At Heritage Law Office, we understand that professional athletes have unique estate planning needs. You need a coach who can help you plan both an offense -- to have your assets work for you -- and a defense -- to protect your assets. That's why we're proud to offer our estate planning services specifically tailored for professional athletes and their families. From asset protection to tax planning, we can help you create a comprehensive estate plan that takes into account your unique circumstances.
Why Estate Planning is Important for Professional Athletes
As a professional athlete, you have worked hard to achieve your success. You've sacrificed your time and energy to become one of the best in your field. Now, it's time to protect your hard-earned assets so that you can enjoy your retirement and provide for your loved ones.
Unique Risks and Circumstances for Professional Athletes
Estate planning is important for all individuals, but it is especially critical for professional athletes. That's because professional athletes face challenges the average person does not. Often with professional athletes, their goals change from the most common type of estate planning (what happens to their assets after they pass away) to making their wealth last a lifetime.
Professional athletes face unique circumstances and risks when planning for their financial future. Some of these circumstances and risks include:
- Sudden gain of wealth
- Multiple or variable sources of income
- Earnings compressed into early career
- Income stream can suddenly cease
- Lack of financial education
- Waiting to plan finances
- Poor spending habits
- Friends, family, and other relationships
A comprehensive estate plan can help protect your hard-earned assets while you are still alive. Additionally, a comprehensive estate plan can ensure that your loved ones are taken care of in the event of your death or incapacity. Finally, estate planning can give you peace of mind knowing that your affairs are in order and that your loved ones will be taken care of according to your wishes.
Athletes Lack of Financial Planning
A shocking number of professional athletes become in financial trouble within a few years of retiring from professional sports. A 2009 Sports Illustrated report estimated "78% of former NFL players have gone bankrupt or are under financial stress because of joblessness or divorce." Additionally the report states, "within five years of retirement, an estimated 60% of former NBA players are broke."
Here are some reasons why a professional athlete may run into financial troubles:
- Poor money management skills - Many professional athletes grew up in low-income households and never learned how to properly manage their money. As a result, they may make poor financial decisions, such as spending their salary on luxury items or investing in risky ventures.
- A lack of financial literacy - A lot of professional athletes simply don't understand the basics of personal finance, such as investing, budgeting, and saving for retirement. This lack of knowledge can lead them to make poor financial decisions that cost them dearly in the long run.
- Pressure from family and friends - It's not uncommon for professional athletes to feel pressure from family and friends to support them financially. This pressure can lead athletes to make poor financial decisions in an effort to keep everyone happy.
- An inability to adjust to life after sports - Many professional athletes have difficulty adjusting to life after their playing days are over. Without a steady income coming in, they often find themselves struggling to make ends meet and are forced to declare bankruptcy.
Everybody likes to think that this will not happen to them and they are the exception, but the way to become the exception and the real solution to ensure this does not happen to you is to plan ahead and prepare. Many professional athletes make the mistake of waiting until the end of their career to start planning.
The earlier you start to plan in your athletic career, the better.
Comprehensive Estate and Wealth Planning for Professional Athletes
Professional athletes should have a wide array of financial and wealth planning. This may include:
- Estate planning
- Financial planning
- Asset protection
- Creditor protection
- Investment management
- Tax planning
What Does a Comprehensive Estate Plan Include for Professional Athletes?
A comprehensive estate plan includes a variety of documents that work together to achieve your specific goals. Depending on your situation, your estate plan may include a last will and testament, trusts, Powers of Attorney, advance directives, and more. Our team of experienced estate planning attorneys can help you create a custom plan that meets your unique needs.
A good estate plan will take into account all of your assets, including your home, your investments, and your life insurance policy. A good estate plan will setup a structure to protect your assets. It will also consider any debts you may have and how best to pay them off. And finally, a good estate plan will identify your beneficiaries and make sure that they are taken care of in accordance with your wishes.
Athletes That Should Consider Estate Planning
Realistically, almost everybody should consider estate planning. The more assets you have or the more unique your situation, the more likely you should have estate planning. The following are some examples of professional athletes that should consider estate planning:
- NFL Athletes
- NHL Athletes
- NBA Athletes
- MLB Athletes
- MLS Athletes
- MMA Athletes
- and more...
Contact an Estate Planning Attorney for Professional Athletes
If you are a professional athlete, it's important to work with an experienced estate planning attorney to create a comprehensive plan that meets your unique needs. At Heritage Law Office, we understand the challenges that professional athletes face when it comes to estate planning. We can help you create a custom plan that takes all of your factors into account, including your high net worth, income taxes, and creditors. Contact us today by calling 414-253-8500 or by sending us a message to learn more.
Frequently Asked Questions (FAQs)
1. Why is estate planning especially important for professional athletes?
Professional athletes face a unique set of challenges in financial planning due to their high-income earning potential concentrated in a relatively short time period, along with the inherent risk and unpredictability of their careers. Good estate planning can help manage these assets wisely, create a safeguard against financial difficulties, ensure the financial well-being of their loved ones, and potentially reduce tax liabilities. Moreover, early planning helps in achieving long-term financial stability post-retirement.
2. When should a professional athlete start estate planning?
It's never too early to start estate planning. The earlier in your career you start, the more you can take advantage of strategies like compounding interest and tax-free growth. With the potential of career-ending injuries or abrupt retirement, it is essential for athletes to start planning as soon as they start earning to ensure their financial security.
3. What does a comprehensive estate plan include for professional athletes?
A comprehensive estate plan for a professional athlete could include a variety of elements such as a last will and testament, trusts, powers of attorney, and advance healthcare directives. It may also include strategies for asset protection, tax planning, charitable giving, retirement planning, insurance, and planning for incapacity or disability. Each athlete's plan will be tailored to their specific needs and circumstances.
4. How can estate planning help in asset protection for professional athletes?
Asset protection is an essential part of estate planning for professional athletes who are often targets for lawsuits and creditors. By using strategies like forming trusts and business entities, athletes can safeguard their wealth from potential claims. Also, estate planning can help in strategically managing their income and investments to minimize tax liabilities, thereby preserving more of their wealth.
5. How does an estate planning attorney assist professional athletes in this process?
An experienced estate planning attorney can provide guidance in navigating the complexities of estate planning, especially for professional athletes. They can help in the establishment of appropriate legal structures like trusts and business entities, advise on tax implications, and ensure that your estate plan aligns with your long-term financial goals. Furthermore, as your life and financial situation evolve, an attorney can assist in regularly reviewing and updating your estate plan to reflect these changes.