Trust for minor athletes' NIL earnings

Summary#

A-11717 would amend New York’s Education Law, section 6438-c. Its stated goal is to protect some name, image and likeness (NIL) compensation earned by minor student-athletes by requiring amounts above $10,000 in a calendar year to go into a restricted trust. The bill is introduced and has been referred to the Assembly Committee on Higher Education; it is not law.

  • The rule would cover athletes under 18 who have completed at least their sophomore year of high school (or an international equivalent) and are eligible, or may later be eligible, to attend college and compete in intercollegiate sports.
  • If such an athlete receives $10,000 or less in NIL compensation during a calendar year, it may be paid directly to the athlete or their parent or legal guardian.
  • If the total exceeds $10,000, every dollar above that amount must go into a restricted trust for the athlete. A parent or legal guardian must establish the account.
  • Trust funds could not be released until the athlete graduates from high school or turns 18, whichever comes first. Withdrawals would be barred except by court order or as otherwise provided in the bill.
  • The state Superintendent of Financial Services must make any rules needed to implement the subdivision.

What it means for you#

  • Eligible minor athletes: The bill would restrict access to NIL compensation above $10,000 per calendar year. It does not apply to athletes who are 18 or older, or to minors who do not meet the stated school-year and college-eligibility conditions.
  • Parents and legal guardians: They would have to establish the trust account. The bill does not clearly say who is responsible for depositing the money.
  • People or businesses paying NIL compensation: Amounts over the threshold must be deposited into the trust, but the bill does not assign that deposit duty to a specific person.
  • State financial regulator: The Superintendent of Financial Services must make rules the regulator considers necessary for implementation.
  • Courts: A court could supervise an account upon petition if necessary. The bill does not create a general review process for every account.

Money#

No publicly available information on estimated costs is included in the supplied materials.

  • The bill requires trust deposits for covered compensation above $10,000, but does not say who must make those deposits.
  • The parent or legal guardian must establish the trust. The bill gives no estimate of account or administrative costs.
  • The Superintendent of Financial Services must make needed rules; the bill gives no staffing or cost estimate.

What is unclear#

  • The supplied materials do not include the current text of Education Law section 6438-c, so the existing law and how this change would interact with it could not be verified.
  • When total compensation exceeds $10,000, the bill does not expressly say who receives the first $10,000; it only says that the excess must go into trust.
  • It does not identify who must deposit the excess, or set a deadline or process for doing so.
  • It refers to withdrawals “as provided herein,” but does not clearly describe a withdrawal process beyond the release timing and court-order exception.
  • The bill does not explain how the trust rules for settlement funds involving minors apply, or which parts are changed by this bill.
  • If enacted, it would apply only to contracts entered into on or after its effective date. The effective date would be July 1 after it becomes law, so the start date is not yet known.

Case for#

  • The bill appears intended to preserve a portion of a minor’s NIL earnings for the athlete’s benefit rather than allow the full amount above $10,000 to be paid out directly.
  • A possible argument for the threshold is that it leaves compensation up to $10,000 available to the athlete or guardian while restricting only the excess.
  • Releasing the funds at high-school graduation or age 18, whichever comes first, gives a stated endpoint to the restriction.

Case against#

  • The bill does not clearly identify who must deposit the excess, which could make compliance responsibilities uncertain.
  • It is unclear how the first $10,000 is handled when annual compensation exceeds the threshold.
  • The bill restricts access to the excess but gives few details about permitted withdrawals, account oversight, or how disputes would be handled.
  • The required trust and rulemaking could create costs, but the bill provides no estimate.