For creatives in media and entertainment, wealth rarely follows a predictable path. A successful production, publishing deal, business sale or catalogue acquisition can create substantial value within a relatively short period. Just as quickly as wealth can be created however, the political and tax landscape can change. With the revolving door of political leaders comes new legislation, revised tax policies and fresh planning challenges that individuals and their advisers must adapt to.
With the Autumn Budget scheduled for 28 October 2026, attention has again turned to possible changes to capital gains, inheritance and/or income tax. None of the widely discussed proposals are certain. That uncertainty, however, highlights an important estate planning principle: a will should provide sufficient structure to reflect an individual’s wishes without unnecessarily restricting the people who must implement them.
This raises an important question: how do you create an estate plan that may not take effect for decades, yet remains capable of adapting to changes in tax legislation, family circumstances and the value of creative assets?
The danger of planning around today’s tax rules
An outright gift under a will creates certainty. A beneficiary is identified and becomes entitled to the asset or share of the estate. That may be appropriate where the intended outcome is straightforward and unlikely to change. However, for clients in the creative industries, nothing is ever so certain.
If an estate passes absolutely, the executors have limited scope as to how or when the assets are distributed. They cannot redirect an inheritance because tax rates have changed, a beneficiary is in a vulnerable position or where retaining a particular asset becomes commercially preferable.
It is likely many estates in the creative space will include appreciating assets. Current speculation includes the possibility of increased capital gains tax and income tax rates, changes to the capital gains treatment of assets on death and the taxation of more investment returns as income rather than capital. These remain predictions rather than announced policy, but each would affect decisions about whether assets should be retained, sold or transferred.
An inflexible will requires decisions to be made by reference to circumstances existing when the will was signed, the key difficulty being that no-one is able to predict certainly as to what may work in a decades time.
A discretionary structure introduces flexibility and allows those decisions to be taken at the relevant time.
The value of a discretionary trust
Under a discretionary trust, no individual beneficiary has an automatic entitlement to a particular asset or fixed proportion of the trust fund. A beneficiary will only have a mere hope to inherit under the trust fund. Instead, the trustees decide which beneficiaries should benefit, when distributions should be made and whether those distributions should take the form of income, capital and/or particular assets.
This does not mean that the individual making the will gives up control over their intended bequest. The will establishes the legal framework and identifies the potential beneficiaries. A carefully prepared letter of wishes can then explain the testator’s priorities and provide guidance on how the trustees should approach future decisions.
The advantage is that the trustees can consider the circumstances at the relevant time. They may be able to assess:
- the tax treatment of a proposed distribution
- whether assets should be retained or realised
- the availability of reliefs
- the residence and personal tax position of the beneficiaries
- whether a beneficiary requires income or capital
- the commercial position of any business or creative assets
- the wider needs of the family
Trustees are themselves subject to tax rules. A discretionary trust is not a means of avoiding taxation and should not be presented as such. For example, trustees can be liable for capital gains tax when they sell or transfer trust assets, although reliefs may be available in appropriate circumstances. The benefit of the structure is the ability to obtain advice and select from the available options rather than being committed in advance to one outcome. HMRC confirms that trustees will usually bear the capital gains tax liability when trust assets are sold or transferred on behalf of a beneficiary and that reliefs including hold-over relief may be available where the relevant conditions are satisfied.
Why this matters for creative estates
For a creative individual, an asset should not necessarily be sold simply because a beneficiary becomes entitled to it.
A music catalogue, publishing right, production company or valuable archive may generate income over many years. Its financial value may also be closely connected to the creative’s reputation and the way in which the work is managed after death.
If capital gains tax rates were increased, owners of appreciated assets might delay selling them. This is sometimes described as a ‘lock-in’ effect. For a creative estate, the position may be more complicated still. A sale could secure immediate value, but it might also surrender control over future licensing, publication or commercial use.
A discretionary trust can give trustees time to consider the position. Depending on the terms of the trust and the circumstances of the estate, they might retain an asset, distribute income generated by it, appoint the asset to a suitable beneficiary or approve a sale when the commercial and tax position is clearer.
That flexibility can also accommodate changes that have nothing to do with the Budget. A beneficiary may be going through a divorce, experiencing financial difficulty, living in another jurisdiction or simply be unprepared to manage a complex creative asset. Trustees can tailor distributions to beneficiaries’ evolving circumstances rather than relying on an arbitrary age or immediate entitlement.
Flexibility does not mean indecision
A discretionary trust should not be used simply to postpone difficult decisions. Its success depends on the appointment of trustees with the judgement, expertise and willingness to act.
In a media and entertainment estate, that may require a combination of family knowledge, professional trustee experience and specialist understanding of the relevant industry. Trustees should also have clear guidance about the creator’s objectives. That might include whether a business or catalogue should be retained, how beneficiaries should be supported and the importance attached to artistic control, reputation or long-term family ownership.
As considered elsewhere in this series, specialist input may also be required when decisions involve intellectual property, image rights, archives or unpublished works. Those assets can continue to generate income and attract public attention long after death, meaning that purely financial analysis may not produce the outcome the creator would have wanted.
Planning for rules that do not yet exist
No estate plan can predict the future nor should individuals rush to restructure their affairs whenever a new Budget “rumour” appears.
The more sustainable approach is to build adaptability into the estate plan from the outset. A discretionary trust can allow trustees to respond to the law, tax rates, asset values and beneficiary circumstances existing at the date of death or distribution.
For wealthy individuals and those in the creative industries, that flexibility can be as important as any particular tax relief. The objective is not to predict the next Budget correctly but to avoid leaving an estate plan that only works if today’s rules remain unchanged.
Our expert Private Client team advises individuals across the creative industries on flexible succession planning, discretionary trusts and the long-term management of creative assets. For further information or to discuss how we can assist, please contact Stephen Patch or Isabel Solarte.
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