03 Oct Why Intellectual Property Should Be Part of Your Estate Plan
Before turning to estate planning, I litigated patents in the Silicon Valley for almost a decade. I had a front row seat and, to some degree, played the game of raising companies like Facebook, Apple and Amazon into the economic pillars that they are today.
I can tell you that these empires are all built on intellectual property (“IP”), i.e., ideas concretized into a form that can be traded. Everything from the code behind your Facebook Friend Suggestions to the distribution systems driving Amazon Prime Delivery are IP, and it’s this property – not the actual iPhones or Amazon’s warehouses – that comprise the real value of these companies.
Based on my experience, I confidently predict that intellectual property will be worth more than real property – i.e., real estate – in one to two generations. In a world where 10 developers could create an app that sells for $1B (Instagram) and social media influencers garner 8- and 9-figure salaries, you better believe it’s going to pay to lock down your own IP.
You don’t have to be a famous producer or household name to own IP. If you create art or music, own a business, write a blog, post regularly to social media, or build gadgets in your garage at night, you have intellectual property. And even if that IP isn’t valued like Instagram, it’s still worth a great deal to your loved ones.
However, because IP is often intangible, it’s overlooked in estate planning. Many estate planning lawyers don’t really understand the value of intellectual property, or how to protect it. We do, and now so will you.
Safeguard Your IP During Life
The first step to take in protecting your intellectual property is to formally document it. If it’s an idea, write it down and date the document. It it’s music, record it. For social media accounts, make sure your username and password are recorded somewhere. You get the idea: create a record of the IP’s existence.
The next step is to consider if any of your IP should be legally registered in the form of trademarks, copyrights, or patents with the U.S. Patent and Trademark Office. The considerations here include whether your IP has value in the marketplace and the significance placed on original authorship of that work. Certainly, if you’re deriving any income from the production or distribution of your IP – for example, generating sales for your business from your YouTube videos – you should at least have the proper documentation and legal agreements in place to ensure that there’s no question about who owns the material.
Don’t wait until your intellectual property is stolen or you receive a cease-and-desist letter to put these protections in place. Registering a trademark or copyright might cost you time and money, but failing to register your original works can cost you far more than that in legal fees or the lost value of your assets, especially if your family ends up in court trying to fight for what you’ve created.
Protect Your IP for Future Generations
In addition to protecting your intellectual property during your lifetime, it’s equally important to plan for what will happen to these assets at your incapacity or death. In the absence of an estate plan that includes planning for your IP, your heirs could wind up in a potentially long and costly court battle over the ownership of your intangible assets, or lose them altogether.
The most important thing is to make sure that your family can locate and access your IP after you’re gone. An accounting of your IP should be included in any inventory of your assets.
Once you’ve created an inventory of your assets that includes your IP, you’ll need to document how you wish to appoint these assets after your death. Provisions should be made in a will or trust to make sure your wishes are executed once you are no longer here to safeguard your IP yourself.
It’s important to meet with an estate planning attorney who has the experience with planning for intellectual property in order to protect any future income the property may generate for your loved ones. Ideally, an attorney should help you plan for each asset, who will inherit it, how its value will be distributed, and how income generated from it will be used. Jane Legal can help you with all of this.
If you think this all sounds overly complicated, imagine how much more difficult it will be for your loved ones to deal with it all should something happen to you. In fact, it could prove impossible for them to even access your IP in your absence, which is why it’s so important for you to take care of these matters now.
Planning for All of Your Assets, In the Best WayTo make sure all of your assets are protected and planned for, including your intellectual assets, give us a call. Jane Legal offers expertise in documenting, valuing, and protecting your IP in a way that ensures your loved ones can benefit from these creations for generations to come.
Schedule a free 15-minute call with me to learn more.
This article is a service of Jane Legal PC. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a free Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been and make all the best choices for your chosen family. Begin the process by scheduling a free 15 minute discovery call today.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such services should be obtained separately from this educational material