In a recent article by Kevin Chupka, Preventing a financial fumble: Brett Favre’s advice to athletes, it is noted that within 2 years of retirement 78% of NFL players are under financial stress or broke and 60% of NBA players, are in similar straits within 5 years of retirement.
Recently, former baseball star Darryl Strawberry lost his deferred compensation to an IRS tax lien/levy sale where it was sold to the highest bidder at an IRS auction.
The solution is:
1. Active players need to review their income, estate and gift tax planning/compliance on an ongoing basis (365 days per year).
2. Establish an asset protection strategy to prevent asset seizures from third party creditors and taxing authorities.
If taxes are owed to the IRS apply for an offer in compromise to suspend IRS seizures under tax levies or jeopardy assessments (pre-audit seizures), if Darryl Strawberry followed this strategy he may have not lost his deferred compensation to the IRS levy.
Always remember to retain experts (not family or friends) who can professionally advise and protect you. As the expression goes: “It is not the seaworthiness of the vessel, but the skillful navigation that assures the prosperous voyage”