People who died without a will: Martin Luther King, Jr.

Most of the time when we post a blog on estate planning here on the website for the Law Office of Bryan Fagan, we do so think about property and assets. Those properties and assets usually take the form of physical property you touch like your house or personal belongings or intangible property like stocks and mutual funds. One type of intangible property that is often very valuable and which needs to be accounted for in an estate plan is intellectual property.

When you think about your family’s most valuable assets your mind may immediately go to a collection of some sort, your home, or something else that you can see and touch. However, depending upon your background and specific circumstances it may be that property that you cannot see, or touch is the most valuable item in your entire estate. These are the assets that are not only valuable now but can also increase in value dramatically in the future. An asset like this needs to be protected due to its ability to produce income for your heirs in the future.

When we talk about intellectual property we are speaking about trademarks, copyrights, patents, and trade secrets. Valuing property is a big part of any estate plan. It’s not that you must add up the total value of your estate and list that in a will, but it is a good idea for you to know how much your estate is worth to start figuring out how you want your estate to be divided upon your passing. So, performing a basic inventory of your property and then appraising each item are some of the first steps that most of us will take when we are creating an estate plan.

Unfortunately, valuing intellectual property is not as easy as valuing a stock account. Just like when it comes to valuing a small business, there are different ways to value intellectual property which can be contradictory and confusing. Just as quickly as intellectual property can become valuable, it can just as easily go down in value. Brand names which were popular forty years ago may be less popular and less valuable from a financial standpoint nowadays. The same will be true of brand names and models now as opposed to a couple of generations from now.

All these challenges are why it is important to have an estate plan which takes into your intellectual property. We talk on this blog a lot about how everyone- not just the rich and/or famous- need to have a will. When a famous person dies without a will then we can use that situation as a cautionary tale. One famous person who had a lot to lose in terms of intellectual property was the Rev. Martin Luther King, Jr. Obviously, Rev. King was known for a great deal more than simply not having a will. That does not change that he left no estate plan to deal with his estate after he passed away, however.

What could Rev. King have thought about before his passing which would have made it easier for him to plan his estate? That is what we are going to be discussing in today’s blog post from the Law Office of Bryan Fagan. When we talk about the intellectual property of Rev. King, I have things like his speeches, his image, his likeness, and things of this nature in mind. We see this man’s photographs and images all over these days but does the use of his image mean that his family or something else connected to him will be able to make money off that usage? We are going to discuss what it means to protect your intellectual property in today’s blog post.

What you want matters when it comes to protecting your intellectual property

Protecting intellectual property in an estate plan does not mean that you must do whatever someone else has already done or that you need to place a specific amount of value on your estate. Rather, your personal preferences for how your intellectual property will be treated moving forward matter a great deal. Keep in mind that your intellectual property is more unique than shares of stock or the contributions you made to a 401K. Your intellectual property is something that you created over time. Therefore, you may have a specific way you want to protect that property and account for it. That is what we will be discussing here today.

That intellectual property outlives its creator presents a double-edged sword situation for you. On the one hand, your legacy can be kept intact due to your intellectual property living longer than you can. One of the concerns that some people run into at the end of their lives is that their legacy will be minimal and that they will soon be forgotten after they pass away. Well, if you have created something then that creation can often live on much longer than any of us will be able to. Therefore, how you or I account for that creation and the intellectual property rights attached to it can be very important. Fortunately, it offers us an opportunity to have an impact on those around us for a long time.

On the other hand, one of the negatives associated with intellectual property is that because these assets will outlive you, potentially, that opens you up to some liability in that if the property is not cared for or protected well, then someone else may come along and ruin what we have built up for ourselves and our families as far as a legacy of production as well as a legacy of income and wealth. Could someone come along and co-opt your intellectual property in a way that damages the value of the intellectual property asset? Absolutely. How you protect your intellectual property means a great deal especially if you will not be living to protect it any longer.

What could a relative or heir do to your intellectual property after you have passed away?

There is a range of outcomes that are possible when it comes to what an heir or beneficiary could do to harm your legacy and your intellectual property after you have passed away. Simply doing nothing with it can be harmful. Consider that your intellectual property may be dependent upon getting copyright updated or performing some other duty that keeps a license “current.” However, if someone who gains property rights to an item fails to follow through with a step like this, then that can cause a great deal of problems for your intellectual property.

Otherwise, your intellectual property could be sold or leased in some way to a person or group that you would not have approved of if you were alive. Another business or individual who could stand to take advantage of your intellectual property may make an offer to do something with your property that is harmful to its value. Yes, intellectual property has more than just an inherent dollar value. It has value to our society and world which could stand to improve lives for the better. However, since this is a blog post that focuses on estate planning the part of your intellectual property which we are going to focus our attention on is that of the financial impacts of the property on your family and beneficiaries now and in the future.

How much intellectual property is there in your estate?

