Xavier Williams was drafted out of college to play baseball for the San Francisco Giants. He rose quickly through the ranks of the minor leagues and soon became a mainstay in the starting line-up. After contributing several solid seasons in the big leagues his notoriety and his income both began to increase. Xavier is a thoughtful, grounded person. He grew more and more concerned that his high profile, combined with the public nature of his 7 figure income could lead to problems. Xavier came to First Covenant for guidance. Xavier already had a good financial advisor in place to help him with investing, and, unlike many professional athletes, his lifestyle was not overly extravagant. His major concerns were:

• Relative to most professions, I will have a short career. Since I’m saving the majority of my take-home pay, my savings don’t all fit into retirement accounts that are protected. My investment accounts are quickly getting large.
  • How can I protect this money so it will be around once my playing days are over? I’m worried an ordinary accident, like a fender-bender in the car, could cost me a lot because people know who I am and that I have a big income.
  • Is there a way to minimize taxes on this investment income I won’t need while I’m still playing?
• I’m often approached by relatives asking for money or a loan. How can I say “no” without alienating people?
• Sometimes friends or family will want me to invest in a new business project. How do I decide which of these investments, if any, are worth doing?

First Covenant worked with Xavier and his other advisors to set up and move assets into a structure utilizing asset protection, charitable and ING[1] trusts. This set-up addresses Xavier’s worries and provides additional benefits.

• Assets are protected from unknown future creditors, increasing the odds that Xavier’s savings will benefit him throughout retirement.
• Federal income taxes are eliminated or deferred on investment income he isn’t using during his playing career. When taxes are eventually paid, it will likely be at a reduced rate because they will be paid after Xavier’s retirement from baseball and his overall income will be lower.
• High state and local taxes in San Francisco are eliminated on investment income.
• Xavier has a thoughtfully engage with giving to the causes he is passionate about, and an earmarked pool of funds to use.
• Xavier can use First Covenant as a shield for friends and relatives looking for funding. Covenant can be the “bad guy,” explaining to would-be recipients that “Mr. Williams’ funds are tied up and can’t be used for certain purposes.”
• Xavier can direct anyone looking for investment funds to First Covenant. As trustee, Covenant can perform due diligence on potential investments. Those not meeting high standards can be gracefully declined.

After working with First Covenant, Xavier’s mind was eased that he was doing the best he could to protect what he was earning and saving. The season after implementing the above, Xavier had his best season—he was voted an all-star and was in the conversation for the league MVP. At First Covenant, we like to think it was because his mind was freed from all the other worries besides hitting baseballs.