How much is a child's income allowed to benefit their parents?

Question

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.

Answer 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".