Athletes gifting property to family: Know the legal traps

Gifts between family members are common, with athletes often giving valuable assets to their relatives. Gifting involves transferring wealth. Athletes such as Kevin Durant, Tiger Woods, and Anthony Walker have made significant gifts to their family members. It is even believed that Dwayne Wade bought a church for his mother as a gift.

How does a gift differ from a sale? In a sale, a person exchanges property for money, backed by legal documents. A gift, however, is voluntarily transferred from one person to another without compensation. Many athletes, due to their high earnings, give assets to their relatives, either by transferring ownership or granting exclusive use. This common practice often leads to legal issues for both athletes and their family members.

Athletes typically give luxury cars and homes to family members. However, athletes need to be aware of substantial maintenance costs. Such gifts can be difficult for recipients to manage, especially due to the upkeep and taxes. For example, a luxury car comes with high road taxes and maintenance costs that add up quickly. The situation becomes more complicated with luxury properties, which entail various expenses for upkeep, as well as property taxes.

If the athlete doesn’t transfer property ownership, the recipient may struggle to pay taxes, and the athlete will be liable. As the legal owner, the athlete is responsible for any administrative or criminal penalties arising from unpaid taxes. Another example involves an athlete buying a business, such as a restaurant or shop, for a family member. This creates problems if the business fails to meet legal obligations, risking the athlete’s involvement in potential criminal charges.

Athletes should transfer ownership when gifting property to avoid being held liable. To prevent legal complications, transferring ownership with the gift is essential. If an athlete gifts property directly to a family member, such as a child, third parties may claim the asset. Depending on the jurisdiction, a spouse may claim the property during a divorce under family law. However, some jurisdictions protect gifts from parents to children during marriage, ensuring the child retains ownership.

Capital gains tax is another consideration when gifting property. In many countries, gifts are subject to capital gains tax, but exemptions exist. Transfers between spouses or civil partners may be exempt from capital gains tax under certain circumstances. In some jurisdictions, gifts between family members, such as parents and children, may also be exempt. Athletes should research the legal implications of gifting property to avoid complications.

Athletes must seek legal advice before gifting property to ensure they avoid future problems. They must account for additional costs. Understanding the legal framework of their jurisdiction and the responsibilities tied to gifts is crucial. Athletes should transfer ownership when gifting property to avoid future liabilities associated with the gifted asset.