The lives of professional athletes, particularly those at the top level, are often lived at a frenetic pace with a strong focus on their activity, with little time and energy to devote to crucial issues such as estate and succession planning. Indeed, it is not uncommon for high-calibre athletes to face challenges related to these matters. For example, some have been struck by poverty, while others have left their families embroiled in complex inheritance disputes.
Because their high earnings are concentrated in a relatively short period, athletes have a particular need to plan their future carefully and strategically. Asset managers who support top-level athletes can use various tools and strategies to protect the financial future of athletes and their families. Among these, private insurance cross-border life policies are certainly one of the most suitable tools to meet the flexibility, tax optimisation and wealth planning needs of athletes. Octium‘s experts explain why.
Portability to meet career flexibility needs
One of the first goals that Wealth Managers who follow successful sportsmen and sportswomen have to meet is that their client’s assets should be able to accompany them without slowing down whenever they have to change residence for career reasons. “Think of football stars, tennis stars or pilots, who often have to deal with frequent changes of physical and fiscal residence in the course of a few years: the athlete can take out a life insurance policy at the beginning of his career and enjoy the advantage of its portability.
The financial assets and the very characteristics of the policy instrument can be retained should the athlete move, without the need to surrender it. The policy follows the insured during his or her transfers, allowing any adjustments in terms of contract structure and underlying assets to be made with ease, whenever necessary. In this way, the athlete will create a source of savings that can be used in cases of need, such as injury or financial necessity.
Fiscal optimisation
A second advantage of cross-border life insurance is fiscal optimisation. “From a financial point of view,” explain Octium’s experts, “this type of policy allows you to invest in a diversified financial portfolio, taking advantage of compound capitalisation of interest and internal offsetting of capital losses and gains. From a tax point of view, the return on the invested capital benefits from tax deferral until the moment of redemption and is not, as a rule, subject to exit tax: a tax applied in some European countries to a chance of country of tax residence of individuals or companies”.
A tool for family protection
A further crucial matter that athletes should take into account is succession planning, especially if they are engaged in sports that expose them to greater risks even at a young age, as in the case of pilots or skiers. Very often, in fact, the families of athletes are financially dependent on the champion and, in the event of that person’s death, may find themselves in difficulty in the period leading up to the completion of the succession administration. “In most European countries,”
Octium’s experts observe, “the capital insured in the policy is either not subject to inheritance tax or enjoys a favourable tax treatment. Moreover, the possibility of nominating beneficiaries with extreme flexibility and the efficient liquidation of the capital, which as a rule takes place within 30 days of the declaration of death, regardless of formal succession requirements, prove to be valuable qualities of the policy”. Finally, it should be remembered that in many European countries, the sums insured in the policy are not subject to seizure or pledge, or partially so, adding a further layer of protection to the beneficiaries’ assets.
In conclusion
The unit-linked life insurance policy is an ideal wealth planning tool for top athletes. “Thanks to its flexibility, tax deferral and inheritance benefits, – Octium experts conclude – this tool is an effective solution for managing the financial and legal complexities that characterise the lives of professional athletes. Proper wealth and estate planning, carried out with the help of experienced professionals, can guarantee stable and secure management of assets, safeguarding the financial future of athletes and their families”.
