Trust Fund Baby | Zach Miller, Sam Acho, Jeff Locke, Riccardo Stewart | NFL Players’ Podcast #21
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A key component to creating multi-generational wealth is planning to pass on your wealth to the next generation.
In this episode, the AWM Football team, Sam Acho, Zach Miller, Jeff Locke, and Riccardo Stewart begin talking about the importance of NFL players setting up a Trust.
What is a trust? Who needs a trust? When is the right time to set up a trust?
For questions, you can reach out to Riccardo Stewart at +1 (602) 989-5022.
+ Read the Transcript
Riccardo Stewart (00:11): Hey, I want to welcome you guys back to another episode of the AWM podcast. My name is Riccardo Stewart. I'm your host and I'm joined with my friends, Sam Acho, Jeff Locke and Zach Miller. Today's discussion and for the next couple of weeks and a couple of episodes, we're going to begin talking about trust. And when it comes to trust and estate planning and so forth. And, uh, the first thing that comes to my mind, fellas is the phrase trust fund baby. I mean, that's a phrase I feel like I've heard for years, like, Oh man, he's a trust fund baby or she's a trust fund baby. And for me, it really started with like the Hiltons and so forth when like they were having their television show and I'm like, what the heck is a trust fund baby? So I'm going to start with you professor. What, what's a trust fund baby?
Jeff Locke (00:55): A trust fund baby really just means your parents had a decent amount of money, probably a lot of money. And when they passed away or even when they're still alive, they put a bunch of money in a trust and now you get to draw money from that trust, either whenever you want or maybe monthly, maybe quarterly. And that's what a trust fund baby is. They don't got to work typically. They don't got to have any certain things they got to do to get that money out. It just comes to them. So that's what a trust fund baby is.
Riccardo Stewart (01:23): Got you, got you. Okay, so we're gonna talk about trust. And I really wanna talk about, okay, what is a trust? Who needs a trust? And even like, when is a good time to be able to get a trust? And just start that out. And then we'll kind of break down over the next episodes in detail of what that begins to look like. And so, Jeff, we've already started with you, but I want you to answer just a couple of questions from me first. Oh, you already did the trust fund, baby. One more, and it's like, what is a trust? You always give a simple definition, so what to trust?
Jeff Locke (01:55): Trust is literally just a document usually a lot of pages and it just details out how you want your assets to actually pass down to your family the next generation when you die one of the key differences between a trust and People without a trust is when you have a trust. It's harder to challenge in court Who gets your assets? So one example is without a trust All your assets actually become public in this court process and people can kind of come out of the woodworks and say, no, no, no, you owe me money.
He owes me money, yada, yada, yada. And it becomes a lot more expensive to get your assets down to your family. And it takes longer. So the analogy I love is like being a king in a castle. The castle is your trust. Once everyone finds out you die surrounding the castle, you raise the drawbridge, don't let anybody else in except for your family that you actually want to have access to your money without a trust. Everyone finds out you die and they come running to try and steal and raid all your stuff.
Riccardo Stewart (03:00): Thanks King Jeff. Okay. Sir, Sir Zach. All right. Actually no, actually Sam, cause part of this, Sam, part of this even started with, I know men has been several guys that have come up to you and asked about trust and what their plans are. I mean, just kind of talk about that when you have NFL players that are coming to you, just asking you questions.
Sam Acho (03:25): Well, I think that's part of the impetus coach to your point of, “Hey, why do we want to do a podcast to talk about trust?” I was training at this place in Dallas called sports Academy. And there's a bunch of guys who train there. And there's one guy who trains there who is about to be the highest paid potentially player in the NFL, but highest paid at his position. And I've been kind of seeing them train and training with them. I was like, Hey man, how do you feel about this next step? Like, you know, you're about to, you know, there's all this money you're going to get. And he's like, man, I feel great about it. I said, awesome, man. What's your, what's your plan? He said, Oh, I got a plan.
I said, okay, sweet man, well, what is it? And he said, well, if I told you, it wouldn't be a plan. And I was like, that kind of sounds like a secret, but, you know, but, so I kind of like let him go a little bit. Then we kind of came back around and then we kind of continued that conversation again. I mentioned a little bit about what I do at AWM and kind of the athletes and, and I said, so kind of, what are you thinking? He said, well, I've got a great plan. I got a trust. And I was kind of like -
(04:20): And we were kind of middle of the workout, didn't really get a chance to dive deep, but that led to this conversation of, okay, well, why would you get a trust? What kind of trust and what's the benefits? And so to your point, Zach, and even hearing you coach and Jeff of, okay, okay, there actually are benefits to a trust. What are they? And so that's kind of where we started with this conversation, coach.
