{Read in 3 minutes} Things that have value don’t always need to be items that show as simple dollars and cents on paper like bank accounts or brokerage accounts, or even assets like real property or a valuable piece of jewelry. Many people are creative and have composed works that constitute intellectual property. This may include:
– An author’s copyrights;
– A designer’s design;
– An artist’s artwork; or
– An inventor’s patents.
These types of assets may be a source of income to a person during their lifetime, and may continue to produce income well beyond the person’s death. The Estates of many long-deceased celebrities still produce income from creative work and use of the deceased’s name and likeness to this day.
I am not a creative person, but creative people should talk to about these issues when they are creating their estate plan. Why? It’s important to know who is going to inherit this property along with all the others when they die and the Surrogate’s Court admits their Will to probate.
Who will receive these future income streams? Whether we are talking about pennies or thousands of dollars a month, it is an ongoing interest that needs to be addressed.
Also, sometimes there are people who own these interests and may be receiving little to no income from them, or perhaps their income stream has diminished greatly as time has passed since the work in question was created. One of the issues that will come up is when someone wishes to reproduce or use that now deceased person’s work — use their published text or use their design. Someone needs to grant permission to do this. It might be the Executor of the Estate or it might be the person to whom the client directly leaves this asset.
Finally, Executors and Administrators must deal with special issues when keeping track of and accounting for estate assets. The ongoing receipt of income will likely generate additional income tax liability for the Estate that may pass out to the beneficiaries. The Executor or Administrator must use diligence to identify such property — work that is not presently producing royalties may be harder to find if it is not producing annual tax notices. Once identified, the Executor or Administrator should get in touch with the royalties administrator to discuss whom should receive ongoing payments upon the conclusion of the Estate administration — this will likely go to the beneficiary him- or herself.
For more information on this topic, please contact me.