Several weeks ago, I addressed the issue of financial abuse affecting older adults. Although rarely encountered, the financial exploitation of minor children likewise presents a serious concern and warrants careful attention. These are matters where minor children have inherited property, are victims of identity theft, or may be subject to a guardianship.  Questions arise regarding who has legal authority to act on the minor’s behalf. Familiarity with these issues enables practitioners to better protect the interests of vulnerable minors and ensure compliance with applicable procedural safeguards.

Jackie Coogan, who portrayed Uncle Fester in the 1960’s TV show The Addams Family, was a star child actor in Hollywood in the 1920’s. On becoming an adult he discovered his parents squandered almost all of his multi-million-dollar earnings.  As a result, in 1939 California enacted what became known as the “Jackie Coogan” law.  This law, among other things, requires employers to place 15% of  minor’s earnings into a protected trust fund.  These assets are basically frozen until the child turns 18 years old.  Several other states have similar protections.

Other recent examples of high-profile child exploitation cases are: Gary Coleman of Diff’rent Strokes; Macaulay Culkin of Home Alone; Le-Ann Rimes, a pop singer; and Ariel Winter of Modern Family.  Each reportedly asserted claims against parents and business managers arising from loss or misuse of earnings while they were a minor. Today children also earn substantial income as social media influencers, You Tubers, streamers, content creators.  models, athletes, and pageant participants. These expanding opportunities likewise create new avenues for financial exploitation.

Evidence that may indicate possible financial abuse of a minor child includes:

1. Bank account opened in name of the child and is unknown to the child or responsible guardian,
2. Unknown or unusual mail including bills and collections notices addressed to the child
3. Emails, texts, or social media offers for credit cards and loans to the minor.
4. Credit report in the child’s name and social security number
5. Unexplained activity involving bank accounts or electronic payment services such as PayPal, Zelle, Venmo.
6. Signs of possible identity theft include such things as utility accounts or other financial obligations  opened in minor child’s name

Although uncommon, minor children have been named as debtors in bankruptcy cases.  Children may inherit real and personal property, and bankruptcy cases have occasionally been initiated to address foreclosures involving inherited property. This raises an interesting legal question: Can a minor child file for bankruptcy?  In the case of In re: Brittany Murray 199 B.R. 165 (Bankr. M.D. Tenn 1996) Judge Lundin said yes.  Judge Jernigan citing the Murray case wrote:

“Judge Lundin, after an exhaustive review of what appears to be every published case and article dealing with guardians or other representatives filing cases for incompetents or infants, allowed a mother of a seven year-old to file a chapter 13 as “next friend“ custodian and guardian for her daughter, daughter had inherited from her deceased father a house that had a mortgage on it and also received Social Security benefits and there were arrearages that the debtor/guardian wanted to cure through a plan using the Social Security benefits.” See In re: Matthews 516 B.R. 99, 106 (Bankr. N.D. Texas 2014).

In 1998 a 10-year-old, Shawn Powell, filed a bankruptcy petition in the District of Maryland in an effort to save the family home from foreclosure. The case made national news. Shawn and his 2 siblings had inherited the home following the deaths of both parents. Their uncle resided in the home with 2 of the children, but the mortgage was not being maintained.  The estate also included a $100,000 life insurance policy from the deceased father. At the same time, proceedings were pending in state court because the minor debtor’s half-sister was seeking to obtain guardianship over the 3 siblings.  This raised the question of who possessed the authority to file the bankruptcy petition on Shawn’s behalf. News accounts at the time observed the bankruptcy case  “is noted for his rounded, boyish signature on the sheaf of required legal documents and for his poignant listing of personal property- “toys, $100, clothes $100, and income of $327 a month in social security payments.”  Brett Weiss, the attorney for the debtor,  had the case voluntarily dismissed.  He said the case served its purpose of avoiding foreclosure.  See Capitol News Service November 24, 1998 https://cnsmaryland.org/1998/11/24/hearing-stalled-for-bankrupt-10-year-old-as-relatives-wrangle/ and https://www.washingtonpost.com/archive/local/1999/03/01/update-on-the-news/958a78a2-a30d-44c8-b38b-e9a761d3d3be/.

In another case an uncle filed a Chapter 13 for his minor nephew without any record of being a court appointed guardian. Years later, after the Debtor reached the age of majority and filed a Motion to Reopen, the Bankruptcy Court expunged the filing. Evidence was never presented that the uncle had legal authority over the Debtor. The underlying case had been dismissed for non-payment prior to the court appointing a guardian ad litem.  The Debtor complained the case had adversely impacted his credit.  The Bankruptcy Court concluded the appropriate remedy was expunction of the record.  See In re: Doe No. 03-04291 (E.D. North Carolina Feb. 7, 2012) 2012 WL 401076.

See also the recent case of In re: KR, a minor, 678 B.R. 795 ( Bankr. D.S.C. 2026) where a minor debtor’s father was appointed guardian ad litem pursuant to Fed. R. Bankr. P. 1004.1 and granted other relief.

Final Thoughts

The financial exploitation of children often goes undetected because minors generally lack the knowledge, experience, or legal capacity to protect their own financial interests. Whether the exploitation involves earnings from entertainment or social media, identity theft, inherited assets, or even bankruptcy proceedings, vigilant oversight by parents, guardians, financial institutions, and the courts remains essential. Early detection can prevent long-term financial harm and preserve opportunities that should rightfully benefit the child upon reaching adulthood. As children increasingly generate income and own valuable assets, the importance of safeguarding their financial future becomes more significant than ever.

(Printed with permission, NACTT Academy, Considerchapter13.org, September 27, 2026)