Inheriting ‘intangible’ assets

What to know about intangible assets and intellectual property

• Intangible assets most commonly take the form of intellectual property, but can also be things like land easements, water rights, or succession rights.

• Intellectual property includes anything that can be legally protected that your loved one created through intellect or creativity.

• Through copyrights, patents, and trademarks, their life’s work lives on: everything from works of art to inventions, trade secrets, software, and more.

• Legal help is highly advised in assessing intangible assets, transferring them, and managing the revenue they may produce for the estate in the future.

When dealing with an estate and its beneficiaries, the assets that are easiest to imagine are the ones you can see and touch: a house, cars, art, or jewelry. These are known as tangible assets.

While you can’t see or touch intangible assets—so named because they do not exist physically or materially—they can make up a substantial part of an estate’s value, especially if your loved one was an innovator in their field.

Defined as assets that are not physical in nature but instead represent something else of value, they may take the form of things like succession rights or land easements—but intellectual property is the most common type. This includes published or unpublished works of art, as well as inventions, discoveries, trade secrets, software, and domain names.

Because copyrights, patents, and trademarks live on after we die, they can be passed down to individuals or can be part of an estate managed by heirs. If managed well, these assets can be a source of income for years to come.

Like a family business, intellectual property can maintain and grow its value over time. So familiarizing yourself with this area of law—and, ideally, seeking the advice of an attorney who specializes in intellectual property—will make it easier to carry on your loved one’s legacy.

Copyrights

Copyrights protect “original works of authorship,” including written works like novels, screenplays, and poems; songs; artwork; photography; software; sound recordings; and films.

The author has a copyright as soon as the work is created, and a copyright gives you the right to make and distribute copies of the original work, perform and display the work, and create derivative works based on it.

Posthumous publication of their work can continue long after your loved one dies. In fact, with prominent authors, a literary executor is often appointed in addition to an estate executor, to specifically deal with publishing rights and income from the author’s body of work.

Patents

Patents apply to inventions, and they are regulated by the U.S. Patent and Trademark Office (USPTO). Most patents are "utility patents" because they relate to the functional aspects of a product, but the USPTO also issues design patents and plant patents, related to industrial design, architecture, and engineering.

Trademarks

If your loved one was a business owner, they may have registered trademarks for their business name, logo, or product names. Even if your trademarks have not been federally registered, you may still have state or common law trademark rights.

Other types of intangible assets

In addition to intellectual property, intangible assets can come in the form of succession rights (in the form of rent-controlled apartments, for example), land easements, water rights, timber rights, and more.

Transfer of land use rights can be complicated if your loved one had informal agreements with their neighbors that were not written down—an especially common occurrence in rural areas. If that is the case, seek out a real estate lawyer for advice on your options.

Determining whether they can still be inherited 

If your loved one had a will that includes intellectual property, the first thing the executor will need to decide is whether the copyrights, patents, trademarks, and the like have expired or will live on and be passed on to beneficiaries.

Copyrights usually last for 70 years after the author’s death, for works created after January 1, 1978 (older works have different expiration dates). Patents last 20 years, and design patents last 14. And a registered trademark can last indefinitely, as long as you renew its registration every 10 years.

It is highly advised to contact an intellectual property attorney or an estate attorney experienced in handling intellectual property to help you with this decision and with any other issues that may arise regarding this property, including its valuation for probate and federal estate tax purposes.

In addition, the estate may require oversight to make sure royalties are properly paid and that filings to the U.S. Patent and Trademark Office and others are done in a timely way—responsibilities that can be time-consuming.

Assessing their value

The value of your loved one’s intangible assets will need to be assessed for the probate process, just like their tangible assets. Determining some of those valuations can be a difficult job.

Trade secrets, to name just one example, can be an extremely valuable part of an estate. But to determine their value you’ll need to calculate the costs of maintaining the secret, estimate how long it will take competitors to catch up with a similar product, and factor in a number of other financial and economic variables.

Legal and financial experts are crucial to help guide you through these valuations—not to mention an estimate of the additional taxes that inheriting intellectual property can trigger. (Your loved one may have addressed this issue with a tax strategy in their estate planning, but even so, an attorney experienced with intellectual property can help you identify and work through any tax issues that may arise.)

When there is no will

If your loved one did not leave a will, intangible assets will be distributed according to intestate succession laws, like all other assets. Intestate succession may produce results that you do not expect or intend.

Depending on the state your loved one lived in, the results can be quite different. For example, a surviving spouse usually gets the largest share of assets, but in many states, portions are allotted to surviving parents and children as well.

Transferring intangible assets

If your loved one did extensive estate planning, they may have put their intangible assets in a living trust, so that the assets could be transferred without going through probate.

Whether you are inheriting by will, by trust, or through intestate succession, taking possession involves a bit of paperwork.

For copyrights, patents, and trademarks, you’ll need to register as the new rights holder. Check the websites of the federal agencies that oversee the types of asset you are inheriting—such as the U.S. Copyright Office or the U.S. Patent and Trademark Office (USPTO)—since each will have its own processes and requirements for transferring ownership.

For other types of intangible assets, check with your estate lawyer to make sure you’ve registered with the city, county, or state agencies overseeing the assets you have inherited, particularly easements and succession rights.

Whatever form intangible assets take, they are an inheritance that holds special value. Not only do they represent different ways that your loved one left their mark on the world, they offer you the opportunity to help them live on through their creations.

You may be eligible for free bereavement support. Empathy can help with everything from funeral planning to estate administration, with step-by-step guidance and real-time expert support. Many people get free premium access to Empathy as a benefit with their life insurance claim. We partner with New York Life, Guardian Life Insurance Company, Bestow, Lemonade, and other leading carriers. When you make your life insurance claim, talk to your representative about whether Empathy is a benefit they offer.