There is no doubt that wills and trusts are an indispensable part of any estate plan. They are an essential tool for protecting one’s assets and often include tangible assets, such as real estate, automobiles, furniture, and other valuable items, legally referred to as “real” property. But what about assets that aren’t tangible, such as ideas? In short, you can definitely include them in your estate plan, and it is essential that you do so. Accounting for intellectual property helps solidify your estate plan and ensures that all of your assets are disbursed properly when the time comes.
What Exactly Is Intellectual Property?
Simply put, intellectual property is the product of human creativity, or rather, a way for a creator of an idea to rightfully take ownership over the product of his creativity. There are five different types of intellectual property: copyrights, patents, trademarks, trade secrets, and rights of publicity. In this article we will focus on the three most common types: copyrights, patents, and trademarks. These three types of intellectual property help maintain the integrity of people’s inventions and creations by attributing them to their owner. They also help make original creations available to the public while retaining the author’s identity and preventing exploitation of the creation as well as unnecessary competition.
A copyright protects the creative expression of ideas through tangible mediums such as music, art, literature, film, and others. It allows the owner to regulate who can produce, distribute, display, and/or perform the work in question. For works created after January 1, 1978, copyright protection lasts for the remainder of the author’s life plus an additional 70 years, but these terms may vary based on the individual copyright and other criteria. After a copyright expires, the work is said to enter the public domain, where it becomes available for use by the public without requiring permission from the author. It is important to note that a copyright does NOT protect the original fact or idea that the expression is based upon.
If your property is an original creation, it is eligible for patent protection. Owning a patent prevents third parties from manufacturing or selling an invention created by the owner of the patent. The terms of a patent may range depending on the type of patent and item being protected. When a patent expires, it may not be renewed, after which it enters the public domain and may be freely exploited. There are four different types of patents: utility, design, plant, and provisional patents. A utility patent protects the technical idea of the functionality of an object, while a design patent protects the object’s physical appearance. Plant patents protect new kinds of plants produced through conventional means, but generally do not extend to genetically engineered specimens. Provisional patents are useful for inventors who have not yet market-tested their product since they allow up to a year’s time to file a regular non-provisional patent.
Trademarks are usually pictures, words, phrases, logos, or symbols used by companies to identify the source of their products. They protect your name brand by preventing others from using or reproducing it for commercial purposes without your permission. They also help avoid confusion between your business and similar businesses or imitation businesses who may be trying to sell or promote goods or services under your name.
Should My Estate Plan Account for Intellectual Property?
So why is it important to account for intellectual property in an estate plan, and how is it done? Just like other property, intellectual property rights may be gifted during life or transferred to your successors upon death through a will, trust agreement, or other written and/or legal documents. All instructions regarding copyright, patent, and trademark transfers should be provided to your estate’s trustee or executor in writing. Similar to real estate property and cash assets, if your estate plan does not describe what will happen to your intellectual property, it will become part of your residuary estate; any part of your assets that remains after all beneficiaries have received their cut of the assets. If you do not have a trust or will with clear instructions regarding what will happen to your intellectual property upon your death, the rights will likely have to go through probate and it may take years for them to be released. This means the rights may not go to the beneficiary that you intended, and further, may not be managed in a manner that will protect them and maximize their value.
According to the United States Patent and Trademark Office, 5,739,851 total patents were granted worldwide between 1977 and 2015. Approximately 3,000,000 of these were from the United States alone. In fiscal year 2017 (October 1, 2016 to September 30, 2017), trademark filings increased by 12 percent. Without appropriate protection and distribution of intellectual property, many innovative ideas would be lost or abused by others after the death of an inventor or business owner, or perhaps even during their lifetime. Estate planning helps safeguard your assets and ensure the efficient use of your ideas in the future. If you or a loved one currently have ownership of intellectual property rights that you would like to have passed down to your heirs, it is imperative that you consult with a licensed estate planning attorney who can help facilitate the process of making sure your assets end up in good hands after your passing.