Copyrights: Estate Planning Conundrum

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

If you own a copyright and need to estate plan, you’re in good company:  James Joyce, Walt Disney, C.S. Lewis, and Andy Warhol faced your same dilemma.  Although the Sonny Bono Copyright Term Extension Act generously extended the length of copyrights, at some point in the future your copyright will be controlled by someone other than you.

The Life of a Copyright

It is commonly known that the U.S. Constitution granted authors the exclusive right to their writings for limited times, both incentivizing creativity and dissemination of ideas and ultimately giving the public access to creative works.  Copyright protection generally lasts of the life of the author plus an additional 70 years; for works for hire or for anonymous or pseudonymous work (unless the author’s name is revealed in the records of the copyright office), protection lasts 95 years from publication or 120 years from creation, whichever is shorter.

Making your Copyright Useful

Copyrights are designed to protect the use of our creative works.  What does “protect” mean to you? More importantly, what does it mean to your surviving spouse, children and grandchildren?  The usefulness of your works is the essence of your copyright and some important questions should be reviewed:

  • Are you concerned about your work being reproduced without compensation?
  • Are you concerned your work may be used for profit by another?
  • How would you feel if your family “protected” your work by refusing all use?

Simply leaving your copyright to another as part of your estate plan is not enough.  You need to consider whether you want to leave more specific wishes for the use of your copyright.

Your Survivors’ Power to Terminate the Grant of Your Copyright

Let’s just say you grant your copyright during your lifetime for what you think is a GREAT purpose and/or financial gain.  As you may be aware, under the 1976 Copyright Act, the creator enjoys an absolute, nonwaivable right to terminate a transfer during a five-year window that begins 35 years after the assignment of the copyright.  Did you know that the creator’s “statutory heirs” have this termination right after the creator’s death?

In essence, this means that the creator’s surviving spouse, children and grandchildren may exercise this post-mortem termination right whether or not you agree.   This is concerning because your copyright may not be used as intended.  For example, in the case of James Joyce, his survivors have opted to take many of his works OUT of the public domain, which is widely seen as a disservice because, among other things, it can lead to the erosion of the author’s place in the literary world.

Estate Planning Tools for Copyrights

There is one limited exception permitted by the Copyright Act which allows the creator to waive this termination right and circumvent the statutory heirs’ termination right: the creator can transfer the copyright by Last Will and Testament.  However, at least in California, this can require a probate administration of the estate which can be time-consuming and expensive.  Therefore, the creator could consider transferring the copyright to a Living Trust.  However, the 1976 Copyright Act does not allow the creator to waive termination rights in a Living Trust or other state-recognized will substitute.  Therefore, it is possible that your surviving spouse, children and/or grandchildren could unwind the transfer made to a Living Trust.  Clearly, this is an estate planning conundrum.

Regardless of what approach you take, you may be inspired to create a plan for the use of your copyright by the approach of Andy Warhol, whose Will mandated that his works be managed by a foundation.  This foundation allows for Warhol’s imagery to be used widely in the interest of free expression, but aggressively defends the copyright when it is used for commercial purposes, such as coffee mugs, posters and other consumer items.  In this manner, the copyrighted materials further creative expression but protect the copyrighted materials from financial gain by others.

Like Warhol, your estate plan can leave instructions which restrict the license of your copyright for specific purposes, exhibition, publication, or production of your creative works, and the use of your name and likeness in connection with your copyright, all of which are likely very important to you as the creator of the work.  Given that the copyright protection lasts long after the death of the creator, it is very possible that you will never even meet or know the beneficiaries and/or heirs that will control your copyright even within 50 years of your death – well before the copyright may terminate.  Therefore, it seems like some basic instructions in your estate plan, at the very least, would be prudent.

Your Legacy

Whatever you chose, be it to transfer your copyright via your Will or Living Trust, it is clear that you need to give thought to how you want your copyrighted works used after your death.  Even if they are not widely used now, you need to contemplate future interest in your works after your death and consider leaving your survivors with some instructions.  After all, the creative works you have copyrighted may give rights to your survivors that allow them to control your legacy many years after your death.

