoy MacKinnon, vice president of marketing. “Children cannotperform until a Coogan account is established. From what weunderstand, and I haven't confirmed this, a lot of castingcompanies won't even let a child audition without proof there is aCoogan account established.

“So we get a lot of parents of young performers opening upCoogan accounts. It's now considered part of a package a childneeds such as photos, an agent and so on. A lot of these accountsare established and the children never end up working in thebusiness. They don't get the part, or they get one small part andnever work again. The account just sits there with a very lowbalance.”

The question, MacKinnon said, is how to develop a relationshipwith these young members when their primary reason for opening theaccount was the expectation they could succeed in the business. Theharsh reality is tens of thousands of people strive to be an actorbut very few get their lucky break.

So why even offer Coogan accounts? Mackinon suggested along-term view.

“Our whole mindset in offering Coogan accounts was there was aneed and it was a natural fit for us because we hope that peoplewho end up in the entertainment industry will continue to have afinancial relationship with us. The bulk of our Coogan accounts arefor performers between 1 and 10 years old, young children justgetting into the business. There isn't a lot we can provide themother than a basic savings account until they at least hit theirteenage years when we can offer them a checking account.”

When the state of New York passed its own version of the Cooganlaw in October 2003, offering child trust accounts seemed like ano-brainer for Actors Federal Credit Union, whose Los Angelesbranch already offered the accounts. By early 2004 AFCU wasoffering child performer trust accounts in New York. The creditunion now has 5,000 child performer and Coogan accounts.

Steven Sobotta, director of marketing, said: “After New Yorkpassed its law, no banks were willing to do it. When it came to ourattention, we spoke with our lawyers and we felt it was verydoable. Parents have to understand the money is locked until thechild is 18, period, but it is only 15% of the gross.”

One sign of how specialized these accounts are is the fact thatmajor New York banks often refer parents looking to open a childperformer trust account to AFCU. “Who is that?” the parents wonder.They may even be uncertain about what a credit union is.

“Our child performer trust accounts have no maintenance fee, nobalance requirement, and no initiation fee,” Sobotta said. “Thecredit union does have carrying costs. The kid may appear in an adwhen he is five years old and the money just sits in the account.But credit unions have an obligation not just to do things thatmake money, but to do things that serve your membership and yourclientele in the community. If not for us, there would have been noplace to turn for child performer trust accounts in 2004.”

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