Smart money

Over the next 40 days, millions of dollars worth of signing bonuses will go out to NFL rookies. However, the chances are that the lucky players who play 8 years or more could still be penniless 15 years from now. In 1993, QB Mark Brunell was drafted in the 5th round, played 16 years and made millions of dollars, and is now is about $20 million in the hole.

Those who read my column know that I am passionate about helping NFL players keep and protect the money they earn. So instead of just telling clients what they should do, I went one step further and asked an asset protection expert and partner at Blanchard, Krasner & French, in La Jolla, California, Reggie Borkum, to give us some specific instructions on how to manage all that money.

Here are seven basic steps that he recommends players take to protect themselves:

1. Separate business assets from personal assets. In other words, if you buy a piece of investment property, purchase that property in a Limited Liability Company or other similar entity so as to isolate the risk in that investment from your personal assets (your car, house, boat, stock account, etc.) and your other investment properties.

2. Same goes for any new business or venture your high school buddy wants you to fund. First off, I would recommend you make your high school buddy put up some of his own cash so he has “skin in the game” and set the business up as a Subchapter-S corporation or other similar entity to separate business from personal. Most importantly, have your own legal counsel and accountant review the deal paperwork and keep tabs on how the money is being spent.

3. Life insurance is another great way to provide for your dependents. Generally, the younger you are and the better your health, the less the annual cost of the policy. You can also decide between a Term Policy that provides protection for a given number of years (i.e. a 10, 20 or 30 year policy) or a Full Life Policy that remains in place throughout your lifetime.

4. Set up an estate plan. This can serve various purposes. First, it enables you to name guardians for your children should something happen to you. Second, it is a great way to begin transferring assets out of your estate and to your children (you can even set up a trust for your children and limit when they can access the money.) Third, it enables you to decide who gets what should something happen to you. (If you leave it to probate, dying with a will or nothing at all in place, the brother you don’t talk to could end up with all the money.)

5. Keep track of what you own, what you owe, and what you make. It's a good idea to pay your own bills so you are aware of how much you are spending on a monthly basis.

6. Hire an accountant. Pick one that has experience dealing with NFL players but is not under the same roof as your financial advisor or agent. A good accountant can be your first and last line of defense.

7. Do not co-sign for anyone on a loan or give your signature as a personal guarantee for a bank loan or real estate deal.

While these points are just the beginning of a complex area full of pitfalls and “buyer beware” signs, the hope is it provides a good starting point for further questions and prevents this current crop of rookies from making the same costly mistakes as some of the past players in the league.

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