Your son or daughter just got offered an NIL deal. Maybe it’s a local car dealership. Maybe it’s a national apparel brand. Maybe it’s a collective promising a monthly stipend in exchange for social media posts and appearances. Congratulations — this is real money, and your athlete earned it. But before anybody signs anything, your family needs to slow down and understand what you’re actually agreeing to.

The Money Is Real. The Protections Are Not.

NIL income is taxable. The IRS treats it as 1099 contractor income, which means your athlete owes both the employee and employer portions of Social Security and Medicare taxes on top of federal and state income tax. For a $50,000 NIL deal, that’s roughly $12,500 to $15,000 in taxes due the following April. Most families don’t find out until the bill arrives.

But taxes are only one piece. The contract itself is where most families get exposed. Here’s what I see over and over: deals with no injury protection clause, meaning if your athlete tears an ACL in spring practice, the brand walks away and the money stops. Deals with exclusivity provisions that lock your athlete out of future opportunities. Deals with image rights that extend well beyond the contract term. And deals with no legal review whatsoever — just a PDF and a signature line.

The Injury Risk Is Higher Than You Think

Each year, over 20,000 injuries are reported in NCAA football alone, and the numbers in basketball are not far behind. One in five of those injuries leads to season or career disqualification. And these risks extend well beyond the field and the court — female athletes face ACL tear rates up to 8 times higher than males in the same sport, making soccer, basketball, gymnastics, and volleyball among the highest-risk for career-altering knee injuries.

A 20-year study found that 23% of incoming Division I freshmen had already undergone musculoskeletal surgery before they played a single college snap. Now think about what that means for an NIL deal. Your athlete signs a $40,000 contract in August. By October, they’re in surgery. If the contract doesn’t include injury-triggered protections, performance clauses, or a structured payout schedule, your family just lost the income and gained the tax liability on whatever was already paid out.

What Every Family Should Do Before Signing

First: have an attorney review the contract. Not your family lawyer who handles real estate closings. Someone who understands sports contracts, NIL provisions, and the specific state laws that govern your athlete’s eligibility. Forty-plus states now have NIL laws on the books, and they are not all the same.

Second: set up a business entity. An LLC or S-Corp gives your athlete tax advantages, liability protection, and a professional structure for managing income. This is not optional if the money is real — it’s the difference between building wealth and handing 30% of it to the IRS with no deductions.

Third: build a protection plan — but understand that not all protection is created equal. The institutional-grade products you hear about in the news — loss-of-value insurance, long-term disability, critical injury protection — are typically only available for athletes with contracts at a certain threshold. If your athlete’s NIL deal is $25,000 or $50,000, those products are likely not available or not cost-effective for your family.

That does not mean you go unprotected. It means you need a different tier of coverage: supplemental accident insurance that pays cash benefits when your athlete suffers a fracture, ligament tear, dislocation, or concussion. Critical illness policies that pay a lump sum on diagnosis. Life insurance structured for cash value accumulation. These products are individually purchasable, affordable, and available to any athlete regardless of sport, draft status, or contract value.

The problem is that no one is explaining this to families. The headlines focus on the top 1% of athletes. The other 99% are left thinking either they’re covered by the school or they’re out of luck. Neither is true. There is a right plan for every family — it just depends on where your athlete sits in the landscape. That’s the conversation we have.

Fourth: separate the money immediately. Open a dedicated account and transfer 25–30% of every NIL payment into a tax reserve the day it hits. By April, you’ll have exactly what you owe and avoid the scramble that catches thousands of families off guard.

This Is Where We Come In

At McNair Legacy Solutions, this is the exact conversation we have with every family we work with. We review the contract. We coordinate with attorneys and CPAs. We build the protection plan. And we make sure the income your athlete is earning today becomes a foundation for your family’s future — not a one-time event that disappears as fast as it arrived.

I’ve been doing this work since 2019, long before NIL created a market. I wrote The 5th Quarter to give parents the playbook I wish I’d had. And I built this firm because too many families are sitting across from brands, agents, and collectives with no one in their corner.