Pitfalls of Estate Planning for Olympic Athletes
As throngs of Olympic heroes return to American soil today, here are four interesting facts I learned recently about the Olympics:
An Olympic gold medal is not solid gold. It is primarily sterling silver plated with only 6 grams of gold that is 92.5% pure. It weighs roughly 18 ounces. At current silver prices, the intrinsic value of a gold medal is only a few thousand dollars. A bronze medal has a scrap value around $100.
The first eight finishers in every competition receive “diplomas” that evidence their participation and place in the event. It’s worth no intrinsic value and many athletes are unaware they exist.
For the 2026 Games, U.S. medalists are paid $37,500 for gold, $22,500 for silver, and $15,000 for bronze. Up until ten years ago, medal values and bonuses were taxable. Congress finally exempted Olympic and Paralympic bonuses from federal income tax for those with adjusted gross income under $1 million.
Every eligible athlete who participated in the 2026 Games will get $200,000 in deferred benefits. Thanks to a $100 million gift to the U.S. Olympic & Paralympic Committee by Ross Stevens, beginning this year, each qualifying athlete will receive $200,000 in benefits per Games they participated. They will get $100,000 at age 45, or 20 years after competition (whichever is later), paid over four years; and each athlete will receive a $100,000 guaranteed benefit to designated beneficiaries upon their death. This program multiplies too. If an athlete competes in three Games, they could get $600,000 in structured benefits.
U.S. Olympic athletes are provided free assistance to help plan their estate from the U.S. Olympic & Paralympic Foundation in the form of a brochure.
These materials may be helpful for education, but they are not a substitute for bespoke legal counsel. It’s the same thing many financial planners and tax folks use with their clients; and they too need to curb this practice. Granted, what financial planners and other professionals use these days for their clients’ estate planning is getting better at intuitive interviews, they're still not getting a clear and accurate picture of a client's landscape and still all require a lawyer’s review.
What the USOPF provides Olympic athletes is essentially a 101 lesson in estate planning and a booklet to fill out that becomes the estate plan. I reviewed it and it is full of red flags. Minor children, endorsement contract structures, deferred compensation, licensing rights, and post-career benefits must be integrated into a cohesive, holistic set of legal documents. A fill-in-the-blank document does not ensure minor children are adequately protected, assets are funded, beneficiary designations are coordinated, or tax exposure is minimized. I caution athletes everywhere not to use these “lesson & record” books or estate planning software.
One of the biggest reasons athletes need to have a lawyer involved in their estate planning, especially at early stages, is to take advantage of any and every strategy that keeps their money in their pocket versus the IRS. When it comes to estate planning for athletes, three taxes matter: income, gift, and estate.
Income tax. Generally, an inheritance is not income to the beneficiary. If a child inherits life insurance funds and brokerage assets, that child does not report it as income. The major exception is qualified accounts that contain pre-tax dollars. Getting advice before pulling any funds is always wise, but very needed for qualified accounts to avoid large tax liabilities.
Gift tax. Applies to transfers made during your life. The government does not permit you to give away everything at the last minute to avoid taxes. For high-earning Olympians who begin gifting money to family, coaches, or charities, tracking these transfers is critical. Poor documentation can create liability where it didn’t need to exist.
Estate tax AKA the “death tax.” Applies to the value of assets at death, combined with prior reportable lifetime gifts. The federal exemption amount is currently $15 million. For athletes with significant assets, endorsement portfolios, intellectual property rights, and business interests, valuation can be complex and require strategic planning to avoid massive taxes.
For athletes who are able to sustain success, charitable bequests end up becoming the norm. But without an attorney ensuring gifts are properly funded and assets are correctly titled, those bequests may not only fail, they could end up draining the estate’s value for family beneficiaries. Besides tax liability, probate litigation is rife with charities suing trusts and estates for the full, expected value of their gift. If an executor of a trust or an estate isn’t prudent, charities have had them removed and a professional installed.
Like Olympians, many athletes are offered these free estate planning materials or online platforms provided by their school, professional organization, or union. Most successful athletes can afford the professionals needed to adequately protect their assets and legacy. But for some, the reality of their failure is daunting without proper counsel.
Success creates complexity that requires coordination. If you are an athlete, advisor, or agent navigating these issues, engage competent estate counsel before the income compounds. If you’re in Michigan, give me a call. If you’re anywhere else, give me a call and I’ll gladly refer you to one of my friends in your state.
