Who Will Inherit Your Intellectual Property?Author: Fidelis Law PLLC Oct 31, 2014
Who Will Inherit Your Intellectual Property?Intellectual property assets [“IPA”] are easy to overlook during estate planning, since they are intangible-having no physical existence -as opposed to the tangible personal property or real property that can be touched. Most business owners, entrepreneurs, and many others own some form of their intellectual property, or “creations of the mind,” but athletes and “creative” clients-including authors, songwriters, entertainers, and visual artists-are even more likely to own IPAs.
Lifetime Transfers vs. Testamentary Bequests
There are numerous ways to transfer your IPAs. Most typically, you can assign them by a written agreement executed during your lifetime or bequeath the IPAs after death by trust agreement, by will, or by intestate succession laws if you do not leave a will. Or depending on the nature of your IPAs, a hybrid approach may offer the best solution.
When evaluating whether IP assets should be transferred during your lifetime or passed on as a testamentary bequest it is important to consider the likely tax implications of an IPA transfer or bequest. Federal gift or estate tax treatment could be key determinants in your decision-making. Other factors to consider include the age and maturity of the recipients and their ability to protect and exploit the IPAs.
Proper Planning Is Critical
If proper plans for transferring IPA rights are not put in place, those rights will often pass via a will’s residuary estate. Black’s Law Dictionary defines “residuary estate” as “[t]he part of a decedent’s estate remaining after all debts, expenses, taxes, and specific bequests and devises have been satisfied.” In short, any property not specifically bequeathed in the will becomes the “residue.” Ownership of the residuary estate passes to the beneficiary designated in the will. If there is no will, the decedent dies intestate and the laws of intestacy of the state where she had permanent residency at the time of her death will determine who inherits her property.
Intestacy or a poorly drafted will could both yield disappointing results since the “random” beneficiary may not effectively exploit the rights held in songs, photographs, books, patents, trade secrets, trademarks, or other IP assets. As a result, you may wish to take intentional steps to ensure that they go to the person or entity who can best steward those assets on into the future, and for the benefit of those you choose.
At Fidelis Law we regularly advise business owners, entrepreneurs, creative artists, not-for-profit organizations, and others. We welcome the opportunity to help you ensure that your IPAs are identified, protected, and transferred according to your wishes. Please call or email us at Fidelis Law to make an appointment or to request additional information.