0

I asked this on Finance and they said it was a Law question.

Let's say you are an ordinary family, and one of your young children is lucky enough to be cast in a huge blockbuster movie franchise, for which they are paid many millions of dollars.

The income is of course earned by the child and belongs to them. Since they are a minor their parents must manage the money, but are obliged to manage it for the benefit of the child. The money isn't theirs.

However it seems unlikely that the parents continue to work regular jobs, pay the mortgage on their suburban 3-bed house and buy groceries for the family out of their salary while the child is worth tens of millions. But how is this managed, legally speaking, without the parents being able to enrich themselves at their kids expense?

Experience or knowledge rather than guesswork please.

Improve this question
3
  • The jurisdiction involved matters a lot. This was the subject of legislative reforms in California (in the 1930s IIRC). It is an area of law that isn't terribly uniform (although often not very well defined either).
    – ohwilleke
    Dec 21, 2022 at 3:08
  • 1
    I'll take any answer from any jurisdiction.
    – DJClayworth
    Dec 21, 2022 at 4:48
  • "Since they are a minor their parents must manage the money, but are obliged to manage it for the benefit of the child." In this particular case of a young child earning millions of dollars, this is likely true. However, it is not true in every case where a minor is paid for work. I'm 16 years old, and I've done freelance writing work for one particular client several times. They directly deposit the money into my bank account, of which my parents are not co-owners, just like they would for an adult, and I can spend the money however I want.
    – Someone
    Dec 21, 2022 at 4:56

1 Answer 1

Reset to default
1

The legal answer is, it isn't "managed". A parent has a fiduciary duty to manage the child's wealth, and have the same duty to provide for their child that everybody does. This is the abstract theory, but there have been some cases where parents overstepped their parental rights and unjustly enriched themselves. The child can file suit and claw back the money, and the court may appoint someone else to be in charge of the child's wealth (example: Macaulay Culkin, of Jackie Coogan). California Child Actor’s Bill provides partial protection for the child's interest, so that at least 15% of the proceeds are place in a trust. A parent who breaches their fiduciary trust can be sued, but there is no general requirement that parental decisions be pre-approved by a court-appointed guardian in case the child earns "a lot of money".

Improve this answer
1
  • The child may even have him/herself emancipated if she can prove mismanagement of her income by her parents.
    – Neil Meyer
    Dec 21, 2022 at 16:35

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .