wealth tax

Planning for life after the final whistle

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The Tampa Bay Buccaneers quarterback, 44, won seven Super Bowls in an amazing career spanning 22 seasons.

Brady, who led the New England Patriots to a record six Super Bowl victories in 20 seasons with the team and added one with the Buccaneers after the 2020 campaign, has a net worth of USD 250 million, according to Celebrity Net Worth. His history of endorsements includes Under Armour, UGG, Tag Heuer and Aston Martin.

Although Brady is by far the exception to the norm, athletes and entertainers, generally speaking, experience a starkly different career trajectory than most individuals. They can have years where their income dwarfs what an average person would make in a lifetime.

They also have a lot less predictability around their earnings, are burdened with the knowledge that their career can end abruptly, and frequently face significantly reduced earnings potential after their career is over.

But as athletes, including Brady, approach the second halves of their careers, here are 5 items to consider that may help make planning for retirement a little easier – especially as the majority of athletes don’t choose when exactly when their playing career will end.

  • Evaluating opportunities: Some opportunities present themselves while others may take time to develop. Weigh the trade-offs between offers, deals, endorsements, and other outside opportunities. In short, establish a plan for each contract and prepare for the post-professional years—before they arrive.

  • Wealth accumulation: In general, wealth accumulates by saving and through growth from savings. The overwhelming majority of savings for high-income individuals end up in taxable accounts, so the growth is subject to taxes. Tax aware investing is a critical part of the asset allocation process that requires ongoing portfolio monitoring, rebalancing, and reviews to ensure assets and resources align with your needs and desired outcomes while minimizing the tax impact.

  • Liability management: Proactively managing the liability side of a balance sheet is an important part of wealth management. Prudent use of debt can help further diversify balance sheet risk and improve outcomes. For example, rather than selling investments and incurring an immediate capital gains tax expense, a loan can help to spread the liability over multiple years or decades, where future income may help to offset the debt payment while providing your investments with the opportunity to benefit from long-term, tax-deferred growth potential.

  • Risk management: There are two broad aspects for professional athletes and entertainers to consider when managing risks. First, losing out on income due to injury or disability, and second, loss of assets from potentially frivolous lawsuits. Income and asset protection strategies can help to mitigate the long-term negative impact to wealth. High earnings potential and public visibility may create a greater need for income and asset protection.

  • Philanthropy: As part of the Legacy strategy, many professional athletes and entertainers want to use their public visibility and wealth to advance charitable causes that are important to them. High earnings not only provide the funds for such endeavors, but also stimulate the need for charitable income tax deductions that are sought by highly compensated individuals.

Ultimately, UBS’s goal is straightforward: to help athletes and entertainers understand how wealth can be managed to help meet lifetime goals and legacy objectives – regardless if you’re considered the GOAT (greatest of all time) or a first year professional.

“At UBS, we believe that it’s never too early or too late to start planning for life after your time on the ”Big Stage,” says Wale Ogunleye, an 11-year NFL veteran and Head of Sports and Entertainment at UBS.

“For both professional athletes and entertainers, it is important to start having these conversations now with their trusted advisors. The goal of our Athletes & Entertainers Consultants (AEC) is to help our high profile clients build their legacy and set themselves up for success in retirement,” Ogunleye says.

At UBS, we believe that the structured, purpose-driven approach can provide clarity surrounding the decision-making process and help mitigate the financial challenges you might encounter.

For more, visit the UBS Athletes and Entertainers website.

Please note that this item is approved with comments. for use with clients and prospects.

(For Public Distribution)

Expiration: 2/28/23

Approval date: 2/1/2022

Review Code: IS2200560

General Commentary Disclosure:

This presentation is for informational and educational purposes only and should not be relied upon as investment advice or the basis for making any investment decisions. The views and opinions expressed may not be those of UBS Financial Services Inc. UBS Financial Services Inc. does not verify and does not guarantee the accuracy or completeness of the information presented.

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