This is one of the articles in the KROST Industry Sports & Entertainment Issue, titled “Protecting Your Assets and Legacy: Estate & Trust Management in Sports and Entertainment” by Brad Pauley, CPA & Richard Umanoff, CPA, MBA
For athletes, actors, and other high-earning professionals in the sports and entertainment industry, managing assets and planning for the future is essential. One important aspect of this planning is estate and trust management. In this article, we will explore what estate and trust management is and how it can benefit professionals in the sports and entertainment industry.
Estate management involves the planning, administration, and distribution of a person’s assets after their death. This includes everything from financial assets, like investments and property to personal items like jewelry and artwork. By creating a comprehensive estate plan, individuals in the sports and entertainment industry can ensure that their assets are distributed according to their wishes and that their loved ones are provided for after their passing.
Trust management is similar to estate management but involves the transfer of assets during an individual’s lifetime. By setting up a trust, individuals can transfer assets to their beneficiaries while still maintaining some control over those assets. Trusts can be structured in a variety of ways to meet an individual’s specific needs and goals, and can provide tax advantages and asset protection.
For professionals in the sports and entertainment industry, estate and trust management is particularly important due to the often high value of their assets and the unique nature of their careers. Many professionals in this field have complex income streams and assets that require careful management and planning, especially when their work spans across several states. Each state has its own estate taxes. Here is a listing of top tax rates and exemption thresholds for the 2022 tax year:
Domicile at time of death is crucial to avoid state inheritance taxes in above states.
For estate purposes, must have sufficient nexus to state to claim domicile in that state.
One important consideration for estate and trust management in the sports and entertainment industry is the use of intellectual property rights. For example, an athlete may have valuable endorsement deals or a musician may have valuable music rights that need to be properly managed and protected. By setting up a trust or other legal entity to manage these assets, professionals in this field can ensure that their intellectual property rights are protected and that they continue to generate income for their beneficiaries after their passing. At KROST, we advise avoiding lawsuits by structuring assets so they don’t hold direct title through creations of LLC, LLP, LLLP, or irrevocable trusts. The creation of irrevocable trusts and transfer of assets to trusts allows any appreciation in asset is removed from their estate and protected from future potential creditors.
Another important consideration for estate and trust management in the sports and entertainment industry is tax planning. By structuring trusts and other legal entities in a tax-efficient manner, individuals in this field can minimize their tax burden and maximize the amount of assets that are passed on to their beneficiaries. Athletes and celebrities must plan for a client’s “right of publicity” and whether this intangible asset is included in their estate assets.
In conclusion, estate and trust management is an important consideration for professionals in the sports and entertainment industry. By working with experienced attorneys and financial advisors, individuals in this field can create comprehensive estate plans that protect their assets and ensure that their loved ones are provided for after their passing. Whether through the use of trusts, intellectual property rights management, tax planning, or other strategies, estate and trust management can provide peace of mind and help individuals in the sports and entertainment industry plan for a secure financial future.
KROST Industry Magazine is a digital publication that highlights some of the hot topics in the accounting and finance industry. Volume 5, Issue 2 highlights some of the hot topics in the sports & entertainment industry, including tax issues for athletes, estate & trust planning, Client Accounting Services, and more.
About the Authors
Brad Pauley, CPA, Principal
Tax, Sports & Entertainment
Brad Pauley is a Tax Principal at KROST. Brad has over 25 years of experience providing tax advice, projection, and compliance services to clients in a variety of different businesses and industries. His areas of focus include high-net-worth individuals and their closely held businesses, including athletes, entertainers, service professionals, and owners/operators of real estate, including like-kind exchanges. » Full Bio
Richard Umanoff, CPA, MBA, Principal
Tax, Estate & Trust, Gift and Probate
Richard Umanoff, CPA, MBA, is a Principal at KROST CPAs. Richard’s career spans over 40 years, with a concentration in taxation. His primary emphasis is estate and trust tax compliance, planning, estate administration, and probate court accounting. Richard currently serves in the role of trustee for numerous clients. » Full Bio