COLLEGE ATHLETES: PROTECT YOUR NAME, IMAGE, AND LIKENESS (NIL) AND BRAND AS PART OF YOUR ESTATE AND WEALTH PLANNING STRATEGY
By: Kelly Cheung MacDonald
When Buffalo Bills safety, Damar Hamlin, suffered a serious injury and went into cardiac arrest early this year during a game with the Cincinnati Bengals, it was a stark reminder to fans and fellow athletes alike of the risks athletes take each time they step onto the field of play. For an athlete as young and athletic as Hamlin, this was incredibly unexpected and very scary.[1] Hamlin luckily recovered, and returned to the field following almost eight months of recovery after his terrifying injury.[2] For student athletes, as the legal framework around the NCAA’s policy shifts to permit athletes to monetize their name, image, and likeness (NIL) through marketing and endorsements, it’s crucial to recognize the potential risks and prepare for unexpected outcomes.
In September 2019, California enacted the Fair Pay to Play Act, which came into effect January 1, 2023,[3] to allow college athletes to benefit from their own NIL rights and ultimately, this led to the NCAA changing its policies, along with many other states to follow, which was not possible before.[4] With this developing industry, it is important for athletes to also protect their personal brand and their assets generated from this exciting new revenue stream as a unique group of young social influencers and entrepreneurs.
Estate planning, especially trusts, can be particularly beneficial in this context. Estate planning is not just for the mega elite and rich, but also for those with relatively smaller assets and nonetheless, a legacy to leave behind for loved ones or for important causes, just in case.
[1] What to Know about Damar Hamlin’s Injury, New York Times, Feb. 6, 2023.
[2] A Timeline of Damar Hamlin’s Recovery After Cardiac Arrest, People, Oct. 5, 2023.
[3] Senate Bill No. 206, Chapter 383, Oct. 1, 2019.
[4] NCAA Adopts Interim Name, Image, and Likeness Policy, NCAA, June 30, 2021.
[5] 23 Athletes Who Love Giving Their Money Away, Yahoo! Finance, July 9, 2020.
REVOCABLE LIVING TRUSTS
A revocable living trust is one that can be altered, modified, or revoked by the creator (the athlete), and as circumstances change, which undoubtedly it will, as college athletes complete their education, move forward with their career within sports and outside of it, or perhaps start a business or raise a family. This type of trust allows an athlete that flexibility needed to adjust its terms to align with current and future needs and take charge of where their money goes.
MAINTAIN A SMOOTH TRANSITION FOR LOVED ONES DURING A DIFFICULT TIME
Having a revocable trust in place is a way to avoid involving the probate court. In California, probate slows down the process of administering an athlete’s estate and can be costly. While surely an event like incapacity or the untimely death of a young person would cause significant emotional distress for loved ones, having the proper trust instruments in place, and in advance, promotes a quicker route to distribution of an athlete’s assets without requiring a court’s intervention, which could be especially helpful if an athlete has dependents or children relying on his or her financial support. This could be especially advantageous if an athlete’s brand is dependent on a seamless transition to maintain his or her brand influence and relevance even after incapacity or death.
MAINTAIN YOUR PRIVACY
As an influencer, privacy may become a critical concern for NCAA athletes as they probably do not want anyone to know the intimate details of their personal and financial business. With a trust instrument, rather than having only a will, athletes can avoid having their personal lives brought into a courtroom for the public and media to see as public record. Taking advantage of establishing a trust can ensure personal and financial information is kept confidential.
PHILANTHROPIC GIFTING
It is common for professional athletes to donate a part of their wealth to notable causes during their lifetime. Athletes such as Tom Brady and LeBron James have notably donated millions to charities during their lifetime,[5] but athletes may also plan to posthumously leave behind gifts to charitable organizations. Athletes who wish to leave some of their legacy to a charitable cause may find that setting up their trust in such a way will help ensure their hard-earned money can honor their desire to give back to a cause they hold close to their heart.
SPECIAL NEEDS OR DEPENDENTS TRUSTS
An athlete that has a dependent, perhaps a child, a sibling, or even a beloved pet, can set up specific trust provisions to ensure a dependent or loved one is taken care of or supported through the assets funded from the trust. This can be particularly helpful if a loved one is a person with special needs and a government benefits recipient. Setting up a special needs trust can prevent that person from being disqualified from income-qualified assistance programs if the athlete’s outright gifts were to be considered the recipient’s income. This way an athlete can still provide funds to that person without inadvertently risking their essential participation in government assistance programs.
Sometimes, loved ones are not financially savvy or cannot manage a generous sum of money, such as when addiction or mental health issues come into play, creating real concern that they could squander away their inheritance. An experienced trust attorney can help an athlete include provisions in their trust to permit the creation of spendthrift trusts on behalf of that beneficiary, so that a trustee may step in to take responsibility for distributing the funds carefully.
23 Athletes Who Love Giving Their Money Away, Yahoo! Finance, July 9, 2020.
NIL DEAL FUTURE PLANNING
Creating a trust can be specifically designed to address a student athlete’s unique needs including considering any NIL deals and personal branding. Even if an athlete is no longer playing, their brand and social influence quite possibly can continue and live on. For instance, an estate planning attorney can customize a trust to account for various NIL deals, how NIL rights, licensing rights, and royalties will be preserved and distributed, and maintaining those professional relationships if an athlete cannot do so due to incapacity or premature death. Much like the considerations discussed, an athlete can include in their trust a designated person, such as a trusted financial or NIL advisor or consultant, who will assist in continuing the athlete’s brand for possibly decades to come.
YOUR PERSONAL BRAND AND NIL RIGHTS IS YOUR LEGACY
The advent of personal NIL rights for college athletes in the open market brought forth not only opportunities, but also challenges to consider. In navigating this unchartered territory, one thing remains clear: the necessity to safeguard an athlete’s assets. Estate plans and trusts, with their versatile and flexible provisions, offer athletes a robust mechanism to protect their NIL earnings and legacy for the future. As young athletes turn into social influencers and blaze new trails in the world of sports and business, it is paramount that they protect their assets with strategic estate planning. Odom Law Group, a Professional Legal Corporation advises entrepreneurs, social influencers, athletes, and the like, to carefully customize estate plans that will ensure long-term financial security and brand protection.