Protecting Your Intellectual Property in a Vermont Estate Plan

If you are an artist, inventor, author, or entrepreneur, the assets you pass down may extend beyond physical property or financial accounts. Intellectual property, such as patents, trademarks, copyrights, and trade secrets, can hold significant value and deserve careful attention in your estate plan. Unfortunately, many individuals either overlook or misunderstand how to protect these unique assets. With thoughtful planning, you can ensure that your intellectual property (IP) is preserved, managed, and distributed according to your intentions. With that in mind, the attorneys at Unsworth LaPlante, PLLC discuss protecting your intellectual property in a Vermont estate plan.

What Is Intellectual Property and Why It Matters

Intellectual property refers to creations of the mind and includes legally protected rights that can be sold, licensed, or inherited. While intangible, IP often generates substantial value through licensing arrangements, royalties, or outright sales. For individuals who rely on their creative or innovative work for income, incorporating intellectual property into an estate plan is just as important as planning for real estate or retirement accounts. Common types of IP include copyrights (original works such as books, photographs, music, websites, and software), patents (grant the right to exclude others from making or using your inventions or technical creations), trademarks (identify your brand through distinctive symbols, slogans, or names) and trade secrets (protect proprietary business knowledge like recipes, designs, or algorithms). Each form of IP comes with distinct legal protections and rules regarding transfer, ownership, and valuation. If you own any of these, it is essential to take the necessary steps to ensure that they are preserved and passed on in the manner you prefer.

Why Intellectual Property Belongs in Your Estate Plan

Leaving IP out of your estate plan can create confusion, result in litigation, or cause your heirs to lose control of valuable rights. Without a plan, your IP may be left unmanaged, misused, or lost entirely. In Vermont, like in many states, heirs who receive intellectual property without guidance may not know how to register, license, or protect it—diminishing its future value or utility. Proper estate planning can help maintain the revenue your IP produces and protect your creative legacy.

How to Incorporate Intellectual Property into Your Vermont Estate Plan

Addressing intellectual property in your estate plan requires deliberate steps and often guidance from legal and tax professionals. Begin by identifying your IP assets and understanding how they are currently owned and used. Consider the following steps to ensure those assets are properly handled:

1. Take Inventory and Determine Value. Start by listing every item of intellectual property you own. Include copyrights, trademarks, patents, and any trade secrets or proprietary information. It is important to document your ownership, and any agreements related to your IP, such as licenses or collaborative arrangements. If your IP generates revenue, consider working with a valuation expert to assess its current and projected worth.
2. Confirm Ownership Details. IP may be held personally, through a business entity, or jointly with another party. How it is owned will determine what happens to it upon your death. Clarifying ownership now can prevent confusion and disputes later. For instance, if a patent is owned by your company, it may pass according to business succession rules unless otherwise specified.
3. Address IP in Legal Documents. Include clear language in your Last Will and Testament or trust document about how your intellectual property should be handled. You may choose to assign full ownership to a specific beneficiary or direct only the income generated by the asset to someone. If you want the asset to continue generating royalties, a trust can be a useful tool because it enables long-term management and control. Unlike a Will, a trust allows for more flexibility and oversight.
4. Select the Right Fiduciary. Managing intellectual property requires a specialized understanding of licensing, renewals, and enforcement. It is best to name a Trustee or Executor who has experience with IP, or at least access to knowledgeable advisors. If the assets are especially valuable or complex, a professional fiduciary may be the better option. That person or institution can take the necessary steps to maintain, license, or transfer the IP as you direct.
5. Understand the Tax Consequences. Royalties and other income derived from intellectual property may be taxed differently from other forms of inheritance. Your estate may be subject to both state and federal tax rules that apply to income earned after death. Consulting with a tax advisor or estate planning attorney familiar with Vermont laws will help reduce the tax burden and ensure compliance.
6. Review and Update Licensing Agreements. If you license your IP to others or earn revenue through contracts, those agreements should be reviewed for language that addresses what happens if you pass away. Well-drafted agreements can allow for a seamless transition of rights or income to your heirs or trust. They should clearly outline what happens to those income streams and who has the authority to manage or renew them.

Can We Help You Protect Your Intellectual Property in Your Vermont Estate Plan?

For more information, please attend one of our upcoming FREE seminars. If you would like assistance protecting your intellectual property in your Vermont estate plan, contact an experienced Essex Junction estate planning attorney at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.