Intellectual property is an umbrella term that includes several different specific areas of the law.  Trademark law, patent law, copyright laws and trade secret laws are all examples of intellectual property laws.  The constitution guarantees that the federal government has exclusive jurisdiction over patent and copyright laws.  Patent and copyright laws are designed to “promote the progress of science and useful arts.”  

COPYRIGHTS, OWNERSHIP, HEIRS AND ESTATE PLANNING

Copyrights created after 1978 are generally good for the life of the author plus 70 years.  When written for a corporation, so called work for hire copyrights, the copyright is valid for 95 after first publication date to 120 years after the work is created.  To pass a copyright on to heirs, you must be careful to do it the right way.  If a painter passes a painting on to an heir the right to control the copyright of that painting does not necessarily follow.  The painter will have only passed on the original painting.  To pass a copyright, the trust, will or other document must specifically mention that the copyright to the painting passes to the heir.  It is entirely possible for a painter to pass the original work to a friend or partner but pass the copyright on to another person.  

        The death of a loved one is an especially traumatic event. Lives can be upended and surviving family members and friends can be left feeling lost and confused about how to carry on. This is especially true when the death occurs suddenly or under tragic circumstances. Unfortunately, the law does not provide grief-stricken family and friends much time to mourn their loss before important work must be done. This important work involves admitting the deceased’s estate to probate and then administering that estate.

        In New York and elsewhere, an individual who dies with a will or similar document in place is said to die testate. If a person does not have such a document in place, the person dies intestate.

  •         Dying Testate: If the deceased left a will, the first step of administering the estate involves probating the will, or proving the will’s validity. Usually this involves simply introducing the will into the appropriate court. Once the will has been probated, the executor or administrator named in the will is tasked with carrying out the wishes of the deceased as expressed in the will, settling any lawful debts the deceased must pay, and providing an accounting or report to the court showing that the deceased’s assets were dispersed according to the terms of the will.

Making the decisions about your estate plan can be a daunting task. We are faced with a plethora of uncertainties and questions about our future and what to do about our “stuff.” There are a few documents that a client should consider executing with an attorney to protect their estate. One document called a Power of Attorney, that often complements a Will, can be overlooked by a client.

Understanding the Legal Document

A Power of Attorney typically comes in three fashions: a General Power of Attorney, a Specific Power of Attorney, and a Durable Power of Attorney. The distinctions are subtle, but extremely important. A General Power of Attorney allows a client to give authority to someone else to make decisions on anything that the client herself could make, such as financial and/or property decisions. The client is known as the “Principal” and the person that the client gives the power to is known as the “Agent.” In a very simple way, the Agent acts on behalf of the Principal in certain capacities, such as writing a check or selling a property.

Ensuring that your family knows what happens to your property and assets after your death is always a challenge. A Will can help make the decision less challenging and provide solid guidance to your family at a difficult time. A Will is a legal document, which decides who receives your real and personal property at your death. A Will can also be used to select an estate executor. The executor is the person, or people, you choose to oversee and manage the distribution of assets from your estate.  Many people choose to have a will so that they are able to adequately provide for their children and spouse after their death.

If you do not have a Will, your estate will be distributed according to the intestacy laws of your state. Intestacy laws reflect lawmaker’s attempt to figure out how you would like to distribute property and assets among your children and surviving spouse. These laws are complex in most states and become even more complex for non-traditional and blended families – the law can make a wrong decision for your family.  

Blended Family

An earlier post on this blog provided an overview of using beneficiary designations as part of your estate plan. Recall that beneficiary designations are a way to transfer property automatically upon the death of the asset owner outside of the probate process. This post is part II of that discussion, and include some of the pros and cons of using beneficiary designations, as well as a few special considerations related to certain forms of beneficiary designations.

Pros and Cons of Using Beneficiary Designations

Beneficiary designations can be a simple and effective mechanism to transfer your property in much the same a will or trust distributes your property. The advantages of beneficiary designations include the ease in which it can be set up and the speed and in which the beneficiary receives the asset. Also, the owner of the asset has flexibility to designate any of combination of shares to any number of primary and contingent beneficiaries. Beneficiaries may be individuals, trusts, charities, or the property owner’s own estate by way of its personal representative.

