Previously, college athletes could not share in the revenue generated by their universities, however, a landmark Supreme Court ruling in 2021 enabled them to earn advertising revenue based on their name, image, and likeness (“NIL”).
This ruling has opened doors for student-athletes who, because of the change in NCAA rulings, can now make money off their own personalities and licensing deals.
Personal estate planning has become even more important, as these students may benefit quicker than expected. Personal estate planning has become more important for these student-athletes, as they may benefit financially quicker than expected.
Compensation for Use of Name, Image, or Likeness
Prior to the Supreme Court ruling in 2021, college athletes were not allowed to receive any compensation for the use of their name, image, or likeness (NIL) while playing for their universities.
On June 21, 2021, the Supreme Court issued a unanimous ruling in the case of National Collegiate Athletic Association (“NCAA”) v. Alston, which found that the NCAA’s restrictions on education-related benefits violated antitrust laws.
The ruling effectively opened the door for student-athletes to receive compensation for their NIL, allowing them to monetize their personal brands through endorsements, sponsorships, and other licensing deals. This decision has had a significant impact on student-athletes in Texas, who can now make money off their own personalities and talent, as long as they comply with the relevant regulations.
Texas Student Athlete Compensation Laws
Due to a lack of guidance from the U.S. Congress, Texas has enacted laws for compensation and professional representation of student-athletes in intercollegiate athletic programs.
The laws prohibit institutions from preventing student-athletes from earning compensation for their name, image, or likeness, and from obtaining professional representation for related contracts or legal matters.
Scholarships, grants, and similar assistance are not considered compensation. Student-athletes must disclose proposed contracts and attend financial literacy workshops.
Individuals and organizations cannot enter into arrangements or use inducements to recruit prospective student-athletes.
The law outlines conditions for student-athletes entering into contracts and requires institutions to disclose any conflicts.
How Student-Athletes Make Money
Student-athletes can make money off their name, image, and likeness through various avenues.
One way is through social media, where student-athletes with a large following can promote brands and products for compensation. For example, an athlete with a large Instagram following may be approached by a company to promote their product on their account.
Another way is through sponsorships. A student-athlete may sign a contract with a company to endorse their products or services. For example, a college basketball player may sign a deal with a shoe company to wear their shoes during games and endorse them on social media.
Licensing deals are another avenue for student-athletes to make money. They can license their name, image, or likeness to companies that produce and sell merchandise. For example, a college football player may license their image to a sports video game company that includes their likeness in the game.
The Need for Financial & Estate Planning
With the possibility of earning money through various means such as social media, sponsorships, and licensing deals, student-athletes may find themselves with a new source of income.
This income can be used to cover expenses such as tuition, housing, and other costs associated with attending college. It may also provide an opportunity for student-athletes to save for the future, such as for post-graduation expenses or long-term financial goals.
However, with this newfound income comes the need for personal financial planning. Student-athletes will need to consider the tax implications of their earnings, as well as budgeting and managing their income effectively. They may also need to consider estate planning to protect their assets and ensure their wishes are carried out in the event of their death.
While the ability to earn compensation from their name, image, and likeness provides new opportunities for student-athletes, it also comes with new financial responsibilities and considerations.
Estate Planning for Student-Athletes
Student-athletes should consider several types of estate planning to protect their assets and interests related to their NIL earnings. Here are some examples:
- Wills: A will is a legal document that outlines a person’s wishes for their assets after they pass away. Student-athletes who earn NIL income should consider creating a will to ensure that their assets, including any future NIL income, are distributed according to their wishes.
- Trusts: A trust is a legal arrangement where a trustee manages assets on behalf of a beneficiary. Student-athletes can use trusts to protect their NIL earnings and other assets from creditors, lawsuits, and other potential financial risks.
- Limited Liability Companies (LLCs): Student-athletes who earn significant NIL income may consider creating an LLC to manage their earnings and protect their personal assets. An LLC provides liability protection, meaning that the student-athlete’s personal assets are shielded from any legal claims or debts related to the LLC.
- Power of Attorney: A power of attorney is a legal document that grants another person the authority to act on behalf of the student-athlete in financial and legal matters. This can be useful if the student-athlete is incapacitated or unable to make decisions.
- Tax Planning: Student-athletes who earn NIL income should also consider tax planning. They may want to work with a financial advisor or tax professional to determine the most tax-efficient ways to structure their earnings and investments. Additionally, student-athletes may need to file taxes in multiple states if they compete in games or events outside of Texas.
As evidenced from this list of items to consider, student-athletes who earn NIL income need to consider various types of estate planning to protect their assets and interests.
The Takeaway
The law now allows college athletes to receive compensation for the use of their name, image, or likeness, which opened up new opportunities for student-athletes in Texas to monetize their personal brands. However, with this newfound income comes the need for personal financial planning, including estate planning, tax considerations, and effective budgeting. Student-athletes may need to consider different types of estate planning, such as wills, trusts, and LLCs, to protect their assets and interests related to their NIL earnings.
Hire an Experienced Estates Attorney
As a student-athlete, you have a lot on your plate. You’re juggling school, practice, games, and maybe even a job. The last thing you want to think about is what would happen to your estate if you were to pass away.
While it’s not something anyone likes to think about, it’s important to have a plan in place in case the worst should happen. That’s where an experienced estates attorney comes in.
An estates attorney can help you put together a plan that will protect your assets and make sure your loved ones are taken care of if something happens to you. They can also help you navigate the complex world of estate taxes and make sure everything is done according to the law.
Our Houston Probate Attorneys provide a full range of probate services to our clients. Affordable rates, fixed fees, and payment plans are available. We provide step-by-step instructions, guidance, checklists, and more for completing the probate process. We have years of combined experience we can use to support and guide you with probate and estate matters. Call us today for a FREE attorney consultation.
Disclaimer
The content of this website is for informational purposes only and should not be construed as legal advice. The information presented may not apply to your situation and should not be acted upon without consulting a qualified probate attorney. We encourage you to seek the advice of a competent attorney with any legal questions you may have.
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