Baseball's $300 Million Players
by Rita Wilczek on May 20, 2021
Baseball’s $300 Million Players
Even ballplayers prepare for the future.
Provided by Rita Wilczek
The San Diego Padres signed infielder Fernando Tatis, Jr., to a 14-year, $340 million contract roughly one year after the Los Angeles Dodgers inked outfielder Mookie Betts to a 12-year, $365 million deal. That brings the total to 8 baseball players who have signed long-term, $300+ million contracts.1
From an estate strategy perspective, you might be surprised to hear that these baseball stars may face similar issues as other Americans as they prepare for the future.2
To begin with, all 8 will need to understand that the estate and gift tax exemptions are $11.7 million per person. But those exemptions are set to expire and revert back to $5 million in 2026. While those current limits only address a fraction of their net worth, they can start to explore other choices for the balance.2
Remember, this letter is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your legal professional before modifying your estate strategy. Also, some estate strategies involve the use of trusts, which have a complex set of tax rules and regulations. Before moving forward with a trust, consider working with a professional who is familiar with the rules and regulations.
All 8 also should consider who they should name as their health care decision-maker and financial power of attorney. They also may want to consider estate strategies that involve life insurance. All 8 are relatively young, which may work to their advantage as they consider the role life insurance can play.2
Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
While these 8 and many other professional athletes have signed “generational” contracts, it’s not unlike windfalls generated when selling a business or compensation packages for key executives.
Please let us know if there’s a big change in your financial situation. We’d welcome the chance to hear the story.
Rita Wilczek may be reached at (952) 542-8911 or firstname.lastname@example.org
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1. CBSSports.com, April 1, 2021
2. WealthManagement.com, April 21, 2021