A big contract is something you have worked your whole life for. But once that money starts coming in, protecting it is a different game than earning it. A lot of athletes assume the only real danger is spending too much. Overspending can certainly cause problems, but it is far from the only threat to the wealth you have built. Taxes, lawsuits, injury, and the simple fact that none of us can predict the future all deserve a place in your plan.
I work with high earners here in Central Illinois, and the message I give them is the same one I would give you. Your career may be short, your income may arrive in large lump sums, and the decisions you make right now will echo for decades. Let's walk through what actually matters.
Taxes Are the Opponent You Did Not Schedule
Several kinds of tax can take a bite out of your earnings, and each one calls for a different response.
Gift tax. As your income grows, it is natural to want to help family and friends. Be careful, though, because large gifts can trigger a federal gift tax. The good news is that you can give a certain amount to each person every year with no tax and no paperwork headache. For 2026 that annual exclusion is $19,000 per recipient. Give one friend $19,000 and another $19,000 and another, and you can do that for as many people as you like. Beyond that annual amount, you start drawing down your lifetime exemption, which for 2026 is $15 million per person. As long as you have exemption left, you generally file a return but owe no tax. We can talk through how to give in a way that saves tax and protects the person receiving the money from blowing through it.
Income tax. If you live in one state but play for a team in another state or country, you may owe income tax in more than one place. This catches a lot of athletes off guard. Work with an experienced tax professional so you are paying the right tax at the right time. The last thing you want is to owe more because penalties and interest piled up.
Estate tax. Estate tax is not assessed until you die, but it is worth thinking about now. There are two layers to watch. The federal exemption is currently high, but Illinois has its own estate tax with a much lower threshold: $4 million, with no spousal portability. That means a surviving spouse cannot pick up your unused Illinois exclusion the way they can at the federal level. Given that your income may arrive in big lump sums and grow when invested well, an Illinois estate can cross that $4 million line faster than people expect. Good planning today keeps more of your money with your family instead of the state.
Guarding Your Money and Property
Your first line of defense is insurance. Homeowner's, automobile, long-term care, disability, and life insurance all stand between your wealth and a claim or judgment. As your income climbs, your coverage should climb with it, and your life insurance should grow as your family's needs grow. Sit down with an experienced insurance professional from time to time to make sure you are still adequately covered.
Beyond insurance, there are more sophisticated tools we can use. A domestic asset protection trust (DAPT) is an irrevocable trust into which you permanently transfer assets such as your home, cash, or investments. Once they are in the trust, they are generally shielded from future lawsuits, divorcing spouses, and bankruptcies, while an independent trustee can still make distributions back to you. The catch is that DAPT rules vary a great deal from state to state, and the trust has to be set up carefully so it is never seen as an attempt to dodge an existing creditor. This is not a do-it-yourself project.
Another strong option is an irrevocable life insurance trust (ILIT). You move a life insurance policy into the trust, use your annual gift exclusion to fund the premiums, and at your death the benefit is paid to the trust and distributed the way you directed. An ILIT keeps the value of the policy out of your taxable estate and lets you control and protect the money you leave behind.
If You Cannot Manage Things Yourself
You handle your own money today, but what happens if you are injured, incapacitated, or simply on the road with a team in another state when something needs to be signed?
A revocable living trust lets you serve as your own trustee while naming a co-trustee or successor to step in if you cannot act. You keep full use of your assets during your life, you decide what happens to them when you die, and a properly funded trust keeps your affairs private and out of the probate process. One important note: the trust only controls what you actually transfer into it, so funding matters, and a revocable trust does not shield assets from your creditors.
A financial power of attorney lets you name a trusted person to handle financial matters for you. You decide how much authority to give and when it kicks in. If you travel constantly for work, an immediate power of attorney can be a practical tool so someone you trust can act while you are away.
Protecting Your Health Decisions
In a physically demanding career, the right health care documents are not optional. A medical power of attorney names someone to communicate your wishes if you cannot. A living will spells out your end-of-life preferences so the people you love are not left guessing. A HIPAA authorization lets chosen family members get information about your condition without giving them decision-making power. Together, these documents spare your family confusion and conflict at the worst possible moment.
Let Us Be Your Team Off the Field
Proper estate planning matters for everyone, but for an athlete the stakes are higher and the timeline is shorter. You are juggling tax, asset protection, and the real risk of an on-the-job injury all at once. We can build a plan that handles all of it.
At Marvel Law, we are here to help you with understanding, answers, and direction. Call us to set up a consultation and let's protect what you have earned.