Estate planning is a complex process, even if you consider your estate to be relatively simple and straightforward. Most people will start by focusing on tangible assets like money, property, and other physical investments, but it’s incredibly important that intellectual property is not forgotten.
Recognising the true value of intellectual property is so important to ensuring that your wealth and achievements are passed on to the next generation.
What should you consider intellectual property?
Intellectual property law is very broad, and it covers a multitude of different forms of IP including trademarks, patents, trade secrets, and copyrights. IP doesn’t necessarily have to be legally registered as such, but doing so does mean it is much easier for you to prove you own it – and that others don’t have a right to copy or use it.
So, if you’ve properly registered your IP, cataloguing these assets along with the rest of your estate should feel relatively simple and straightforward.
But it’s important to remember that simply cataloguing your IP isn’t enough. As with a house, an investment, or any other asset, acknowledging it and including it within your overall estate valuation is so important. A will that fails to account for every noteworthy asset that comprises your estate leaves the door open for prolonged feuds within the family. If you’ve ever had to consult a solicitor about contesting a will, then you will know the challenges posed by a poorly drafted will.
How do you value IP?
It’s not as straightforward as valuing some of the more obvious assets that comprise your estate. After all, intellectual property doesn’t come with an observable market value. Even if you’re planning on passing all your IP onto one beneficiary (and don’t need to quantify a value to split evenly between multiple beneficiaries), you will need to know the value of your IP for tax purposes.
Inheritance tax – whether your estate will be liable, and how much will need to be paid – depends on the total value of your estate, and IP is a part of that total value.
You will also want to understand potential revenue streams through licensing agreements or royalties, for instance.
For this, you’ll want to make sure you’re speaking to a solicitor with a specialised understanding of intellectual property law. Making sure that the process of passing IP onto beneficiaries is optimised takes a great deal of experience, so don’t attempt to handle this on your own.
What does the beneficiary need to know?
Acquiring IP is not comparable to acquiring a sum of money or a physical asset like property. The beneficiary will, in all likelihood, need to be well-versed in the nature of the IP they are receiving. As with passing on ownership of a business, this is a matter of succession, rather than straightforward inheritance.
As a result, some degree of strategic planning is required. What this strategy entails depends entirely on the nature of the IP in question – whether it represents a primary source of income or something that will only require periodic reviews.
Again, this is a matter worth discussing in detail with your solicitor. When intellectual property law combines with inheritance law, things can start to feel very complex – or, by contrast, oversimplified. Don’t make the mistake of assuming it’s as simple as changing the name at the top of the copyright.