Many of you reading this blog post may have intellectual property and you do not even know it. While you still can, the journey of determining how to protect and preserve intellectual property for the benefit of future generations begins with figuring out how much intellectual property you own at this time. This is known as inventorying your property. You should perform an inventory of all your properties before starting the estate planning process. You can hire an experienced estate planning attorney to help you in this endeavor if you are unsure of how to do this.

Patents, copyrights, and trademarks are three types of intellectual property that may make up your estate. Depending upon the types of intellectual property which you own it could be that your estate is made much more valuable due to these items. If you own a patent on an emerging piece of technology, then that patent may represent the lion’s share of value on your estate. While that technology may become obsolete or the patent may run out, for the time being, that patent can be extremely valuable and important to your overall estate planning.

On the other hand, if you have something that you would like to try and patent then you should apply with the U.S. Patent and Trademark Office. That is the governing body when it comes to someone deciding on whether an item can be trademarked or not. Once your patent is issued a number will be assigned to it and it will be classified as either a utility or design patent. You can then decide if you would like to assign your rights to the patent to someone else.

What if you have a process or a method of performing some sort of action in the world of business or production which is kept close to your vest and not shared with anyone else? In the world of intellectual property, we call this a trade secret. These trade secrets are not disclosed to just anyone. Many times a trade secret may not even be known in full even to the employees of a company that owns a trade secret. The formula of Coca-Cola is a legendary trade secret, for example.

If that trade secret were to be made public and was thus no longer a secret, its value would tank. The financial losses associated with that trade secret being made public means that the person or business who owned the trade secret would need to file a lawsuit to try and recoup any financial losses associated with that trade secret being made public. Ultimately, however, no lawsuit in the world can reverse the process of that trade secret being made public. What’s done is done, as they say.

What does this mean for you and your estate if it were to include a trade secret? You need to think long and hard about making a requirement in your will that any beneficiary must sign a nondisclosure agreement as to that trade secret before he or she acquires the property. If you create a clause in the agreement that another person can enforce that confidentiality or nondisclosure provision then you will have taken a large step towards protecting the property now and into the future.

Who owns the property in question?

Sometimes there may be a question of who owns the property that you consider to be yours. When you invent a product, process, or develop a trade secret then you need to make sure that you are the owner of it before you begin your estate plan. Promising a beneficiary an item of intellectual property that you do not own is not exactly a great thing to do. Even if you were the originator of the product that does not necessarily mean that you also are the one who owns the item. This is especially true if you invented the product with someone else.

Whatever percentage of a type of intellectual property that you own should be specified in the will. The last thing you want to do is promise a beneficiary something when you can only promise him or her a percentage of that item. If you have a question about this then it is wise to consider the counsel of an experienced estate planning attorney, such as those with the Law Office of Bryan Fagan. We can help you create a will or other estate planning instrument which takes into consideration percentage ownership shares of a piece of intellectual property.

Depending upon the invention, what you created may belong to your employer rather than to you as an individual. This is something worth reviewing and may be contained in your employment contract or other document which you signed at the beginning of your period of employment. For example, let’s say that you are an engineer who has worked for a major technology company over an extended period. That you contributed to the creation of several patents does not mean that you have or right to any of those patents in terms of ownership. Rather, the company that you work for likely owns the rights to those patents. Therefore, you could not promise those patents to another person in your will as if you had owned them.

How to preserve the value of intellectual property in your will

There are certain methods and practices which you can choose to implement in your estate plan when it comes to the value of intellectual property assets. As the creator of your estate plan, you need to be the one who ensures that any beneficiaries continue the intellectual property under relevant state and federal law. As we touched on earlier in today’s blog post, patent owners need to pay to maintain and renew the patent. If maintenance and renewal fees are not paid, then the protections offered by the patent will lapse and there will be no enforceable patent rights. What you can do for a beneficiary under your will is to specify any information he or she may need to maintain patent rights. Deadlines to file renewal fees, or even simply stating the expiration date for a particular patent can be extremely helpful.

On the other hand, if you are someone who will be inheriting patent rights as a beneficiary then you need to be sure that you ask the executor of an estate if anything additional needs to be done with the Patent Office other than paying the maintenance fees previously discussed in this blog post. You may need to consult with an intellectual property attorney to discover what responsibilities you have as a new owner of a patent.

As you can see, planning your estate around intellectual property is not simple. Whether you are a famous person like Martin Luther King, Jr. or someone who just wants to create an estate plan that is beneficial for their family, having the advice and perspective of an experienced estate planning attorney can be crucial to achieving your goals. We hope that you will consider the Law Office of Bryan Fagan when you are planning your estate and preparing for the future.

Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan

If you have any questions about the material contained in today’s blog post, please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed estate planning attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way for you to learn more about the world of estate planning law as well as about how your family’s circumstances may be impacted by the filing of a probate case.

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