A rookie NBA player for the Philadelphia 76ers is being lauded for his financial prowess in putting his salary in a trust that he can’t touch for three years, possibly avoiding the fate of a famous basketball player who donned the same jersey and now can’t pay child support.
Drafted 11th overall in the 2013 NBA Draft, Michael Carter-Williams, 22, is guaranteed $4.5 million over his first two seasons, but his salary is being put into a trust he can’t touch for three years, the Philadelphia Inquirer reported. In the meantime, he is living off his endorsement deals with Nike and Panini trading cards, the newspaper said.
A trust is probably something that one of the most famous 76ers, Allen Iverson, could have used. A “Sixer” from 1996 to 2006 then 2009 to 2010, Iverson said this year that he is broke and can’t pay child support. The ex-wife of the 36-year-old former Georgetown University player demanded that he put over a million dollars into a trust fund for child support.
David Friedman, president of Wealth-X, which provides data on high net worth individuals, said that it was surprising that Carter-Williams’ money is in a trust, because the player is very young and doesn’t have a family of his own yet. Trusts are typically structures to pass wealth in a tax-optimized way and they allow control for the heirs, Friedman explains.
“Since he does not have to worry about either of these as the purpose of this type of structure, it’s not apparent what his goal is,” Friedman said. “On the other hand, in the wake of copious bankruptcies and mismanagement of finances by professional athletes, it shows he is trying to be a good steward over the money he is making.”
Not only does the trust force Carter-Williams to save his money, he can tell the hangers-on and distant relations looking to leech off him that he can’t touch the money. The rest here.