When you prepare your will, you'll probably spend a lot of time thinking about how to handle assets like real estate, jewelry, and bank accounts.
But you may not realize that your intellectual property also should be part of your estate plan. Your copyrights, patents, and trademarks live on after you die, and they can be an important source of income for your family.
Like a bank account or family business, intellectual property must be managed correctly to maximize its value. If you don't have an estate plan that describes what will happen to your intellectual property, it will become part of your residual estate. This means it may not go to the person you intended, and may not be managed in a manner that will protect it and maximize its value.
Types of Intellectual Property Rights
Your intellectual property may include copyrights, patents, or trademarks.
Copyrights apply to “original works of authorship," including songs; written works like novels, screenplays, and poems; artwork; photography; software; sound recordings; and motion pictures. A copyright gives you the right to make and distribute copies of the original work, perform and display the work, and create derivative works based on it. The author has a copyright as soon as the work is created. For works created after January 1, 1978, copyrights usually last for 70 years after the author's death. Older works have different expiration dates.
Patents apply to inventions. You must apply to the U.S. Patent and Trademark Office (USPTO) to receive a patent. Most patents are utility patents for the functional aspects of an invention, but the USPTO also issues design patents and plant patents. Utility patents last 20 years and design patents last 14.
Trademarks apply to the things you use to identify your business. If you are a business owner, you or your business may own registered trademarks for your business name, logo, or product names. If your trademarks have not been federally registered, you may still have state or common law trademark rights. A registered trademark can last indefinitely so long as you continue using the mark and file maintenance documents on time.
Understanding What You Own
To include your intellectual property in your estate plan, you must first make a list of the intellectual property you own.
Copyrights. Focus on copyrights that are likely to have monetary value. If you created the work, you own the copyright unless you created it as part of your employment or signed a document transferring the copyright to someone else. It's important to note that if you sell a copyrighted work, such as a piece of art or a photograph, you still own the copyright unless you have specifically transferred the copyright in writing.
Patents. Check your patent registrations to determine who owns them and when the patents were issued.
Trademarks may belong to you personally if your business is a sole proprietorship or a general partnership. Otherwise, your business trademarks probably belong to your business. Make a list of all trademarks you use in your business, including trademarks registered with the USPTO.
Take this list with you when you meet with an estate planning lawyer. Keep a copy with your other estate planning documents. It can be a big help for heirs trying to sort things out after your death.
Deciding What Should Happen After You Die
Proper estate planning helps you control who will own and manage your intellectual property after you die. Here are some factors to consider:
- Do you want to leave your intellectual property to a particular person or charity?
- Who or what is most likely to preserve and maximize the value of your intellectual property?
- How much is your intellectual property worth? You may need expert advice to properly answer this question.
- Will the intellectual property trigger additional taxes so that a special tax strategy is needed?
You can't see and touch intellectual property, which makes it easy to forget when you're developing an estate plan. But when you include your intellectual property in your planning, you help protect it, minimize tax liability and maximize its value.