When people think about estate planning, they usually start with the obvious questions: Who will inherit my investment accounts? What happens to the house? How should life insurance proceeds be handled? These are essential considerations, but they’re not the whole picture.
What often gets overlooked are the assets you can’t see or hold. A business name you’ve built over decades. A photographer’s body of work. A patented process, a logo, or even the commercial value of your name and reputation. These are all forms of intellectual property (IP), and in many cases, they can hold value, similar to traditional financial assets.
Intellectual property generally falls into four main categories:
- Copyrights
- Trademarks and trade secrets
- Patents
- Rights of publicity, including name, image, and likeness (NIL)
Copyrights and estate planning
A copyright is a bundle of rights associated with an original work created by a human author and fixed in a tangible medium. This is most commonly seen with creative works such as music, books, and photography. Although copyright protection exists automatically upon creation, registration with the U.S. Copyright Office provides additional enforcement rights.
Trademarks and trade secrets in estate planning
Trademarks include words, symbols, phrases, logos, or other elements that identify and distinguish the source of goods or services in commerce (like the Nike swoosh or Target bullseye). In the U.S., trademarks may be registered with the U.S. Patent and Trademark Office.
Trade secrets are related to trademarks but are treated differently under the law. Specifically, trade secrets are not registered. This information is non-public and is subject to reasonable efforts to keep it confidential to maintain a competitive advantage. Well-known examples include:
- Coca-Cola – Perhaps the most famous trade secret. The exact recipe has never been patented and is allegedly known to only a small number of executives.
- KFC’s “11 herbs and spices” – The precise blend is kept secret and not disclosed publicly, even though similar recipes exist.
- McDonald’s Big Mac “special sauce” recipe – While copycat recipes circulate, the exact formulation and process are proprietary.
Patents and estate planning
Patents are among the most highly regulated forms of intellectual property. A patent is a grant of property rights to an inventor that prevents others from making, using, selling, offering for sale, or importing an invention into the U.S. Patents must be registered with the U.S. Patent and Trademark Office.
NIL rights and estate planning
In addition, individuals may hold rights related to their voice, signature, distinctive appearance, or other personal attributes. These rights are commonly associated with creatives, entrepreneurs, and public figures and may include endorsements and sponsorships, merchandising and licensing, and more.
| For more information about estate planning for creative professionals, read our article. |
Any of these types of intellectual property may have monetary value because they can generate income. A creator may earn income through direct use (using a trademark to distinguish products in the marketplace), defensive usage (pursuing claims against unauthorized use of a patented invention), or licensing (receiving fees for the use of copyrighted images). Importantly, this income can continue after the owner’s death. As such, it is essential to ensure that appropriate planning steps are in place so heirs can continue to benefit from these assets.
The importance of an estate planning attorney
Estate planning for intellectual property should be handled by an experienced estate planning attorney who understands the nuances of these assets. For example, many intellectual property rights require ongoing maintenance to avoid expiration. A knowledgeable attorney can address these requirements within an estate plan to help preserve the asset’s value and income potential.
In some cases, holding intellectual property in a trust or business entity may help maintain continuity after death. This approach can improve organization, ensure competent management, provide asset protection, and allow beneficiaries to share in the benefits without dividing the underlying asset.
Avoiding probate through intellectual property estate planning
Many intellectual property owners are unaware that transferring a physical item does not automatically transfer the associated intellectual property rights. As with other assets, it’s critical to inform your estate planning attorney about any intellectual property you own. Without planning, these assets may pass through probate, increasing costs and potentially resulting in unintended beneficiaries.
For more information, contact your wealth advisor. Not a Mercer Advisors client? Let’s talk.
| Lessons From High-Profile Estates
For many families, intellectual property is more than a legacy; it’s an ongoing source of income and brand value. The following well-known estates illustrate how planning decisions around ownership, control, and succession can significantly influence long-term outcomes. Do: Establish a clear plan for your IP Don’t: Leave valuable IP unmanaged or intestate Do: Use trusts and business structures to preserve multigenerational IP value Don’t: Neglect fiduciary protections for high-value IP Do: Clarify licensing authority and rights of publicity Don’t: Assume heirs automatically know how to manage or monetize IP |
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. External links are being provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Mercer Advisors of any of the products, services or opinions of the corporations or organizations or individuals represented in the links. Mercer Advisors bears no responsibility for the accuracy, legality or content of the external sites or for that of subsequent links. Contact the external site for answers to questions regarding its content.
Mercer Advisors is not a law firm and does not provide legal advice to clients. All estate planning documentation preparation and other legal advice is provided through select third parties unaffiliated with Mercer Advisors, depending on the complexity of the estate, additional fees may apply.
