Minors’ Contracts in Art, Entertainment, and Professional Sports in California

California’s Family Code, in Division 11, Part 3, Chapter 3, deals with contracts in art, entertainment, and professional sports.

Section 6750 applies Chapter 3 to three specified types of contracts entered into between an unemancipated minor and a third party. If a minor is employed or agrees to render services directly for a person or entity, that person or entity is considered the minor’s employer for purposes of this chapter. This section defines the following terms: “content creator,” “online platform,” and “gross earnings.”

Section 6751 states that a contract under this chapter, 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.

Approval of the court may be given on petition of any party to the contract, after 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. Approval of the court given under this section extends to the whole of the contract and all of its terms and provisions.

Section 6752 provides that a parent or guardian entitled to the physical custody, care, and control of a minor who enters into a contract of a type described in this chapter must 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 the case of a guardian, a certified copy of the court document appointing the person as the minor’s legal guardian.

In an order approving a minor’s contract of a type described in this chapter, the court must require that 15% of the minor’s gross earnings pursuant to the contract be set aside by the minor’s employer, held in trust, in an account or other savings plan, and preserved for the benefit of the minor.

The court must require that at least one parent or legal guardian, 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 determines that appointment of a different individual, individuals, entity, or entities as trustee or trustees is required in the best interest of the minor.

The minor’s employer is required to deposit or disburse the 15% of the minor’s gross earnings pursuant to the contract within 15 business days after receiving a true and accurate copy of the trustee’s statement, a certified copy of the minor’s birth certificate, and, in the case of a guardian, a certified copy of the court document appointing the person as the minor’s guardian.

The court has 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 the minor’s guardian ad litem, or the trustee or trustees, on good cause shown, order that the trust be amended or terminated. An order amending or terminating a trust may be made only after reasonable notice to the beneficiary and, if the beneficiary is then a minor, to the parent or guardian, if any, and to the trustee or trustees of the funds with opportunity for all parties to appear and be heard.

The minor’s employer must deposit 15% of the minor’s gross earnings pursuant to the contract within 15 business days of receiving the trustee’s statement, or if the court denies approval of the contract, within 15 business days of receiving a final order denying approval of the contract. Once the minor’s employer deposits the set-aside funds in trust, in an account or other savings plan, the minor’s employer has no further obligation or duty to monitor or account for the funds.

Where a parent or guardian is entitled to the physical custody, care, and control of a minor who enters into a contract of a type described in this chapter, the relationship between the parent or guardian 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 Actors’ Fund of America, as trustee of unclaimed set-aside funds, is required to manage and administer those funds in the same manner as a trustee under the Probate Code. The Actors’ Fund of America has the right to use those funds transferred to its general account to provide programs and services for young performers.

Section 6753 requires trustees to establish a trust account, that is known as a Coogan Trust Account, pursuant to this section at a bank, savings and loan institution, credit union, brokerage firm, or company registered under federal law, that is located in the State of California. There are numerous requirements related to the trust.

In addition, upon application by the trustees to the financial institution or company in which the trust is held, the trust funds are to be handled by the financial institution or company in one or more of the three specified methods.