Estate Planning and Asset Protection
Athletes Benefitting from NIL
Developing a clear financial and legal strategy with a team of trusted advisors (attorney, accountant, agent, financial advisor) is the key to success for athletes with packed schedules. This strategy should include additional estate planning documents, financial and tax planning advice and a discussion of asset protection and privacy concerns.
Health Care Proxy and Living Will
While every young adult should have a Health Care Proxy and Living Will, athletes are at increased risk of serious injury. A Health Care Proxy allows the athlete to name an individual to act on their behalf with respect to medical decisions, and a Living Will details what type of care they would like to receive under certain circumstances, including end of life wishes surrounding whether and when to implement or withdraw life support. Without this document, a guardian would need to be formally appointed by the probate court to make these decisions, an expensive, court involved process where the athlete loses independence.
Power of Attorney
The Power of Attorney is a document that allows someone else (the “agent”) to make legal and financial decisions on the athlete’s behalf. These documents can be structured so they are effective immediately upon signing or only upon incapacity. Great care must be given to selecting an agent, particularly if the athlete has significant assets or fame, as the agent will have the same authority and power over the athlete’s assets that the athlete would. Parents lose control of these aspects of their athlete’s life when the athlete turns 18. A Power of Attorney allows parents to continue to support their child-athlete.
Athletes compete all over the country and, in some cases, the world. From a tax perspective, athletes need to be aware of earning income in multiple states (or countries) and carefully track this as additional tax filings may be required (and additional taxes may be owed), giving gifts to friends and family, and other circumstances that will require an advanced knowledge of a variety of areas of tax law. Attorneys at Levene Gouldin & Thompson can offer individualized advice and guidance on the best practices for navigating a variety of tax matters.
The use of revocable trust planning is a key planning tool for athletes, particularly those earning an income. Trusts can provide an additional layer of security against any third parties who may try to take advantage of the athlete, especially when using a professional or other trusted individual as trustee. Trusts can also provide terms that would allow the athlete to manage their income in a responsible way by limiting distributions to those things that are necessary, like medical or health expenses and housing. In the event of the athlete’s death, the assets would pass outside of probate court, further preserving privacy to whomever the athlete has named as beneficiary, and creating a long-term benefit for accomplishing a trust at a young age.