If you are a musician, writer, artist, or other content creator, you probably already know there are numerous legal issues surrounding your intellectual property rights. You may have read about copyrights, licensing, royalties, and the like. But do you know what happens to your intellectual property when you die? More importantly, do you know that you can proactively decide what happens to it?
Can a Will Proactively Protect Your Intellectual Property?
Upon the death of any individual, that person leaves behind an estate, comprising all of the personal and real property owned by the decedent at the time of his or her death. Such property may include jewelry, firearms, family heirlooms, bank accounts, retirement accounts, houses, vehicles, stocks, and even entire businesses–anything titled in or owned by the decedent personally. As you can imagine, each individual estate is unique. Moreover, authors, developers, fine artists, songwriters, music producers, and other content creators may also leave behind valuable intellectual property, such as books, films, video games, musical recordings and writings, etc.
To direct what happens to property upon death, it is recommended to have some kind of planned, testamentary document, such as a last will and testament, which will nominate a personal representative (sometimes called an executor or executrix) to administer your estate according to your wishes. Even if you die without a will (referred to as dying “intestate”), state law will provide what happens to estate property–usually dividing it up among your heirs, subject to debts of the estate and other restrictions. Either way, the property will transfer to others, be it beneficiaries, creditors, or tax collectors.
What Is a Literary Trust and Should You Consider It?
Particular assets may be more complicated. Royalty-generating intellectual property, for example, may require more advanced estate planning to account for the continued income from the property and the value of the copyrights. One method to account for this complexity is to establish a separate legal testamentary entity–a trust–to administer those assets for the benefit of particular beneficiaries. The trust is designed to outlive the content creator and continue holding the property. In the intellectual property context, this may be sometimes referred to as a literary trust, but generally operates under the same basic principles as any other trust.
Trusts can have a number of advantages over wills beyond the details of the ongoing management of trust assets. For example, in many cases, the property left behind in an estate will be enumerated in a court proceeding (called a “probate”) upon death. However, if the assets have already been transferred to a trust, the number and value of the assets, as well as the named beneficiaries, may remain private.
Management of the trust is conducted by a trustee. The trustee will usually be appointed in advance by the owner in the trust document. The trustee may be a friend, colleague, or even a professional fiduciary with experience managing trusts. Typically, the content creator will be the initial trustee during the content creator’s lifetime, with a successor trustee to step in upon death. The trust document will also identify the beneficiaries of the trust, which may be the legal heirs of the decedent, and how the assets or revenue streams from those assets are to be provided to the beneficiaries. The details of such profit or asset allocations may be very customized; each trust is unique.
Once the trust is created and the ownership of the copyright is transferred to the trust, the trustee is empowered with alienation of those assets. In the example of intellectual property, those powers may include holding the intellectual property, negotiating publishing deals, working with other artists or creators to share copyrights, filing copyright infringement lawsuits against those attempting to unlawfully copy the intellectual property, and generally acting with such power as if the content creator were still alive. However, the trustee who manages the trust will be responsible for making sure the trust document is followed carefully, especially with regard to beneficiaries’ rights. The objective of the trust is to protect and maximize the value of trust assets for as long as the trust requires and the assets exist. The length of the trust may depend on the circumstances, but may go on for decades, managing royalties from intellectual property, paying taxes, and distributing profits to beneficiaries.
Depending on the complexity of the trust, the trustee may be paid for managing the trust. Additionally, certain vendors and contractors, such as attorneys or accountants hired by the trustee, will likely be paid out of the trust. Trustees should be careful to avoid engaging in any behavior that might interfere with the rights of the beneficiaries, as specified in the trust document. Failure to properly execute fiduciary duties to the beneficiaries may result in the beneficiaries suing the trustee for mismanagement. For this reason, it is important to appoint a trustee (and successor trustees) who are responsible, communicative, and detail oriented.
Incapacity Planning Is an Essential
Aside from wills or trusts, all good estate plans should consider not only what happens at death, but also what happens in the event of medical or legal incapacity during one’s lifetime. For that reason, powers of attorney can be helpful instruments to provide for third-party management of property during life in the event of a brain injury or other catastrophic event. Powers of attorney can be drafted with broad or narrow powers and can be created to account for management of intellectual property as well. Additionally, the appointment of a successor trustee can be drafted in such a way that the powers of the trust can revert to someone else in the event of incapacity. But these plans must be put in place before the person is rendered incapacitated.
Our Estate Planning Attorneys Can Help You!
Whether you need a simple last will and testament or a complex literary trust, Navigate Law Group can help you with your estate planning needs. As the old saying goes, “An ounce of prevention is worth a pound of cure,” so contact us today to protect your hard-earned assets and provide for your loved ones.
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Every legal issue is very unique. Accordingly, the information in this blog is intended as general education material and not as legal advice. If you think you may have a legal issue, you should consult an attorney.