Michigan NBA fans may be familiar with Michael Carter-Williams, the Philadelphia 76ers rookie point guard, for his basketball prowess, but it appears that he is making some interesting moves off the court as well. Reportedly, the 22-year-old rookie has diverted some of his first two seasons' $4.5 million guaranteed salary into a trust. He won't have access to it for three years and plans to live instead on money he's earning from endorsement deals with Nike and other companies.
Carter-Williams's decision to divert his rookie salary demonstrates that he is trying to make good use of his money, according to a financial expert, who went on to note the rarity of such foresight among young athletes. Making the trust instrument rarer still, Carter-Williams's trust gives his parents a measure of control over the funds.
The financial difficulties of professional athletes have come into the spotlight of late, with an estimated 60 percent bankruptcy rate among NBA players five years after retirement and a rate near 80 percent in the NFL. A financial expert speculated that Carter-Williams is simply trying to avoid that pattern and ensure that his rookie contract money is there, because many players never get a second contract.
People establish trusts to suit every sort of individual circumstance. The flexibility of the instrument allows for customization to benefit any number of different financial and other situations. As an example, a living trust can be revocable or irrevocable and will often be designed to automatically transfer ownership of assets on death. An estate planning attorney may be able to help individuals interested in establishing trusts by explaining the differences between the available options.
Source: ABC News, "Philadelphia 76ers Rookie Puts Salary in Trust: A Smart Choice?", Susanna Kim, December 03, 2013