Young earners need protection

Cameron Wakefield is working 12- to 14-hour days at the moment; he owns a rental property with his younger brother, has a share portfolio, and recently threw a big party for his friends. Cameron is 12.

While most pre-teens are spending their holidays at the skate park or getting under their parents' feet, Cameron is in Auckland filming a Disney movie, Bridge to Terabithia, with some junior Hollywood stars. He is one of two New Zealanders to be chosen and it's the big break he's been waiting for.

You would recognise Cameron's voice from the Meadowfresh ads. Spotted three years ago at a talent contest as an Elvis impersonator, he has been working ever since. You will see him soon on kids' comedy horror series Killian's Curse on TVNZ.

Since Cameron was discovered, the Wakefield family's way of life has changed dramatically. From juggling the family finances of five children and two working parents, the Wakefields' concerns have switched to, "what shall we do with this $5000 cheque our child has just brought home?" Three of Cameron's siblings are also performers.

For parents whose offspring start to bring in some serious money, the challenges come thick and fast. Decisions have to be made about how you are going to teach the child to handle large amounts of money, and all with the knowledge that their ability to earn may just as suddenly dry up if they decide they would rather play computer games after school.

"We keep him grounded, tell him that it could all be over tomorrow, so think wisely about it," says Cameron's mother, Anita.

The Wakefields have set up a loss-attributing qualifying company (LAQC), and made all the children shareholders. Cameron and his 10-year-old brother Mitchell, also an actor, own half the shares in a Wellington house and their parents own the other half. Another house will probably follow this year. Then there is the share portfolio. Cameron is a magnate in the making.

"He's read Rich Dad, Poor Dad. He works with other kids who will go out and buy six mobile phones. Cameron is not interested in this kind of excessive spending. They see us work hard for our money," says Anita, a nurse who works part-time for Plunketline. Husband Stuart works in IT for NZ Post.

Cameron has had a speedy lesson in accounting - he earned $14,000 last year.

"We explained to him what tax was. He gets invoices from his agent, we make him keep a record of what days he works, and he's managing contracts," says Anita.

When a big cheque comes in, the deal is he gets to spend 10 per cent of everything. He recently bought a drum kit, and he is more than happy for the rest to be invested, says Anita.

Says Cameron: "They said it's my choice, I could blow it all, but I would rather save it and buy a second house." And he seems to have his spending well under control. "I bought a cellphone which was essential, a couple of Xbox games, and I spent too much at Christmas."

He gets a bit of teasing from kids at school.

"Some of them get a bit jealous. They say, 'he's earning, like, $50,000'."

Cameron has not yet earned $50,000 but he is enjoying filming the Disney movie and says he would do it even if he were not paid.

Parents of high-earning children could not be blamed for feeling tempted to pay off the family mortgage with the earnings, but children have been known to sue families for misusing their money.

Says Anita: "I don't agree with it going into family finances. I think you might regret that. They work damn hard for it yet they are having a good time along the way. I remember reading that the next generation of children will find it hard to buy their own homes. This is a good stepping stone."

If Cameron and his siblings continue to succeed the Wakefields would be well advised to put the money into a trust for Cameron.

Kay Caverhill, a senior solicitor at Callaghan & Co, says the $900 cost of setting up a trust can be well worth it. A child earning money is no different to money coming in and protecting it for whatever reason, she says. Even if the child is earning money, the parents still have to raise the child.

For the parents of these high-earning juniors, there is still a lot of commitment or unpaid work expected from the parents.

The overnight success of his 14-year-old model daughter Grace has meant some sacrifices for Steve Hobson and his wife Wendy. Steve is a glorified taxi service for his daughter, taking her to shoots and fashion shows - you can see her at the moment on a Coca Cola billboard at Victoria Park Market - and the truck driver for a recycling firm worked many extra hours last year so he could accompany her on a career-making trip to New York for a month.

Steve is directing Grace's year-old career. He accepts or rejects jobs, although he says she has the right to veto them.

Grace has earned tens of thousands of dollars in the past year - enough for the couple to be considering sending her to private school. The bulk of it has gone into a term account.

The teenager's spending thus far has been on nothing major, says Steve. Just things like cellphones and clothes.

"We hold on to her bank card and she will ask for x amount of dollars, then we allow her to have that - we've got to trust her.

"Grace is a teenager, in fourth form this year. She has not set her goals, she doesn't think like a mature person," Steve says.

So far he hasn't taken financial advice on his daughter's earnings. "We are trying to see how far it will actually go," he says.

Talent agencies give a small amount of guidance. The owner of Nova modelling agency, Caroline Barley, who discovered Grace, says she directs her models to accountant Shirley Johansen, at Hewitt Scaletti Waters.

Johansen says the first thing to do is open an account and "they have to fill out a tax return, regardless of age" because the models pay withholding tax.

One thing new models don't understand is that they can claim for a lot of expenses when going to jobs, says Johansen, but also that they have to pay ACC on earnings.

For less-established families with young children, the money their kids earn can end up just going into the family pot.

Ron and Sophie Fox, whose 1-year-old twins Hugh and Thomas were in a television ad last year, have put the money from that into furniture for their new house. Living on one income, the extra money was very welcome. Sophie, who was also in the ad, earned the bulk of the $5000 fee.

"We had just moved into a new house and had no furniture.

"There was no real question about whether we would painstakingly divvy it up. Any money that they get goes into the pool at the moment. We are just trying to create a better environment for them," says Ron.

The twins' grandparents have set up a trust for the boys.

Stephanie Paxton-Penman, a partner at Gubb, Mitchell, Crawshaw & Partners, says this will stand the boys in good stead in years to come and will protect their interests into adulthood.

"The trustees have obligations under the Trustees Act. There is a code of behavior ... and if [the trust is] not being managed properly, trustees can be removed."

One advantage of a trust for money children earn is that it can stop avaricious friends from getting the money when the kids grow up.

The money can also be used as an education trust for the grown-up children, who may no longer be performing by the time they go to university.

- HERALD ON SUNDAY