Planning for athletes and celebrities
Crafting a financial plan based on your unique circumstances
Professional athletes and entertainers experience unique circumstances that are important to take into account when crafting a personal financial plan. Knowing the specific challenges to address and the range of strategies available to help can make all the difference in ensuring your long-term financial success.
Common challenges
Research suggests that despite outsized earnings, 78% of professional athletes face financial distress within a few years of retirement.1 This is understandable as they face a unique set of challenges.
For example, they tend to have a singular focus on their careers. Very few people in the world have the talent or work ethic to succeed at the highest levels in sports or in Hollywood. Those who do have little time left to tend to the business side of their career or personal brand. Sadly, this intense focus on their craft is often one of the reasons for a lack of long-term success financially.
Planning tip
Planning tip
With a high-powered career, it’s imperative to understand what a reasonable spending and savings rate might be. For long-term success outside of an athletic or artistic career, it’s also critical to meet with advisors to discuss investment performance, due diligence and risk management.
Putting together a team
Having an experienced team of advisors that regularly partners with professional athletes and celebrities and understands your particular circumstances can make a world of difference in helping to maximize your wealth over generations. In addition to an attorney, certified public accountant (CPA), and financial advisor, your team may include an:
- Agent, manager, or management team
- Executive coach or seasoned counselor
You should always seek a second and third opinion from your advisors before taking any significant financial action.
Key planning topics
Ideally, your team of professionals will guide you through several stages of planning during your lifetime to address issues such as income tax planning, asset protection planning, insurance, estate planning, and philanthropy. Here we highlight three key areas of planning.
State and federal income tax planning
Protecting your current income from income taxes is vital. Be sure you are saving in qualified retirement plans, which are exempt from the claims of creditors. Qualified plans include 401(k) plans, money purchase pension plans and profit-sharing plans, but not individual retirement accounts (IRAs). Many states also exempt IRAs, although the amount of this protection varies based on state law
State income tax rates applying to employment income vary from highs of 13.3% and 11.0% in California and Hawaii to a complete absence of employment income tax in nine states (Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming, and Alaska).
State income taxes are generally based upon the taxpayer’s residence as well as the geographic source of the income. Be aware that many states impose taxes on athletes and celebrities for the “duty days” they compete or work in that state, even if the athlete is not domiciled there.
Asset protection planning
Asset protection planning involves the use of various strategies to help minimize exposure to the claims of future creditors. These planning strategies can range from the simple (liability insurance) to the complex (domestic and foreign asset protection trusts). Because this protection is forward-looking, you should take action before any such claims are filed or even anticipated.
More complex asset protection strategies involve the transfer of property to a spouse, entity, or trust. If properly structured and implemented, these strategies may permit the transferor to protect the asset from the claims of certain creditors while still receiving some degree of benefit from the transferred asset. You may want to consider:
- Asset protection trust (APT), also known as a self-settled spendthrift trust
- Beneficiary controlled trust
Insurance planning
Life insurance can be used to address a broad range of financial concerns for the professional athlete or celebrity, protecting your brand and financial interests, planning for estate and wealth transfer, serving as an alternative investment option or fulfilling a philanthropic goal.
Life insurance can be used as a means of providing funds to replace lost income in the event of premature death or injury. It can be used to cover funeral expenses and taxes, pay off existing debt or create a source of funds for future expenses such as college tuition.
In 2025, the federal estate and gift tax exemption is $13.99 million per person ($27.98 million for a married couple).2 The federal tax rate for transfers over the exemption amount is 40%. A life insurance policy can potentially provide assets at death that could be used either to pay the estate tax or to purchase illiquid assets from the estate, and thereby may help to avoid a forced sale or the burden of a loan.
1 Leigh Steinberg, “5 Reasons Why 80% of Retired NFL Players Go Broke,” Forbes, February 9, 2015.
2 This assumes that each spouse is a US person (i.e., a US citizen or US domiciliary). For a US person, the gift and estate tax exemption is indexed annually for inflation and currently includes a temporary increase. This increase expires after 2025, at which time the gift and estate tax exemption will be cut roughly in half.
Dive deeper
For more information about the challenges and opportunities to consider in crafting a financial plan, download Planning for athletes and entertainers. Connect with a UBS Financial Advisor to learn more about planning strategies tailored specifically for athletes and entertainers.
Neither UBS Financial Services Inc. nor its employees (including its Financial Advisors) provide tax or legal advice. You should consult with your legal counsel and/or your accountant or tax professional regarding the legal or tax implications of a particular suggestion, strategy or investment, including any estate planning strategies, before you invest or implement.
Insurance products are made available by UBS Financial Services Insurance Agency Inc. and by other insurance licensed subsidiaries of UBS Financial Services Inc. through third-party insurance companies unaffiliated with UBS Financial Services Inc.
Trust services are provided by UBS Trust Company, N.A. or another licensed trust company. UBS Trust Company, N.A. is an affiliate of UBS Financial Services Inc. and a subsidiary of UBS AG. Trust investments are not deposits or other obligations of, or guaranteed by, UBS Trust Company, N.A. or UBS AG or any of their affiliates. Trust investments involve investment risks, including possible loss of the principal.
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