One of the essential functions of an effective estate plan is efficiently distributing your assets upon death. Using a beneficiary designation on assets that transfer on death can be a tool to efficiently transfer certain assets with ease if properly completed. Assets that can be transferred to a designated beneficiary upon death include insurance policies, bank accounts, retirement accounts, or other investment vehicles that feature a transfer or payable on death designation.

Types of Beneficiary Designations

Beneficiary designations include primary, contingent, and sometimes default beneficiaries. Upon the death of the owner, the asset will be transferred or disbursed to the primary beneficiary. If the primary designation fails, then the contingent beneficiary will receive the transferred asset. The default beneficiary will receive the transferred asset in the event there are no other primary or contingent beneficiaries designated to receive the asset. In some cases the default beneficiary may be a trust established by the owner of the asset, or the owner’s estate.

A recent Forbes article reported that while most family business owners do have estate plans, many do not update their estate plans regularly. Many circumstances can change over just the course of a few years, which makes a regular review of any estate plan necessary in order to capture planning opportunities and evaluate risk. For small business owners, it is also a good way to review their family business succession plan, which can help ensure the continuity of their business assets, manage tax liability, and avoid dilemmas that typically occur in closely held family enterprises.

Business Succession and Estate Planning

For many family business owners their business not only represents their greatest source of wealth, it represents a heritage and opportunity for the next generation. As such, family business owners have a strong motivation and obligation to plan for the transfer of their business assets. By not implementing a business succession plan, the value created over so many years will be at risk. Depending on the size of the business and other sources of wealth, failing to plan over the long term can create a greater potential for estate tax liability and put the family business at risk in the event of an unplanned transition. For these reasons, family business owners should create and continuously monitor a business succession strategy as part of their estate planning process.

Maintaining government eligibility for a disabled child or family member is extremely important for their long term care needs because such programs will often be the primary source for medical care throughout their life. A special needs trust is a way to supplement the needs of a child or loved one without risking program eligibility. Special needs trusts include self-settled trusts (grantor and beneficiary are the same person) and third-party trusts.

Establishing a Special Needs Trust

In many ways a special needs trust is established just like many other kinds of trusts. Special needs trust differ with respect to some specific provisions on the use and disposition of trust assets. Any special needs trust should clearly illustrate the purpose of establishing the special needs trust as providing supplemental benefits for the disabled beneficiary without compromising or reducing benefits received through government programs. The terms of the trust should also take into account the source of the trust assets. If a special needs trust is self-settled and funded with the beneficiary’s assets, the trust document must adequately address the requirements of New York and  federal law relating to the treatment of trust accounts and benefits under state plans. Special needs trusts that are settled and funded by parties other than the beneficiary need to provide for discretionary distributions of the trust assets for supplemental support so as to avoid being classified as assets available to the special needs beneficiary. Assets available to the special needs beneficiary will be counted as resources for means-testing for government benefit programs. Other important features of a special needs trust include requirements that the trustee:

If you have included a special needs trust as part of your estate plan, you need to know the importance of making sure the distributions from that trust are permissible per the terms of the trust and do not defeat the purpose of the trust by affecting eligibility for needed government programs.

Effect of Distribution

A special needs trust is one way to supplement the needs of a disabled loved one without compromising eligibility for means-tested government benefits, including Supplemental Security Income and Medicaid coverage. With respect to means-tested programs, federal law will require a reduction in benefits to the extent the beneficiary receives income or assets are otherwise made available to the beneficiary. For example:

The State of New York’s estate tax does not mirror the federal estate tax regime in many ways. A lack of careful planning may result in a New York estate tax liability even where the estate is not taxed at the federal level.

New York’s Estate Tax

New York’s estate tax, like its federal counterpart, is a tax levied on the value of the decedent’s estate upon death, and before distribution. New York’s estate tax parallels the federal estate tax with some exceptions.

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