4 Reasons young creatives need estate plans
What’s the number one estate planning mistake?
It’s young creatives thinking they don’t need to live with the end in sight. This is a problem for all people, actually, but it is exacerbated for creatives who may have a wealth of intellectual property that can grow in value after they die.
All up, I reckon this is a problem with the term ‘estate planning’, which conjures images of old men in smoking jackets luxuriously planning the distribution of their immense wealth over 100-year-old scotch with their well-groomed lawyer.
But, just because you prefer track pants to smoking jackets doesn’t mean you can afford to do without an estate plan.
Here are four reasons why:
1. You’re tying the knot
So, after years of partying, you’re finally over your fear of commitment.
You’ve found someone who knocks your socks off enough that you want to spend the rest of your life with them. You’d also like to buy a place where you and your beloved can settle in under the doona.
These are probably two of the most massive life decisions a person makes, and they’re both made by a lot of people when they’re in their twenties or thirties. This is where a prenuptial agreement steps in and becomes part of your estate planning.
A prenup protects you against any debts your spouse may have acquired before you tie the knot, but it can also protect the assets you currently have, any expected inheritances, retirement account contributions, and your residence (marital or non-marital), which can save a lot of hassles as you grow together as a couple – or not – as is frequently the case.
2. You never know what’s around the corner
Just because you’re young and can still chuck an all-nighter, doesn’t mean you’re untouchable in terms of illness or accident.
There are unknowns in life and some of these might affect your ability to make an income, make decisions or make amends.
Use an Enduring Power of Attorney so you can nominate the person[s] you want to make day-to-day decisions for you, if for some reason you can’t.
Another document called an Advanced Health Directive allows someone else to make decisions about medical care on your behalf if you’re incapacitated.
These two important documents should be part of everyone’s estate plans, whether they’re 18 or 80.
3. You never know what’s around the corner #2
Just because you’re young, doesn’t mean the old meanie of death, Mr Grim Reaper, won’t come a-knocking.
Best to get your affairs in order. I’ll tell you why.
You might want what you own distributed in a certain way and there’s no way of this happening unless you say what you want.
If you die intestate (without a Will), the government steps in and decides who gets what.
Further, if a Will goes to probate for the court to decide who is able to be the executor and administer the estate, this is a costly process.
4. You might be broke but your parents probably aren’t
That’s right; while you might be struggling to pay student loans and rent and to make sure there’s a little left over for a beer on Friday night, your parents and grandparents probably aren’t in the same boat.
If they happen to die and leave you an inheritance, it’s a good idea to have a structure in place so that you know exactly how such money will be used.
Estate planning can assist you in avoiding taxes that sometimes accompany a large sum such as an inheritance.
5. You might be broke, but your work might be valuable some day
If you’re a writer or filmmaker, musician or visual artist, it’s important you say what happens to your work after you’re gone. It’s part of your care for your work. But also, in some cases, work like yours only becomes recognised and gains the ability to make money, only after its creator is dead. Don’t you want your family to benefit from this win?
As an example, James Dean died at a very young age with probably no anticipation of the icon he was to become. His cousin now reaps the financial benefits of strategic use of the James Dean brand. You never know what will happen. Set your estate up so your family can gain.
Being an adult means you can drive, get into clubs and choose your own life adventure. It also means you have to take responsibility for the life you live – and for the work you leave behind.