Intellectual Property in Estates and Trusts
One often overlooked consideration for artists and businesses is the disposition of intellectual property rights upon death. In this post, I will attempt to provide some general information you should have prior to discussing estate planning with your attorney. I strongly recommend consulting a private attorney for the planning of your estate, as he or she will know the relevant state laws governing trust, estate and tax issues.
Below are some important things to consider when planning an estate with intellectual property:
Be specific. The bequest of intellectual properties should specify:
- The person or organization to whom it is bequeathed or transferred;
- The intellectual property conveyed (including, but not
limited to, copyrights — assigned and unassigned);
- The intellectual rights conveyed;
- The scope of the rights conveyed;
- The duration of the rights conveyed;
- Relevant contracts; and
- Finished and unfinished works.
Avoid ambiguous language, which could subject your will or trust to attack.
Failure to bequeath specific property rights will result in these rights passing under the will’s residuary clause, or, if there is no residuary clause, then these rights will pass by intestacy. A residuary clause disposes of any property not disposed of through other bequests. “Intestacy” is dying without having made a valid will or without having disposed of a part of the property by will or alternative estate planning vehicle such as inter vivos trust. State statutes determine how property is passed when a person dies intestate. The court will appoint an administrator to act on all matters concerning your estate, and your next of kin will have legal rights to your estate and its assets as specified by statute.
If you have a will, it should designate one or more executors.
All executors bear equal responsibility for your assets. You should give great thought and consideration to appointing executors and trustees who will serve the best interests of your estate and its beneficiaries. To avoid conflicts of interest, they should not have a financial interest in your estate. Often, a bank and/or someone with business experience are selected for this important role. One named executor should be familiar with your intellectual work and have some expertise or at least familiarity in the entertainment industry. If you do not know such an individual, you may direct your executor to use the services of a paid agent and/or advisor to the executors.
Executors have many important and complex responsibilities.
A preliminary duty is to notify your publishers and licensees that royalties are to be paid to the estate during the period of the estate’s administration. Also, under the Copyright Act of 1976, an author may not dispose of renewal copyrights in her will that arise after her death. The executor may renew them if the author’s spouse and children, if any, are deceased. Many technicalities exist under the Copyright Act regarding the right to terminate transfers and licenses. This right does not pass to executors. It passes upon death to the author’s spouse and children, or if they are deceased, to the author’s grandchildren.
You may direct your executor to publish of some or all of your unpublished works in your will.
An Executor is not liable to your beneficiaries, however, if he fails to find a publisher for your work after exercising due diligence. Additionally, you may restrict certain types of publication and use of your work and/or provide for a period of time to elapse before publication can take place. The Executor’s duty to license the use of the work belonging to the estate consists of the obligation to fairly consider all offers and to grant proper parties a license when it would financially benefit your beneficiaries, unless there is an express prohibition in the will. There is no requirement that your estate grant permission to reproduce your work, however.
Proper administration of your estate will require funds.
If such funds are not available, your Executor may be forced to sell property belonging to the estate. To alleviate this problem, you could set aside sufficient earnings during your lifetime for estate administration, or you could do so through a life insurance policy. You may also consider establishing an inter vivos (“living”) revocable trust. This is a trust created during your lifetime to which you transfer all or part of your assets, intellectual property or otherwise, while you are still alive. During your lifetime, you are the beneficiary. After death, your assets pass to those named as trust beneficiaries. The establishment of an inter vivos trust has one great advantage — the avoidance of probate. The property transferred to the trust may or may not be included in the gross estate, which is the property owned or previously transferred by a decedent that will be subject to the federal and state estate tax. Consulting a tax specialist or your attorney is advised on this issue.
You may consider donating originals, manuscripts, letters and other personal papers to your local library, university or other charitable institutions.
Be advised that each institution maintains its own policies on accepting such donations and should be consulted prior to naming them in your will. Some libraries, such as the New York Public Library, collect manuscripts in discrete subject areas. They cannot possibly accept all that is offered to them. Obtaining this information in advance will ensure that your work finds a secure home that will preserve it for posterity. You must be sure to identify clearly in your will both the works to be donated and the institutions to receive them. Additionally, you must designate whether the institutions are to receive the copyright along with the physical work, or whether another beneficiary will receive it. Copyright is a separate property right in your work apart from the right to own its physical form.
The above comments are intended for use only as a general guide when planning your estate. The law changes frequently and the enclosed information may be outdated or inapplicable in your state; check with your attorney. If you would like to discuss how you may handle your intellectual property rights in your estate, feel free to reach out to Stevie M. Fitzgerald Law.