EP Wealth’s Vice Presidents Adam Fein and Joseph Palumbo share what parents of NIL college athletes should know about wealth planning, from managing taxes and LLCs to investments, budgeting, and more.
Parents often play an important role in helping college athletes navigate NIL opportunities. From the very start of the financial planning process, we encourage parents or trusted mentors to be actively involved. Their participation provides perspective, accountability, and guidance that can help athletes make informed decisions. We each have more than 20 years of experience working with professional athletes at every stage of their careers. That experience has shown us what tends to work well and where things can go wrong. As a result, we have developed a blueprint that helps athletes identify and manage common pitfalls such as overspending, failing to set aside enough for taxes, or taking financial advice from social media or from people who may not be qualified to guide them.
NIL is still a new and evolving space, which means it is especially important to work with advisors who understand its unique complexities. As fiduciaries, our responsibility is to act solely in the best interest of our clients. We are not looking for jerseys, tickets, or personal perks. Our attention is on the financial well-being of the athletes we work with.
When we meet with potential NIL clients and their parents, there are certain questions that come up consistently. In this blog, we share some of the key points we review with families at the outset to help them approach NIL income with greater clarity.
NIL income can provide athletes with an early ‘head start’ to building their financial future, but in most cases it does not amount to lifelong wealth. College sports are unpredictable. We work with a lot of college football players, and factors like coaching changes, the transfer portal, or injuries can quickly shift the course of a career. Even highly ranked recruits who enter college with great expectations do not always meet those early projections.
That uncertainty is why we build financial plans around what is known and guaranteed: current income and immediate needs. We don’t plan based on the possibility of a future professional contract that may never materialize. The reality is that most athletes won’t reach the professional level, but the financial habits and discipline they build during the NIL years can carry forward into their next chapter, whether that’s playing at the next level or pursuing another career entirely.
A common surprise for athletes and parents is that NIL income doesn’t function like a traditional paycheck. Employers usually withhold taxes on a W-2, but that does not happen with NIL payments. Instead, most NIL earnings are reported on 1099 forms, which means athletes are responsible for setting aside money and paying both federal and state taxes themselves. In some states, even portions of scholarships or stipends can be treated as taxable income.
Failing to plan for these taxes can lead to unpleasant surprises at filing time, or worse, IRS notices down the road. That’s why we encourage athletes to work closely with a CPA who has specific experience with NIL reporting. If a family does not already have that CPA relationship, we can connect them with professionals in our network who specialize in this area.
We typically recommend that athletes earning NIL income form an LLC. This separates business and personal finances, to help manage tracking contracts and expenses while adding a layer of liability protection if disputes arise.
What an LLC does not do automatically is lower taxes. By default, income still flows through to the athlete’s personal tax return. Where tax benefits may come into play is when the LLC is structured in a particular way, such as electing for it to be taxed as an S-Corp.
Choosing an S-Corp designation may help reduce self-employment taxes; however, this option is generally only appropriate for college athletes earning substantial income. It also comes with potential trade-offs and administrative complexities, which is why it should only be considered in consultation with a financial advisor and CPA to determine if it is the right fit for your specific situation.
Parents often ask, “When should my child start investing?” It’s a natural question, but in our experience, investing isn’t the first step. During college years, there’s too much uncertainty to tie up funds that may be needed for immediate expenses or tax obligations.
Instead, we ease athletes into the financial planning process by starting with three basic building blocks:
This gradual approach helps teach athletes to build financial discipline and confidence before moving into more complex investments. It can also help avoid the risk of locking money away prematurely, only to need it later.
NIL income does not typically affect scholarships, stipends, or housing benefits. Athletes continue to receive these forms of support even while earning money through NIL agreements.
In some states, however, scholarships and stipends are treated as taxable income. An athlete may receive a 1099 for these amounts in addition to NIL payments, which can make tax filings more complex. A CPA who understands these rules can help athletes report everything correctly and minimize surprises.
When athletes and families evaluate college opportunities, it can be tempting to focus on where the biggest NIL dollars are available. But NIL income is only one piece of a much bigger picture. For football players especially, development, playing time, and visibility on the field may have more impact on future financial opportunities than the immediate paycheck.
Choosing a school where an athlete can play and showcase their ability may, in some cases, lead to better long-term outcomes than accepting a larger NIL offer at a program where playing time is limited. Every situation is different, and these decisions involve more than just financial considerations. Parents, agents, advisors, and mentors should all be part of the process to help weigh the options from every angle.
NIL income brings complexities that go beyond traditional financial planning. One example we like to use is that if you had a heart condition, you would not see a general practitioner - you would go to a cardiologist. The same principle applies here: athletes need advisors like us who specialize in working with NIL clients.
With our combined 40+ years of experience in wealth management for athletes, we know the NIL space and regularly work alongside other professionals who share that focus. For example, we work closely with CPAs who know how to properly report NIL earnings, what expenses can and cannot be deducted, and how to handle income that may be taxed in multiple states. Working with advisors who lack this experience may result in costly mistakes that could take years to resolve.
We believe the process works best when parents or mentors are regularly involved in NIL planning. In nearly all of our meetings with college athletes, a parent or mentor joins the discussion, and often both do. Parents frequently raise questions that athletes may not consider on their own, such as how taxes will be handled, what contract terms really mean, or what the long-term implications of planning decisions may be. Their presence provides an important balance, helping the athlete see beyond the immediate excitement of NIL opportunities.
In our view, leaving parents out of the process would be a disservice to our student-athlete clients. Financial decisions at this stage affect not only their current situation but also their trajectory for years to come. Having multiple trusted perspectives at the table leads to stronger decision-making.
Our approach to NIL planning is grounded in comprehensive, step-by-step guidance. We start with basics like cash flow management and tax planning and gradually expand into investing, insurance, and more complex planning as appropriate.
We collaborate closely with CPAs and attorneys, whether connecting clients to our network of NIL-focused professionals or working with the advisors they already have. Our goal is to provide continuity, so families don’t feel like they’re piecing advice together from different sources.
We also understand the demands on athletes’ time. College sports don’t follow a 9-to-5 schedule, and neither do we. We make every effort to make ourselves available whenever needed, whether the question is about budgeting, buying a car, considering real estate, or evaluating business opportunities. And when the question goes beyond our expertise, we bring in professionals from our network who can provide an answer.
Our work is not about chasing quick wins. It’s about guiding athletes and families through decisions that can shape their financial lives for years to come.
If you’re looking for a financial partner who understands the unique demands of NIL athletes, EP Wealth is here to help. Learn more about our athlete-focused planning approach and how we support long-term success on and off the field.
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