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Legacies of the mind: intellectual property and estate planning

Did you come up with the logo, symbol or slogan for your company? Do you create computer code or designs dwellings? Are you an inventor, a choreographer or a writer? If so, you are probably aware that you own intellectual property and that you can protect your rights to its exclusive use by registering it with the United States Patent and Trademark Office.

So far, so good. But here’s my question as a tax attorney: Are you also aware that creations of the mind, whether they pay royalties or not, are as much of an asset as real estate, stock holdings and bonds are? That they should be part of your estate plan in the same way?

Intellectual property rights — some of them could still be valuable or even have appreciated long after you have died — can be passed on to heirs in the same way as any other personal property: via a will or a trust or, in the absence of both, intestate. And like tangible assets you can transfer them during your lifetime or after your death, with varying tax implications. Whichever route you take, you should keep in mind the lifespan of intellectual property: Patents stay valid for up to 20 years before they become part of the public domain; copyrights expire 70 years after the original copyright holder dies. Of all the intellectual property rights, trademarks and trade secrets last longest. Provided they are renewed regularly and remain in use, they stay valid indefinitely.

To include intellectual property in your estate plan, you will first want to locate and catalog it. Then, if you haven’t done so already, you should think about registering your creations with a government office. (By the way, pursuant to the Berne Convention, copyright is automatic. This means you do not have to register an original piece of work with the United States Copyright Office to claim protection under the law, though a registration will serve as evidence in a legal dispute.) As a third step you should ask an independent expert to assess the market value and the income value of your intellectual property rights. Depending on the worth of your intangible assets and the potential tax liabilities that come with the different forms of transfer, your attorney will then advise you on how to best include these legacies of the mind in your estate plan.

by Kevin J. Moore