IP rights and inheritance
More and more people are acquiring intellectual property rights, whether in the form of copyright, patents or trademarks and the associated moral rights, and often these have significant value after we have died. Indeed, Stieg Larsson’s most successful works (the Millenium series, including the Girl with the Dragon Tattoo) were published only after he died.
So, who inherits any royalties and who controls the way in which your reputation and intellectual property rights are exploited?
If a company owns the rights, they form part of the assets of the company and so belong to the shareholders.
However, if you are the sole shareholder or if you own the rights personally then you decide who inherits and controls these. You should therefore consider the terms of your Will carefully and structure the legacy appropriately.
To start with, you should keep a log – detailing what you have done, when and why, and how you intend to continue protecting and exploiting the value of your rights.
From a tax perspective, there may be advantages in including a specific legacy of your rights in your Will as this may help secure business property relief from inheritance tax.
Secondly, who do you want to inherit these rights after you have died? Depending on the nature of your rights, income may be received over a long period. If you leave the rights to someone outright, on their later death the future income will pass to the beneficiaries named in their Will. This may not be what you want to happen. Instead, you can specify in your Will who inherits in this situation.
It is sensible to limit the number of beneficiaries who will share the income. Otherwise, there will be increased administration which can become burdensome and over time the number of beneficiaries may increase even further.
If the income is likely to vary significantly from year to year, then you might want to provide your executors with the flexibility to decide each year how to allocate income between different members of your family in order to make full use of numerous annual tax allowances and lower rates of income tax.
Thirdly, who should administer this part of your estate? We would encourage you to choose one or more executors who have expertise in exploiting the value of intellectual property rights. They can be different from the executors of your remaining estate, who may struggle to cope with administering assets as complex as these.
By appointing special executors, you can also take steps to control the ownership of these rights ‘from the grave’, i.e. to protect the way in which your works are presented.
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