There was a recent news report about a well-known television personality Aditya Narayan being on the verge of bankruptcy due to the COVID-19- induced lockdown impact on his professional career.
Whilst he has clarified that he was quoted out of context on the same and that there is no truth in this matter, it is not uncommon for celebrities in multiple areas - Bollywood or Hollywood, and even sports professionals, to go through this kind of a challenge during their career.
This very often happens due to a concept called the "Sudden Wealth Syndrome" wherein someone who has worked very hard, and had meagre earnings from his/her professional life thus far, comes into a significant amount of wealth suddenly.
In fact, you do not need to be a celebrity to have this happen to you - it could happen due to a windfall gain from your stock options, sale of your business, a large inheritance, or even winning a game show or lottery.
There are multiple steps that one can take to deal with a situation of this kind including:
In addition, having a robust risk management plan by having the right types of insurance for life and health, covering against critical illness and liability insurance is crucial, along with a solid succession/estate plan through the right vehicles like wills and trusts.
A tax advisor may not be best suited to this comprehensive role, and thus one may need to seek the services of an experienced certified financial planner, who can give comprehensive advice around all these aspects. Tax matters could, of course, continue to be handled by a professional tax advisor.
Whilst the sound of the audience clapping on your virtuoso performance in your last film or your last match is wonderful, being sound with your financial matters is equally important.
(Vishal Dhawan is a certified financial planner and founder of Plan Ahead Wealth Advisors, a SEBI Registered Investment Advisory firm.)
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