You don’t have to own a large company to own intellectual property. If your business creates inventions, written and artistic works, designs, logos, brand names, and images, you almost certainly have intellectual property. However, because intellectual property is intangible, it’s often overlooked in your business’s succession plan and your own personal estate plan.
Even if you’ve worked with a lawyer to set up your business entity or a CPA to file your taxes, those professionals may not be thinking about what happens to your intangible business assets upon your death. Many lawyers who focus on estate planning don’t really understand the value of intellectual property and how to protect it. We do, and now so will you.
Even if your business’s intellectual property doesn’t seem that valuable to you right now, it may be worth far more than you realize, and possibly even more when you die or if you become incapacitated. It may also hold significant sentimental and monetary value for the people who love you, and without properly planning for these works in your succession plan and estate plan, your family could lose these valuable assets forever.
It’s essential that you take the proper steps to not only protect these intangible assets during your lifetime but also ensure that your business’s intellectual property is properly handled following your death. That way, the monetary and human value of your intellectual property isn’t lost forever when you die.
While you might think that identifying, protecting, and valuing your business’s intellectual property is something that only applies to big companies, that’s definitely not the case. Your intellectual property may have more monetary value than you realize and could be of even greater value to your loved ones after you’ve died.
The first step to take in protecting your business’s intellectual property is to formally document it in an inventory of assets that describes what the asset is, where it’s located, and how to access it if it’s a digital or intangible item. This is something I help all of my clients create to ensure that no asset, whether tangible or intangible, is left out of their estate plan.
The next step is to consider if any of your intellectual property should be legally registered in the form of trademarks, copyrights, and patents with the U.S. Patent and Trademark Office. Original works are automatically copyrighted when they are created, but without legally registering the copyrights, it can be difficult to prove and enforce the copyright if someone steals your business’s work and presents it as their own. If your company is lending, renting, licensing or selling anything you’ve created to a third party, it’s also important to have the proper legal agreements and contracts in place to ensure there’s no question about who owns the material.
Likewise, if your business doesn’t have royalty and licensing agreements for products that are lent out to other companies, non-compete agreements for employees, or work-for-hire provisions in your agreements with independent contractors and vendors, now is the time to do so.
Don’t wait until your business’s 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 your business’s original works can cost you far more than that in legal fees or the lost value of those business assets, especially if your company or your family end up in court trying to fight for what you created.
In addition to protecting your business’s intellectual property during your lifetime, it’s equally important to plan for what will happen to these assets at your incapacity or death and to protect your heirs from a potentially long and costly court battle over the ownership of your company’s intangible assets.
The most important thing is to make sure that your business successor or family can locate and access your company’s intellectual property after you’re gone. Otherwise, it could be lost forever.
Once you have created an inventory of your assets, you must make sure your successors and family know how to find your inventory so that if you die or become incapacitated they can easily locate and access your company’s assets. Your inventory should also include how each asset is accounted for in your succession plan and whether you share ownership of any intellectual property with another person or company.
To make sure all of your business assets are planned for in the right way, it’s imperative to meet with an attorney who has the experience and knowledge to plan for your company’s intellectual property and protect any future income the property may generate for your business and your loved ones.
Your attorney should help you plan for each asset, how it will be managed in the company, how its value will be distributed upon the company’s sale, and how income generated from its use will be dispersed or invested, all while avoiding the need for a long and costly probate proceeding.
If you think this all sounds overly complicated, imagine how much more difficult it will be for your loved ones or business partners to deal with it should something happen to you. In fact, it could prove impossible for them to handle these matters in your absence, which is why it’s so important for you and your legal team to take care of these issues now. That way, your family isn’t stuck trying to clean up your mess after your death.
Even if your company isn’t on the Forbes 500 list (yet), you very well may have valuable intellectual property, and chances are that property has not been adequately documented or accounted for in your business succession plan and your personal estate plan. Besides monetary value, your company’s intellectual property reflects your heart, soul, and personality and may have the ability to provide for your family for years to come.
To make sure all of your assets are protected and planned for, including your business’s intellectual assets, give us a call. As a Personal Family Lawyer® firm with a business planning focus, we offer expertise in documenting, valuing, and protecting your intangible assets so your loved ones can benefit from these creations for generations to come.