For professionals who create or own intellectual property (IP), including inventors, artists, developers, athletes, or entrepreneurs, estate planning takes on added importance and complexity. Intellectual property can be a person’s most valuable asset, yet it is often overlooked or poorly documented in estate plans.
Why Estate Planning for Intellectual Property Matters
Traditional estate plans typically include a will, financial and medical powers of attorney, and often one or more trusts. However, owners of IP assets face additional considerations. Intellectual property assets, including patents, copyrights, trademarks, and trade secrets, often have legal protections or restrictions and may generate ongoing income through royalties. Additionally, most forms of IP require continuing maintenance that must be timely satisfied.
Without careful planning, IP rights may become difficult to transfer, become the subject of disputes, lose value, or even be abandoned entirely. Incorporating IP management into your estate plan ensures your creative and economic legacy is protected.
Steps to Include Intellectual Property in Your Estate Plan
To plan for IP assets, start by confirming that all intellectual property is registered and ownership accurately recorded, so the legal owner is clearly identified. In the United States, this typically means registration with the U.S. Patent and Trademark Office (USPTO) or the U.S. Copyright Office. Next, list and describe your IP assets in your estate planning documents to ensure they can be transferred, licensed, or maintained appropriately.
Coordinate your estate plan with any existing IP contracts, licensing agreements, and ownership documentation. For example, IP held through a business or subject to employment-related restrictions may have transferability limitations that need to be addressed.
Managing IP Assets and Future Income
A well-structured estate plan clearly states who will inherit your intellectual property, who will manage it, and what authority each stakeholder will have. For creators or business owners with ongoing revenue from IP, such as books, software, designs, or patents, it is essential to decide how to handle that income stream.
Work with your attorney to determine whether the rights and revenue will pass to one or more beneficiaries, be sold, be transferred to a business partner, or be managed by a corporate entity. The management rights and the rights to revenue are distinct interests that do not necessarily need to be transferred to the same people or entities, and it often makes sense to separate them for estate planning purposes.
Using Trusts to Protect and Manage Intellectual Property
In many cases, creating a trust to hold and administer your IP may offer added flexibility, privacy, and continuity. A trust can help ensure professional management of your intellectual property, providing your beneficiaries with the financial benefits of IP ownership without giving them legal control over decisions.
It is essential to name a trustee with the specialized knowledge and experience needed to license your work, collect royalties, and enforce your rights. For valuable IP portfolios, certain trusts can also improve estate and gift tax efficiency.
Preserve and Protect Your Creative Legacy
Thoughtful estate planning for intellectual property ensures that your creative work and its financial value are preserved, protected, and aligned with your long-term goals.
For guidance on managing and transferring IP assets, contact your Varnum attorney or a member of our Estate Planning or Intellectual Property Practice Teams.
