Protecting Intellectual Property in Estate Planning

Estate planning is a powerful tool for transferring wealth from one generation to the next while minimizing taxes and reducing the risk of loss to creditors. A well-rounded estate plan goes beyond cash and real estate to include less commonly considered assets like intellectual property. While authors, small business owners, and inventors often understand the importance of safeguarding their intellectual property, others may not realize they possess assets that could provide a significant income stream for their loved ones after they pass away.

What Is Intellectual Property?

Intellectual property (IP) refers to creations of the mind that have commercial value. There are four primary types of IP, each requiring specific considerations in estate planning: 

1. Patents: Patents protect inventions and grant the creator exclusive rights to produce and sell the invention for a set period. Think of the iPhone by Apple. In estate planning, it’s crucial to determine the current value of patents and who will manage or license them after your death. Without proper planning, these rights could be lost or undervalued.
   
   
2. Copyrights: Copyrights protect creative works like books, music, and films, like the Harry Potter books by JK Rowling. They often provide a long-term income stream, as royalties can continue for decades after the creator’s death. Estate plans should designate beneficiaries for these royalties and outline how the copyrights should be managed.
   
   
3. Trademarks: Trademarks safeguard brand names, logos, and other identifiers of a business. A great example is the Nike Swoosh logo. Trademarks can retain or grow in value over time. An estate plan should specify who will own and maintain the trademarks to ensure they remain active and valuable.
   
   
4. Trade Secrets: Trade secrets include proprietary formulas, processes, or business strategies. The formula for Coca-Cola is a great example of a trade secret. Proper documentation and confidentiality agreements are vital to protect these assets and pass them to the right individuals.



Why Include Intellectual Property in Your Estate Plan?

Failing to account for intellectual property in your estate plan can lead to disputes, lost income, or unintended beneficiaries. At the Smith Law Firm, we create comprehensive estate plans for our clients every day. Start by booking a Peace of Mind Planning Session! We can meet in person or via Zoom. We’ll answer your questions, explain your options, and share our unique flat fees and process for getting started. The session is normally $275; mention this blog and we’ll waive the fee! BOOK HERE!