Your job is to advise, guide, and protect clients all day long. Whether you are a sports agent, a financial advisor, a business manager, a trusts and estates attorney, or a family law attorney like me, our jobs all have a common thread – which is to shield our clients from the worst-case scenarios.
That is my job – to help prevent my clients from getting into these “worst-case scenarios” and why I think athletes need to have the perfect prenup before getting married.
The divorce rates for athletes are higher than the average divorce rate. Divorce can be ugly. A high-profile divorce, such as that of a professional athlete, that is being litigated in the media and the tabloids can be even uglier. It becomes even worse when the most intimate details of their lives and finances are being revealed.
A professional athlete should work with a family law attorney to help create a prenuptial agreement before getting married. The athlete’s assets and contract income, including, but not limited to, signing and roster bonuses, guaranteed and non-guaranteed income, as well as earnings from endorsements, off-the-field marketing and sponsorship deals, etc., can all be safeguarded from a soon-to-be spouse in a prenuptial agreement. This prenup can also shield intimate details of the athlete’s finances with confidentiality language and a non-disclosure agreement.
Athletes should also be working with other professionals from the beginning of their careers. A financial advisor can help set money goals and establish a plan for saving (putting money away from each paycheck). A private wealth attorney can set up trusts and other mechanisms for protecting assets in a tax advantageous way. A business and intellectual property attorney can help protect an athlete’s brand. Finally, a sports agent and business manager can work together to discuss how maximize the athlete’s career and earnings both on and off the field.
Here are my top 5 things that must be protected in an athlete’s prenuptial agreement.
- Contract Income
A professional athlete has worked a lifetime to achieve and accomplish great success.
However, an athlete is always one helmet-to-helmet hit or torn Achilles tendon away from ending a career. An athlete’s ability to perform at a consistently high level on the field or court equals money in the bank.
I have read and analyzed hundreds of sports contracts. As a family law attorney, it is important that when drafting and negotiating a prenuptial agreement, to fully identify and anticipate all potential sources of an athlete’s income. It is beneficial to work with the other professionals already in the athlete’s inner circle, like those listed above, to ensure that the athlete has a prenup that provides full protection.
- Off-the-Field Income and Post-Retirement Income
An athlete’s brand is everything. We are living in a world where marketing and sponsorship opportunities are endless – thanks to mega television deals that exist, international fan bases, various social media outlets, and the ongoing global outreach programs that promote the visibility of the professional athlete. An athlete can often earn more in endorsement and marketing deals than from playing contracts. This income stream can be protected in a prenuptial agreement. Now, think about those earnings when a professional athlete’s days are over. Maybe that athlete wants to pursue a post-playing career in coaching or broadcasting that has the potential to be financially lucrative; if that athlete had a prenup already in place, it can protect these future post-playing career earnings.
- Spousal Support
Athletes can negotiate to limit or waive spousal support in a prenuptial agreement. Most athletes earn their money in their 20’s and 30’s. An athlete and their family often live a very comfortable and lavish lifestyle during these years. However, post-retirement this lifestyle cannot be sustained if a financial plan is not in place in the beginning of the athlete’s career. Early in an athlete’s career and also during the prenuptial agreement process there needs to be conversations about finances and the lifestyle an athlete wants to live – how to save money and smartly invest – and the benefits of working with a team of professionals designed to protect an athlete’s finances and interests.
In the state of New York, generally speaking, in the absence of a prenuptial agreement anything earned or acquired after marriage is considered marital property and is subject to being divided. This can include bank accounts, investment accounts, businesses, residences, vacation homes, and personal property (watches, cars, jewelry, etc.). A prenup can protect what is most important to an athlete and the division of assets and property can be negotiated in a prenuptial agreement.
Thank you to Twitter, Instagram, and Facebook; it is because of you that my favorite three-letter word is NDA (non-disclosure agreement).
Getting married without a prenup containing an NDA is akin to playing football without equipment or stepping into the batter’s box to face a 95mph fastball without wearing a helmet.
In this new world of social media, these platforms – and the many more that exist – provide athletes and their brands with many marketing opportunities and large audiences. We are living in a world where breaking news often occurs via social media. We are always one click away from finding out the latest news, so it is essential to have strongly worded confidentiality language and an NDA agreement in a prenuptial agreement.
Long gone are the days where a high-profile divorce can fly under the radar.
For more information contact Berkman Bottger Newman & Schein, LLP.
To schedule a consultation with an NYC divorce attorney, please calls us at (212) 466-6015, or reach out to us through our contact form today. We maintain offices on 5th Avenue in Manhattan, in White Plains, and in Hackensack, NJ.