Kimberly Napolitano, concentrates on the representation of individuals and families in all aspects of estate planning, business succession, asset protection, and the reduction of tax burdens. To learn more about Kimberly or for further questions visit our website laxlawyers.com.

Always consult an attorney in your area.
Image courtesy of http://www.freedigitalphotos.net/
Posted in Estate Planning | Tagged , , , , , , , | Leave a comment

Back to School: Living Trusts and Education Expenses

Image courtesy of nuttakit / freedigitalphotos.net

By Kimberly Napolitano

Backpacks are purchased, new shoes abound, and alarm clocks are ringing early across the nation as we celebrate the start of another school year.  Some of us complain about budget cut-backs in our public schools, others of us complain about the rising cost of private school tuition.  Either way, we realize that raising the next generation is an expensive task.

Then that that lurking fear comes back about how our children are going to afford to go to college.  Add to this angst that the University of California system, once upon a time a great deal, now budgets total cost for California residents at or above $30,000/year, and parents can really start to panic.

Savings for college is essential, but so is proper estate planning with regard to the education of your children.  Your living trust should provide details on how you intend to pay for your children’s education.  Or, very possibly, what you think your children should pay for.  The key is to use your living trust to instruct those that survive you how you want to deal with the costs of educating your children.

I’m paying for my kids’ college

How very generous of you.  Now, let’s discuss what and how.  If you have multiple children, what will happen if one goes to a community college and the other gets no financial aid but enrolls at Harvard?  Should the community college student get a later distribution for the expenses saved in going to a cheaper school?  And what about beauty school or a technical school:  is this a “college” expense you would pay for?  Are you paying for grad school?  How about a year off and a round-the-world plane ticket?

By creating a living trust with specific provisions for the education of your children, you can detail how your money should be divided among multiple children and what type of expenses you are going to pay for.

My kids can take out loans – like I did

Hopefully your children will learn to appreciate the money spent on their education.  But beware, your kids are likely going to depend on financial aid and are very likely to need to take loans.  The U.S. Department of Education reported that for 2009-10, 53 percent of first-time, full-time undergraduates took loans to pay for their education, up from 51 percent just a year earlier.

The problem is that these aid packages usually require a co-signor or guarantor on the loans.  If, we, as parents are not alive at the time these tuition payments must be made, our kids could be left with few options.

Again, your living trust can help your children by making set distributions on a time-frame that agrees with your personal philosophical decisions.  Whether you give the kids some money at 18 or wait until they are 30, you can let your living trust replicate the financial decisions you would make if were alive at the time the kids head off to college.

So, after the homework is completed and lunches are made…

Take a look at your current trust to make sure it agrees with your current philosophy on paying for your child’s education.  If your kids are in private elementary, middle or high school now, does your trust provide for ongoing payments?  Does your trust reflect your current wishes for college and graduate studies?

If you don’t yet have a living trust, think seriously about your current situation: your children will receive any inheritance when they turn 18 and there are no rules about how the money is spent.  Consider whether you want to create a trust to provide some structure to their distributions before and after they turn 18, including a framework to pay for their education.

Kimberly Napolitano, concentrates on the representation of individuals and families in all aspects of estate planning, business succession, asset protection, and the reduction of tax burdens. To learn more about Kimberly or for further questions visit our website laxlawyers.com.

Always consult an attorney in your area.
Image courtesy of http://www.freedigitalphotos.net/
Posted in Uncategorized | Tagged , , , , , , , , , , | Leave a comment

Online Passwords: Who will log-in when you cannot?

Password

Image courtesy of Stuart Miles / freedigitalphotos.net

By Kimberly Napolitano

Passwords are tricky beasts.  Given the proliferation of password requirements to do anything from sell stock to buy movie tickets to see your friend’s vacation photos, we are all inundated with passwords.  Some require a number, some a symbol, some a capital letter.  It’s nearly impossible to remember the perfect combination of username and password.  And even when I click the dreaded “Forgot Password?,” I cannot always remember which email address I used to open the account.  And since my mother’s maiden name is known to any teenage hacker, I have to remember something obscure like the name of the street just north of the street I grew up on or my best friend’s (which one!?!) favorite food.  Put simply: it’s a nightmare.

