Following the post-COVID stimulus hangover in 2022, the bull market has continued to run. One of the key factors was the Federal Reserve’s decision to
Intellectual Property: Estate Planning Considerations
Published Date : May 2, 2017
Intellectual property (IP) is a critical driver of innovation and economic competitiveness. In the last several years, new groundbreaking products and services have been made available to the world markets from right here in Silicon Valley and surrounds: drones, back-lit LED plasma TVs, hybrid and self-driving cars (!), streaming video, smart phones, life-saving pharmaceuticals, medical tools, to name a few. Individuals, closely-held businesses and established companies hold IP rights to game changing inventions. My guess is that many of our readers own such property rights. As these products and services increasingly impact our world, associated intellectual property rights grow increasingly valuable.
Intellectual Property describes “creations of the mind.” They are protected by patents, trademarks and copyrights. Privately held IP rights are intangible assets which require careful, specialized attention as part of their owner’s estate plan. In fact, they may be as or even more important than traditional assets, such as real estate, financial accounts, and personal property. Unless otherwise specifically designated, IP rights will pass pursuant to the general terms of a will or trust to be divided amongst beneficiaries according to general instructions. Instead, earmarking them to be handled and administered by a specific person may be the most appropriate plan.
In a previous article, we explored the concept of appointing a “literary executor” for ongoing management of copyrights and royalties related to artistic and literary works, and associated contracts for authorized use. Similar to these forms of intellectual property rights, your heirs and appointments are best guided by a carefully-worded document specifically addressing any and all IP rights. In the case of patents, an individual must be designated to license them and make maintenance payments. At the death of the owner of a patent, documents must be filed with the US Patent and Trademark Office to record the transfer of it in order to allow the new owner to administer the patent registration and update it through other value-creating work.
Gaining thoughtful counsel on how best to manage and administer privately-owned IP rights is imperative. If carefully structured, the financial benefits of patents, trademarks, and other IP can flow to multiple beneficiaries while the asset can be managed and administered by the candidate most able to oversee and develop them further.
IP rights can be gifted during life or transferred upon death; however, if the rights are needed for on-going business purposes, many IP owners may not be willing to transfer them during their lifetime because they are essential to an ongoing business’s continuity. If the decision is made to transfer such rights during the owner’s lifetime, accurately valuing IP is extremely important due to potential gift tax implications. For 2017, the estate and gift tax exemption permits gifts up to $5.49 million for individuals, and $10.98 million for couples, free of gift taxes. Any excess up to the limit at the date of death can be applied to assets that remain in the decedent’s estate.
Intellectual property rights may be among your most important – and complex – assets. We encourage you to protect the value of your copyrights, trademarks, patents or other IP by working with your IP and estate planning attorneys to ensure these assets are handled optimally.
Articles and Commentary
Information provided in written articles are for informational purposes only and should not be considered investment advice. There is a risk of loss from investments in securities, including the risk of loss of principal. The information contained herein reflects Sand Hill Global Advisors' (“SHGA”) views as of the date of publication. Such views are subject to change at any time without notice due to changes in market or economic conditions and may not necessarily come to pass. SHGA does not provide tax or legal advice. To the extent that any material herein concerns tax or legal matters, such information is not intended to be solely relied upon nor used for the purpose of making tax and/or legal decisions without first seeking independent advice from a tax and/or legal professional. SHGA has obtained the information provided herein from various third party sources believed to be reliable but such information is not guaranteed. Certain links in this site connect to other websites maintained by third parties over whom SHGA has no control. SHGA makes no representations as to the accuracy or any other aspect of information contained in other Web Sites. Any forward looking statements or forecasts are based on assumptions and actual results are expected to vary from any such statements or forecasts. No reliance should be placed on any such statements or forecasts when making any investment decision. SHGA is not responsible for the consequences of any decisions or actions taken as a result of information provided in this presentation and does not warrant or guarantee the accuracy or completeness of this information. No part of this material may be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) redistributed without the prior written consent of SHGA.
Video Presentations
All video presentations discuss certain investment products and/or securities and are being provided for informational purposes only, and should not be considered, and is not, investment, financial planning, tax or legal advice; nor is it a recommendation to buy or sell any securities. Investing in securities involves varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular client’s financial situation or risk tolerance. Past performance is not a guarantee of future returns. Individual performance results will vary. The opinions expressed in the video reflect Sand Hill Global Advisor’s (“SHGA”) or Brenda Vingiello’s (as applicable) views as of the date of the video. Such views are subject to change at any point without notice. Any comments, opinions, or recommendations made by any host or other guest not affiliated with SHGA in this video do not necessarily reflect the views of SHGA, and non-SHGA persons appearing in this video do not fall under the supervisory purview of SHGA. You should not treat any opinion expressed by SHGA or Ms. Vingiello as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of general opinion. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based solely on any information provided on this video. There is a risk of loss from an investment in securities, including the risk of loss of principal. Neither SHGA nor Ms. Vingiello guarantees any specific outcome or profit. Any forward-looking statements or forecasts contained in the video are based on assumptions and actual results may vary from any such statements or forecasts. SHGA or one of its employees may have a position in the securities discussed and may purchase or sell such securities from time to time. Some of the information in this video has been obtained from third party sources. While SHGA believes such third-party information is reliable, SHGA does not guarantee its accuracy, timeliness or completeness. SHGA encourages you to consult with a professional financial advisor prior to making any investment decision.
Other Posts By This Author
- – The Flexibility of the California Uniform Directed Trust Act
- – The Advantages of Exit Planning: Secure Your Legacy and Maximize Your Wealth
- – Include Personal and Financial Planning in the Sale of Your Business
- – Help the First Responders Help You
Related Posts
- – The Flexibility of the California Uniform Directed Trust Act
- – An Optimal Approach to Beneficiary Designations and Your Children
- – Caring for Our Feline and Canine Companions
- – Choosing Your Legacy: Deciphering Per Stirpes Vs. Per Capita in Estate Planning
- – The Advantages of Exit Planning: Secure Your Legacy and Maximize Your Wealth
Recent Posts
