David Walter Osborne has worked with many athletes over the years, and he knows that they are often the golden child for their families. In other words, the family may otherwise be poor and struggling and looking forward to that athlete to provide for them. However, there are good and bad ways to approach this situation, and doing it properly will save everyone a lot of money and hurt feelings simultaneously.
The Covid-19 pandemic has changed many things in the world, including financial investment for professional athletes. David Walter Osborne has seen many of his clients struggle to understand the market in these strange times. Unfortunately, David Walter Osborne has also seen many athletes make decisions that aren’t wise considering the world of professional sports.
The first suggestion that David Walter Osborne suggests during this time is to create a Roth IRA account for athletes’ family members. These accounts have many benefits. First of all, they grow tax-free as well as at retirement they can be withdrawn tax-free and, providing family members with a good nest egg. David Walter Osborne suggests this option because he knows so many athletes come from challenging backgrounds.
Beyond these steps, David Walter Osborne also suggests not giving in to the temptation for a big one-time gift to family members. Yes, it is tempting once that check finally clears but a big gift has many downsides. First of all, it is more tempting to spend a lot of money all at once and this could lead to tax consequences. Instead, small gifts are a better option.
Typically, David Walter Osborne suggests setting up a trust that puts small amounts of money automatically into a family member’s checking account. David Walter Osborne warns large amounts will deplete the trust quickly.
It is also a good idea to set up 529 plans for young family members who may want to go to college. For example, David Walter Osborne suggests a 529 plan for each young college-bound individual. Starting these funds early enough will help them grow, David Walter Osborne says, they will be withdrawn tax-free for higher education and also can be passed down on to the next generation if they didn’t go to college.
Though these steps are very wise, David Walter Osborne knows that many family members may be annoyed by them. Many may want a large cash payout right away to pay off a home or a car or stop working. However, it is essential to plan for a rainy day. After all, a professional athlete’s average career is usually 3-10 years, with some lasting much less.
David Walter Osborne