A more serious concern arises when someone needs to access your accounts when you cannot.  From an estate planning perspective, this is the worst nightmare of all.

What you can do:

  • Dreaded E-Statements.  Honestly, you can be my parent, child or my best friend and I would never know what accounts you may own if you don’t get a statement or print out your emailed statement.  At a minimum, keep a list of the institutions in which you have accounts so that those that are taking care of your affairs have a place to start.  It’s your money.  Help us find it.
  • Emailed Invoices.  Same goes for the utility bills, your child’s tuition payments, and in some cases even a large bill like your mortgage may be paid without their being a trace of the bill in your filing cabinet (even those of us with a well-organized filing cabinet may be missing critical documents).  Again, a simple list of the companies you pay on emailed invoices would be enormously helpful.  At least we’ll know to call Netflix and just pay for those movies you’ve had since last March and stop the monthly payments.
  • Online Photos, Facebook and Other Digital Assets.  The law in this area is far from clear, but suffice it to say that if you have data online that you need someone else to be able to access, you need to take action.  Maybe this blog will go nuts and my children will live on the advertising dollars when I’m gone.  Or maybe I’ll become a renowned photographer and my early works will become treasured assets.  Or maybe those taking care of my affairs will just want to close my Facebook account.  Currently, the best bet would be to leave a list of these types of accounts and instructions as to what should be done with these accounts.  An attorney can also assist you in preparing a General Assignment and list these types of assets as transferring to your Trust in hopes that the law will allow those who manage your Trust to take control of these assets – but in a changing digital world, there are no guarantees.
  • Consider keeping a running list of your passwords.  You may find that keeping a list of passwords available for the Trustee of your Trust and/or Agent under your Power of Attorney gives you the assurance that the designated person can access the accounts on your behalf.  Now the big question: where to keep the list?  This is something you should work out with the person that needs access to the information and can include placing a flash drive in your safe deposit box or in-home safe which can be accessed through the powers given in your estate planning documents in the event of an emergency.
  • Keep your list fresh.  Set a reminder in your Outlook calendar, add it to your to-do list, or tie a ribbon on your index finger, but do NOT let this list get stale.  As a whole, we are moving money around more quickly than ever before and need to make sure that our lists of our accounts and debts stay current.  In addition, those pesky passwords are required to be changed more and more often making our own ability, much less someone else’s, even more difficult.  Update, update, update.

Have a suggestion?  Post a comment if you have a suggestion on how to deal with the password conundrum.  You can check back for updates, that is: unless we start password protecting this blog…

Kimberly Napolitano, concentrates on the representation of individuals and families in all aspects of estate planning, business succession, asset protection, and the reduction of tax burdens. To learn more about Kimberly or for further questions visit our website laxlawyers.com.

Always consult an attorney in your area.
Image courtesy of http://www.freedigitalphotos.net/
Posted in Estate Planning, Trusts & Estates | Tagged , , , , , , | Leave a comment

Expecting an Inheritance? Already Got One? Get Advice!

Image courtesy of Ambro / freedigitalphotos.net

By Kimberly Napolitano

One of the greatest aspirations of parents is to leave an inheritance for their children.  Whether you receive your inheritance from a parent, grandparent, extended family or a friend, you need to be very careful what you do next.  It may be hard to focus as you grieve, but you need to take this seriously.

The single largest issue that arises if you are married or later marry.

That probably means it matters to most of us.  If you are married, you need to proceed directly to an attorney, do not pass go (you will certainly recoup the $200 and the consultation fee).  Schedule a consultation and determine your separate property rights to your inheritance.  Ideally, you should seek an attorney’s advice before you even deposit your inheritance check or take title to assets you inherit.  It is that important.

If you inherit cash or assets while unmarried, you need to seek advice from an attorney before you get married.  We have written before about the importance of a prenuptial agreement, but for you, this is nearly a must.

Why, you ask, do I need an attorney?

It’s simple: to keep the money protected as your own.  After all, it is your inheritance, isn’t it?  Let’s face it, the statistics for successful marriages are dismal and the reality is that if, for example, you put your inheritance check in your joint checking account (almost a given if it’s the only account you and your spouse have), you have likely under the law just “gifted” half of your inheritance to your spouse.  Even if it seems fine now, it will just short of guarantee that neither you nor your survivors will think it is fine in the dreaded event of death or divorce.