Riccardo Stewart (04:40): Well, I mean, kick it to you, Zach. First, like, in terms of a trust, like, like, who needs a trust?
Zach Miller (04:46): I mean, for NFL players, it's a lot of them. And once you have significant assets, so pretty much it's several thousand dollars to get one put together. So, I mean, there is a cost to it, but for most NFL players, once you've played a little bit, it makes sense to have a trust. And then especially once you have a wife and kids, if you don't have a trust, it's kind of irresponsible, to be honest, because you need to have control over what happens to your money if something happens to you.
It's the same thing like if you just, if you're the sole earner in your family, you don't have like life insurance, that's kind of irresponsible to not set your, you know, your people who rely on you up after you're gone. And so it's something that we recommend a lot. We help with the process, but it has to be tailored to the, to the family because it's so, it's so customized and it's so specific to what your individual needs are that you really, there's, there's not one blanket statement like, Oh, if this, then that. So, it really is up to you to coordinate that with the people that know your family best.
Riccardo Stewart (05:49): So just personally, I'm assuming you have a trust. I know you have a trust. So like, when, at what point in your career, and who was the person who told you you needed a trust?
Zach Miller (06:01): So I actually, I set mine up on my own. I heard that I needed one. And so I found a local estate attorney in Seattle. He was actually in Kirkland and did the whole like basic estate planning process. So I have a revocable living trust. And so that's the very basic one you can set up and revocable just means at any time I can change it. I can go in there, my wife or I can go in there and change what we want and literally rip it up or change who gets - who are the beneficiaries, who gets what cut of the money, all that kind of stuff, we can always change.
As opposed to what, once you make a lot of money in the NFL, then you can start talking about irrevocable trusts and you enter into a whole nother world of that money once you set up that trust, you don't have control over that money like you did if you had a revocable trust. So that's very, it gets very complicated, but if you don't do some of that planning, you're literally giving away money to the government in the form of an estate tax, which is just like we talked about earlier, you get income tax, and then they get you again when you die for a state tax.
Sam Acho (07:06): So I was gonna ask Zach to your point, because I'm still trying to answer, hey, what kind of trust was this player trying to get? So let's say you got a guy who's, let's call it $100 million, about to sign a $100 million contract. Would it be revocable, irrevocable, living trust, testamentary? Like what kind of trust and what are the benefits, if we could be real specific on that?
Jeff Locke (07:31): If I'll jump in first you're gonna have at least at least two different types of trust here Sam answer your first question: Are you gonna have that revocable living for sure and you're also gonna have at least one of these irrevocable trusts that Zach is talking about and that's because you got too much money sitting in your accounts and if you were to die tomorrow on a majority or asset, you're gonna owe the federal government 40% of everything left behind So you got to use one of these irrevocable trusts to help get some of those assets away from the government. So you can actually pass more on to your kids. You could actually have four, five, six different trusts depending on what your plan calls for. And again, like a secret, like the plan's not just gonna be one trust for someone making that much money. It's gonna be a lot of trusts that all connect and don't connect in certain ways.
Riccardo Stewart (08:21): So Jeff, ok, I want you to keep going here. What are players missing out when they don't have it?
Jeff Locke (08:26): Yeah, I think of peace of mind is the first thing, right? Just knowing that if you got hit by a bus tomorrow, things are going to go the way you said they should go in the trust, right? There's the privacy aspect, right? You get hit by a bus tomorrow. Your family isn't fighting with a bunch of other people of what happens to your assets. It's written down. You notarized it. You signed it. This is exactly how I want my assets to pass. Those are the two biggest things. The reason I have a trust also, the reason Sam has a trust, like we all got him done while we were playing in the NFL.
Riccardo Stewart (09:03): So let me close with this because we're going to talk way, way more in detail about these things and irrevocable and so forth. Just timing wise, Jeff, like when, like I'm in the NFL and I've been in the NFL for three or four years. I mean, we see it when we get clients, when they come on with us, they've had advisors, one for 15, 20 years, and no one's ever really helped them, you know, set up a trust. When's an ideal time for an NFL player to set, begin setting up a trust?
Jeff Locke (09:32): Now go back to my castle analogy, it's when you become a king, right? And that's going to be in one of your first couple of years in the NFL, when you have assets that need to pass down to other people. Zach nailed it too. You buy a house or you have kids or a wife, your trust should already be set up. You're behind the eight ball if you haven't done it already. So you got to get it done pretty quickly once you start making some money.
Riccardo Stewart (09:56): Good, we're gonna take the next couple of weeks and episodes and we're gonna talk more about this in detail. One, because we think that obviously every NFL player that's in the situation, you need to have it and that you have the resources to understand it. And so if you guys have any questions, please reach out to us, 602-989-5022. Again, that's 602-989-5022.