Does Your Estate Plan Protect Your Intellectual Property?
If you own a business, you probably have intellectual property. However, because your intellectual property is intangible, it can be invisible to you and those who aren’t familiar with the nature of intellectual property. For this reason, intellectual property often gets overlooked, especially when it comes to Wills and Trusts planning. Further, if you fail to properly document your intellectual property, your Will and Trust will likely not protect it which could cause your loved ones to miss out on what can be among your most valuable assets.
When we talk about intellectual property, we’re referring to creations of the mind. This includes inventions, literary and artistic works, designs, logos, brand names, and images, all of which are used in the course of a business.
Even if you’ve worked with a lawyer to set up your business or a CPA to file your taxes, those advisors may not be thinking about or helping you plan for what happens to your intangible business assets upon your death. Similarly, most lawyers who focus on Wills and Trusts planning don’t understand the full value of intellectual property and how to protect it.
Along those same lines, when helping you set up your business, most business lawyers aren’t thinking about your incapacity or death. With this in mind, you must understand enough about your intellectual property to ensure that any intellectual property you own is documented, protected, and you’re working with a legal team that helps ensure the value of your intellectual property isn’t lost when you die.
Identifying, Valuing, and Protecting Your Intellectual Property
Your intellectual property could be your most valuable asset. In fact, studies show that 80% of a typical company’s total value consists of intellectual property. Given this, we want to support you and guide you to make the invisible intellectual property visible, enhance its value, protect it properly, and ensure your family receives the maximum value from your intellectual capital when you pass away.
Properly protecting your intellectual property, or IP, begins with identifying and valuing it. Nonetheless, even the biggest of today’s companies often fail in this regard. “Very few companies recognize the value of their IP, nor have they secured an IP strategy that mirrors their long-term corporate strategy in order to maximize this value, ” said Brian Hinman, Chief Innovation Officer at Aon, a leading global professional services firm.
While you might think that identifying, protecting, and valuing your intellectual property is something that only applies to big companies, that’s not the case. Indeed, your intellectual property can be of even greater value to your loved ones once you’re no longer around.
For all of these reasons, it’s imperative that you take the proper steps to not only protect these intangible assets during your lifetime but that you also use Wills and Trusts planning to ensure that your intellectual property is properly handled following your death.
Documentation and Registration
The first step to take in protecting your intellectual property is to formally document it. When you create your asset inventory, be sure to not only list all business entities you own, but also consider that each business entity should maintain a record of its assets which includes intangible assets like intellectual property.
The next step is to legally register trademarks, copyrights and patents with the U.S. Patent and Trademark Office. You also want to ensure you have the proper legal agreements and contracts in place to ensure there’s no question about who owns these works. If you have not already protected your intellectual property with copyrights, trademarks, patents, royalty and licensing agreements, non-competes for employees, and work-for-hire provisions in your existing agreements with independent contractors and vendors, now is the time to do so.
You don’t want to wait until your intellectual property gets 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 them can ultimately cost you far more than that in legal fees or the lost value of your assets trying to fight for what you thought you owned.
Address Your Intellectual Property in Your Estate Plan
In addition to protecting your intellectual property during your lifetime, you don’t want to put your loved ones in the position of losing those assets in the event of your incapacity or death. To prevent your heirs from losing out on your most valuable assets, as well as ensuring they don’t get caught up in long, costly court battles over the ownership of your intellectual property, you should put in the time and energy to protect these assets now.
After you have documented your intellectual property, you should review the operating agreement or bylaws of your business entity. If you don’t have an operating agreement or bylaws, now is the time to put these essential legal agreements in place. Read through your business’ governing documents to see what they say about what happens to your business and its intellectual property upon your death or incapacity.
If you think this all sounds complicated and like a lot of work, imagine how much more difficult it will be for your loved ones to deal with it should something happen to you. In fact, it could prove impossible for your loved ones to handle these matters upon your death or incapacitation. That is why it’s so important for you to take care of these issues now. That way, your family isn’t stuck trying to clean up your mess after your death or incapacitation.
To fully understand just how lengthy, costly, and ugly court battles over intellectual property can be, you should read this account of the troubles American writer John Steinbeck’s children and grandchildren had in dealing with the rights to his literary works following his death. Even though the Nobel Prize-winning author died in 1968, his family members were still fighting over his intangible assets as recently as 2017.
Protect Your Intellectual Property For Future Generations
While you might not be a Steinbeck, you may have valuable intellectual property that has not been properly documented or addressed in your Will and Trust. If that’s the case or even might be the case, you should meet with us, as your Personal Family Lawyer®, right away to discuss how we can support you in documenting, valuing, and protecting these intangible assets so that your loved ones can benefit from these creations for generations to come.
This article is a service of Levi L. Alexander, Personal Family Lawyer®. We do not just draft documents. We help to ensure you make informed and empowered decisions about life and death, for yourself and the people you love. This is why we offer a Family Wealth Planning Session™. During this session, you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by calling our office to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session for free.
