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Your loved one came up with an awesome new invention, used it to launch a business, and went on to earn millions. When he passed away, you expected he’d leave his intellectual property to you. However, other relatives are coming out of the woodwork to lay claim to his hard-won fortune.
Handling an intellectual property estate can be much more complicated than an estate with only tangible property, such as a house and cars. Below, you’ll learn how to resolve intellectual property disputes in probate and how to safeguard your IP before you pass away. And if you’re a resident of the beautiful Natural State, check out our guide to Arkansas probate laws.
What Exactly Is Intellectual Property?
Unlike tangible property, such as a house or TV, intellectual property is intangible. It’s not physical property, but it still has value. Trademarks, copyrights, and trade secrets fall under the intellectual property umbrella. So, too, do artistic works, inventions, brands, business names, and designs.
Other types of intangible assets include:
- Customer lists: A list of customers can be invaluable to business growth, allowing business owners to keep track of their biggest clients.
- Proprietary computer programs: A business that uses a custom-built computer application may classify that program’s code as intellectual property.
- Goodwill: Goodwill includes things such as positive brand recognition, reputation, and customer loyalty.
- Websites and domain names: Established websites and domain names can be worth a fortune. Some domain names sell for thousands of dollars or more.
- Licenses and contracts: A contract that grants a business exclusive rights to markets, technology, or permissions can be classified as intangible property.
Does Intellectual Property Have To Go Through Probate?
Is an intellectual property estate handled any differently than a tangible property estate? Intellectual property may not be physical, but it’s property nonetheless. That means it must usually pass through probate like all other property types.
Note the word “usually.” If the intellectual property holder created a copyright transfer agreement while still alive, the property would pass to the person named in the agreement without going through probate. And if the deceased placed their intellectual property into a trust before death, it wouldn’t go through probate, either. Rather, the trust manager would distribute the property to the deceased’s heirs according to the trust’s terms.
How To Handle Intellectual Property Disputes During the Probate Process
Suppose you and your relatives are arguing over the inheritance rights of your loved one’s intellectual property. This is less than ideal because inheritance disputes can significantly extend the probate process timeline.
Your loved one’s will should clear up disputes over intellectual property. If they had a will, it should spell out how to distribute the property among heirs. The deceased may have chosen to give the property to a single person or split it between several parties.
If the deceased had no will and didn’t take steps to transfer their intellectual property on death, you can try mediation. During mediation, you and other heirs will work with a neutral third party to resolve your disputes.
If you cannot resolve the dispute in mediation, the probate court will decide how to distribute the intellectual property.
Protecting Your Intellectual Property Before You Pass On
If you own an intellectual property estate and don’t want to put your family through stress after your death, there are several ways that you can avoid having your IP go through probate. Which estate planning method to choose depends on whether you have a copyright, patent, or trademark.
A copyright is an exclusive legal right given to the maker of a creative work, such as a novel, song, or movie. You don’t need to do anything special to apply for a copyright, as it exists as soon as a work is created. Copyright-eligible works are protected for 70 years after the creator’s death.
Copyrights transfer automatically to your chosen heirs upon your death. In your will, you can also provide stipulations on how heirs can use your work.
Patents give inventors exclusive rights to their inventions. To control who inherits a patent after you’re gone, you can create an assignment agreement, which allows you to transfer or sell the patent to someone else. You could also transfer the patent to a trust, allowing heirs to bypass probate.
Trademarks refer to brand logos, designs, symbols, words, and phrases that distinguish businesses. Transferring a trademark to an heir is a bit more complicated than transferring a copyright or patent. Your estate representative will need to make the proper trademark assignment; if they don’t, the trademark might not transfer to beneficiaries.
It’s safer for your business to hold the trademark instead of you individually. That’s because the business will keep ownership of the trademark after your passing, so there’s no risk of expiration. Also, businesses don’t pass through probate as personal assets do. The business can hang on to the trademark and continue operating indefinitely when you’re gone (as long as you’ve set up a rock-solid succession plan).
Don’t Wait for Your Inheritance; Apply for Probate Funding Today
Expecting a nice inheritance from your relative’s intellectual property estate? If you can’t wait for probate to settle, consider probate funding. The main benefit of probate funding is that you’ll have access to money now instead of waiting months for the estate to close.
Rockpoint Probate Funding makes the funding process a breeze, and you could have cash in hand in 24 hours or less. It takes just minutes to apply, so complete your application now or call (888) 263-8588 to learn more.
