Patents, copyrights, and trademarks can be highly valuable forms of intellectual property, which means these assets must be properly accounted for in your estate plan.
Patents protect inventions and are most commonly classified as either utility patents or design patents. Utility patents protect inventions for 20 years from the application filing date, while design patents last 15 years from the patent issue date.
Copyrights protect written works, photographs, paintings, sculptures, films, computer software, and other forms of original expression. Copyrights are different from patents because they protect the owner as soon as the work is fixed in a tangible medium. If the work was created in 1978 or later, author-owned copyright lasts for the author's lifetime plus 70 years.
Trademarks are recognizable designs or expressions that identify products or services. Trademarks have no expiration date as long as they continue to be used and renewed.
To include these forms of intellectual property in your estate plan, you'll need to obtain a professional appraisal of the value of your patent, copyright, or trademark. Then, you must decide whether your intellectual property should be transferred through lifetime gifts or through a bequest after your death. This decision should take into account your own income needs, as well as who is best equipped to monitor your intellectual property rights and maximize the income potential of the asset. If intellectual property makes up a significant portion of your estate, you may wish to appoint an executor solely responsible for handling these complex issues.
Even though it's not a tangible asset, intellectual property can be subject to estate taxes. If you feel strongly about keeping your intellectual property in the family, you may want to consider purchasing a life insurance policy owned by an irrevocable life insurance trust (ILIT) to provide cash upon your death that can be used to fulfill any estate tax obligations. This will ensure the long-term financial security of your heirs by preventing them from being forced to sell the rights to your intellectual property to pay the necessary estate taxes.
How Can We Help?
If you own intellectual property, our Pasadena estate planning firm can help ensure that this asset will remain protected. Please call our office at (626) 683-8113 or email us at info@PasadenaLawOffice.com to learn more about how to include intellectual property in your estate plan.