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Protecting Your Legacy: Estate Planning for Creatives and Their Loved Ones

May 13, 2015

If you’re a photographer, author, musician, visual artist, or software coder, chances are you know a little bit about copyright law. You’re probably aware that, as a copyright holder, you have a bundle of exclusive rights at your disposal, including the right to make copies of the work, make new works based upon the original (derivative works), sell or license copies and publicly display and perform the work. However, did you know that, during your lifetime, if you transferred or licensed any of your works created after 1977, you have the right to terminate that transfer or license 35 years after the date of the transfer? Or that, upon your death, your heirs will inherit the right to terminate the transfers you made during your lifetime? 

 

A Second Bite at the Apple


It’s often assumed that once a copyright has been transferred to another, such a transfer is permanent or irrevocable. However, copyright law acknowledges that the value of a copyright is impossible to determine in the early days of a work’s exploitation, and thus affords creators and their heirs a special opportunity to recapture the copyrighted work 35* years after such a transfer, so that they may have a second bite at the apple. 

 

The Copyright Act provides that the creator of the work (or, if deceased, the creator’s surviving spouse, children, or grandchildren; or, if no surviving spouse, children, or grandchildren, then the creator’s executor, administrator, personal representative, or trustee) has a non-waivable right to terminate most transfers granted by the creator of the work. 

 

Unintended Consequences


If a creator dies before the termination period becomes ripe, the termination rights will pass entirely onto the surviving spouse; or, if the creator also has then-living children and/or grandchildren, then half of the termination rights will pass to the surviving spouse, and the other half will pass to the children and grandchildren. Since it is impossible to know who will actually hold the rights of termination until the time at which the rights mature, this scenario becomes extremely difficult to plan for.

 

Indeed, the Copyright Act has driven a gaping hole into estates law, due in part to the termination rights of heirs, who may obtain an interest in a copyright, despite the deceased copyright holder’s intent to dispose of the copyright otherwise. There is, however, one (and only one) way to avoid triggering the termination rights by unintended beneficiaries after you die: a good old fashioned Will. 


 
Where There’s a Will, There’s a Way


A transfer of a copyright that is made “by will” is not subject to termination under the Copyright Act. In the Act, Congress did not account for transfers of copyrights upon death through instruments other than a “will,” such as a testamentary trust or a copyright assignment to a company or charitable foundation. Instead, a literal reading of the Act would indicate that all transfers of the copyright that are made other than by will are subject to termination by the creator’s statutory heirs. Therefore, the use of the common estate planning mechanisms other than a will for the disposition of copyrights presents an opportunity for a copyright holder’s heirs to undo (terminate) transfers made by means other than a will if such transfers do not inure to their benefit.  

 

Creative People Need Creative Lawyers


If you’re a copyright holder, or could claim a termination right in a copyright that you transferred or licensed at one time, you’ll need an estate planning lawyer with a colleague who practices intellectual property law.  

 

Before meeting with your estate planning attorney, you’ll want to consider crossing off a few items from this list as a starting point to getting your copyright plan in order:

 

  • Register all copyrights with U.S. Copyright Office
  • Think about what you want to do with your copyrights, and who you want to benefit from them
  • Gather all contracts you currently have regarding any licenses or assignments that have been made for the copyrights during your lifetime
  • Ask your copyright lawyer (if you have one) to refer you to an estate planning attorney who has handled the disposition of copyrighted works, or as your estate planning attorney to introduce you to a copyright lawyer that can help you organize your copyright portfolio

 

To learn more about copyright and estate planning, contact Sheila E. Eddy and the estate planning attorneys of Smith Haughey at (231) 929-4878.

*This blog focuses only on works created and transferred after 1977. For pre-1978 works, the rights of termination mature at different times and different rules apply.

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