Jonathan Paul Manziel got paid. The most talked-about quarterback in college football since Tim Tebow recently signed a four-year contract with the Cleveland Browns. According to an official press release by the National Football Association, insiders believe that the rookie from Texas A&M will earn $8.3 on his first NFL contract. Just a few weeks before becoming a millionaire, however, Manziel was named as a defendant in a bizarre federal lawsuit that could have been avoided with the right planning.
The case was filed by a federal inmate known to file baseless civil actions using the names of people in the news and entertainment industries. Here he used the name of a CNN reporter. The claim said that Manziel had sexually harassed the plaintiff by posting inappropriate pictures on Instagram.
The Cleveland Browns flamboyant rookie quarterback has been making news, much of the time for his off-the-field behavior, and for being sued in some crazy suits. In addition, tabloid reporters follow Manziel from nightclubs to casinos to pool parties. A recent insurancenews.netarticle titled "Heisman Trophy Winner and NFL Rookie Quarterback Needs an Estate Planning Playbook Opines?" explains that he appears "to enjoy football, beautiful women, nightlife, and money, and not necessarily in that order." This could be a problem. The way Johnny Football is running around Vegas and spending his money—as well as defending all of the goofy lawsuits—it is possible he could have money problems down the road.
The original article also reports that 78% of NFL players experience some form of financial hardship, even though they earn millions of dollars every year. Worse yet, many of these players will one day file for bankruptcy.
When you have an $8 million payday, it is not surprising that you gain numerous friends. These people will be looking for their own paydays. The best play Johnny can call, even if he does ride the bench for a while, is to speak to an estate planning attorney now so that he can begin to game plan his asset protection right away. One “player” in this type of strategy is an irrevocable trust. This will give him outstanding pocket protection against blitzing sham plaintiffs, gold diggers, hangers-on, and other unsavory linebacker-types who are looking to sack him and get his money.
If Johnny places his NFL income into an irrevocable trust, he would in effect be blocking access to his money from others. When the assets are in an irrevocable trust, they do not belong to Johnny—they belong to the trust, and the trustee is in charge of the books. An irrevocable trust would allow him to be paid out of the trust so that he can maintain the lifestyle to which he has so quickly become accustomed: pool parties, blackjack, and pompom girls. An irrevocable trust would keep him in check so that he is not scrambling for cash when he is 40.
Note: Irrevocable trusts can be extremely complex, especially when asset protection is the goal. Be sure you work with an estate planning attorney with considerable experience both with irrevocable trusts and asset protection planning.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: insurancenews.net (August 14, 2014) "Heisman Trophy Winner and NFL Rookie Quarterback Needs an Estate Planning Playbook Opines?"