Protecting Your Basics
Protect what you can’t control. An old adage, but as true today as it has always been. A large part of what we see initially with athletes comes down to risk management. Looking outside of the norm and making sure that if the unexpected occurs, you and your loved ones are taken care of.
What does this mean?
Essentially it means taking a “worst case scenario” approach and evaluating the consequences. Accidents, litigation, disability, and death are things nobody wants to think about but need to be provisioned for. For the “20 something” athlete these are usually not front and center of one’s thoughts. Some of the things reviewed in protecting the basics include:
Will and/or Trust documents
It is a very morbid way to think but unfortunately without a Will, the government will decide who gets your assets if you pass away and who will be the guardians for your children. The thought of this is usually unacceptable but very few actually have the documents to prevent it.
Power of Attorney Documents
A Power of Attorney is a legal document that allows someone to act for you if you cannot. This becomes a real issue if one is disabled or incapacitated. Without such a document, the courts will decide who your “attorney in fact” will be and the court will oversee how they do it.
Umbrella Liability
As professional athletes and public figures you become a target for litigation. Unfortunately, those with assets become targets of those without. Having an umbrella policy in place will help insure any dollar amount above your traditional home and auto policies. This will also help insulate you from a large dollar settlement and provide other coverages that are useful.
Life Insurance
Depending upon contract length and dollar amount, we typically advise some sort of life insurance to be paired with the already existing insurance through the latest CBA. This decision is a personal one based on assets, time horizon, and other factors. Life insurance gives your family choices by providing the benefits to help pay off debts, meet housing payments/ongoing living expenses, and help fund college educations for your children.
Disability Insurance
An athlete’s peak earning years tend to be at a young age. With this come income risks. An individual under 30 is much more likely to become disabled than to perish. It is important that the athlete understand the insurance through the current CBA and evaluate it to their own situation. In some cases, obtaining additional disability insurance may be prudent for the athlete.
While not fun to talk about, the protecting the basics is a critical part in an athlete’s successful financial planning. Taking the initiative and covering the basics puts them and their family in control of the unforeseen worst-case scenario event.
Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network®.
Retirement Capital Advisors does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.