But what if we want to spend the inheritance?

By all means, you should spend your inheritance the way you see fit, which can include benefiting your spouse.  Go ahead, put a new roof on the house, install the new appliances, and go on the cruise you had only dreamed of.  An attorney experienced in these issues can advise you how to document loans from your separate assets to the community so that in the dreaded case of death or divorce, you can be paid back for the money you loaned.  And if it all works out that you live “happily ever after” you can consider forgiving the loans – just beware, these kind of endings may only happen in fairytales.

What should I tell my spouse about my inheritance?

Try this:  I’ve received an inheritance and I’m going to keep it as my separate property in my separate account.  I’m not going to mix it with our community funds unless we sign documents that make it clear that I’m making a loan to both of us.  I want to make sure that I use the money as it was intended and I hope you’ll understand.  If and when you receive an inheritance, I’d expect for you to do the same.

Last word

If there were one piece of advice we could give clients who have been trapped by this situation of depositing or giving part or all of their inheritance to their spouse, it is this:  KEEP RECORDS.  In the event of death or divorce, one or both of you will be trying to prove if the money you inherited belongs to you or to both of you.  Don’t be short on ways to prove it.  Getting the advice of an experienced attorney at the time you receive your inheritance will be worth every dime.

Kimberly Napolitano, concentrates on the representation of individuals and families in all aspects of estate planning, business succession, asset protection, and the reduction of tax burdens. To learn more about Kimberly or for further questions visit our website laxlawyers.com.


Always consult an attorney in your area.
Posted in Estate Planning, Trusts & Estates | Tagged , , , , , , , , , | Leave a comment

Vacationing Without the Kids? Pack Some Peace of Mind

Image courtesy of digitalart / freedigitalphotos.net

Your Itinerary:  A room for two, sleeping in, quietness and no diaper bag to schlep, puzzles to assemble or game consoles to charge.  What could be better than a weekend away without the kids?  But then than nagging feeling sinks in again – what if something happens and you still haven’t picked a guardian for your kids.  Or, worse yet, you have a guardian selected and haven’t formally written it down.

Tip: Get it over with.  Select a guardian.  Have an attorney formalize your decision.

The alternative: A judge gets to pick who takes care of your kids.

Direct Flight

If you already have a guardian selected, make a call to an attorney and simply memorialize your decision.  Make sure you also have a few alternate guardians to nominate, as well.

Plan for a Stopover

If you haven’t a clue who should be your kids’ guardian, it’s time to plan a meeting with an attorney to discuss your options.  You and your spouse may want to prepare a list of all of the people who could possibly take care of your children in the event you are unable.  An experienced estate planning attorney can help you to narrow down your choices based on factors such as age, health, living situations, values, parenting styles, etc.  After meeting with the attorney, you and your spouse can finalize your decision and sign your guardianship designation.

Changes to Guardianship Plans Permitted

You should remember that the guardian you designate can be changed over time.  We encourage clients to consider the guardian that would be best if your kids required a guardian in the next three to five years.  As with all estate planning documents, you should review your guardianship designation at least annually to make sure that it reflects your current wishes.

Enjoy the Trip
Leaving your kids is always tough.  Designating a guardian can be very difficult, as well.  But with the peace of mind of knowing that your kids will have a guardian if the unthinkable happens, you may find that parting from the kids for that much-needed vacation is just a little bit easier.  So to all my fellow hardworking parents out there: Enjoy your time off, you deserve it.  Just put “Designation of Guardian” on your packing list and get it taken care of before you go.  You deserve total peace of mind.

Kimberly Napolitano, concentrates on the representation of individuals and families in all aspects of estate planning, business succession, asset protection, and the reduction of tax burdens. To learn more about Kimberly or for further questions visit our website laxlawyers.com.

Always consult an attorney in your area.

Digital image provided by http://www.freedigitalphotos.net/
Posted in Family Law, Trusts & Estates | Tagged , , , , , , , | Leave a comment