Wills, Trusts, and Probate

Wills, Trusts, and Probate

Theodor Geisel, otherwise known as Dr. Suess, died September 24, 1991. Yet, in 2019 he managed to make $19 million dollars for his estate. Michael Jackson died in 2009, but in 2019 made $60 million. He was the highest paid dead celebrity that year, second place went to Elvis.

How do they make that kind of money from beyond the grave?

Answer: Copyright.

You’ve worked hard to not only create your books, but also your publishing company, and while death is never a pleasant subject to ponder, there’s no avoiding it in the long run. After all that work most authors wish to protect their legacy. They want some say in how their work is used, who owns it and for how long, and what that owner is allowed to do with it, long after they are gone. Most wish to see their loved ones benefit from their works and receive the income from them after they are gone.

The popular misconception is that copyrighted material enters the public domain when the owner dies. This is far from the truth.

A word about Copyright

The Copyright Act of 1976 (and the extension act of 1998) established the terms of protection to the life of the author plus 70 years. This applies to works created through joint efforts as well. As we mentioned earlier, should the work be produced and distributed via the authors publishing company, the protection is defined as 95 years from the year the work was first published.

Who takes ownership of your copyrights is not something to procrastinate about. Not everyone dies late in life, and the mess that is often left behind by a failure to plan ahead can cause an assortment of issues. Having a will that spells out the who, what, and how your estate is to be distributed will avoid those problems.

A good example of poor planning would be Prince Rogers Nelson, otherwise known as Prince. When he died in 2016 he left behind an estate worth hundreds of millions of dollars. Yet, he never took the time to write a will. His death resulted in a years-long series of court battles over who owned his estate. This kind of battle often results in estranged families and large amounts of money being siphoned off to pay for attorneys. The banks and lawyers involved in settling Prince's estate racked up fees totaling $9 million in less than twelve months. An even larger amount went to the IRS. In the end, the six heirs got much less than they could have if Prince had taken the time to write a will.

Ownership of your copyrights is usually transferred to the heirs of your estate. Wills and their execution are subject to local and state law, and each state has its own particular way of doing things. Typically an heir is defined as your spouse and/or children, or other family members if you are unmarried and do not have children. You may wish to specify that a particular person or entity receive ownership of your copyrights and you can use a will to name that beneficiary.

Transferring Copyright Ownership

If you have transferred your copyrights to your LLC you can specify who will receive ownership of the LLC and the copyrights it holds. If you have signed any agreements involving those copyrights they remain solvent, your death does not nullify the agreement or cause it to expire early unless words to that effect are included to cover that. If the copyright has been licensed, the license owner retains the specific rights that were granted in the agreement for as long as the agreement should last or until the copyright expires.

Estate attorneys can help with drafting a will that will ensure that the authors wishes are clear and unambiguous.

The author may wish to place limits on how the beneficiary can use the copyright. An example of this would be an actor or musician denying their image or music be used in advertising or for any political purpose. If the desired heirs are too young to take ownership, the copyrights may enter a trust that allows the beneficiaries to benefit from them until they reach a certain age, at which the ownership of the copyright becomes theirs.

Will or Trust?

A will is a simple legal document, the goal of which is to provide directions for your heirs and the state for how you wish your property is to be distributed after your death. Every will requires that you appoint an executor (your legal representative named in the will) who is the person who will carry out your wishes as you have instructed in the will.

NOTE: A will can only dispose of your property. Any property that is jointly owned or in a trust cannot be included.

A will goes through what is known as probate, which refers to the execution of the will or trusts instructions. This is subject to a local court which oversees the administration of the will. The court will perform two major functions:

• It determines if the will is valid.
• It determines if the executor is distributing the property as set forth by you.

Unlike a will which goes into effect when you die, a trust (whether it be a living trust or an irrevocable trust) goes into effect when it's created and can allocate property before your death or after.

A will can also create a trust upon your death. This is known as a Testamentary Trust and is often used when the heirs are young children.

In the case of a trust, a third party is usually employed to oversee the trust. This person (or institution, such as a bank or a law office) is known as a trustee. The trustee administers the estate as outlined in the will. They will hold legal title of the copyrights for the beneficiaries for a predetermined time.

A trust manages and distributes only those assets that have been transferred into the trust.

Most executors are trusted relatives or maybe the family lawyer. Either can divide the estate pie as instructed when it comes to tangible assets. This could be someone in the trust department of your bank or financial institution, your agent, your lawyer, or your accountant. But for authors, an executor may not be enough, you may also need what’s known as a literary trustee.

Literary Trustees

Being an independent author requires constant maintenance and upkeep. Advertising needs to take place, websites need to be maintained, sales need to be tracked, and fans need to be responded to. This requires an actual human person, one who knows the ins and outs of the publishing world. Unless your executor is also an experienced indie author, you will need to find someone who is if you wish your heirs to capitalize on your copyrights after you are gone.

The executor has a fiduciary responsibility for settling the estate after your death per the directions in the will. An executor will:

collect and identify the estates property.

• locate any and all creditors.
• pays expenses and taxes owed.
• acts as the business manager of the estate.

Writers, however, should consider appointing a literary executor (or literary trustee) in addition to the first executor.

The literary executor is in charge of your literary works. A literary executor will:

• negotiate contracts with publishers.
• maintain and protect copyrights.
• collect and distribute income.
• arrange for the publication of any unpublished manuscripts.
• track and audit sales reports.
• manage your on-line presence, including such things as blogs and social media.
• perform advertising.

For the role of literary executor, you may wish to retain someone who does not have a personal interest in your estate. The best choice would be a literary executor with both knowledge of the independent author profession, and the business skills needed to navigate the publishing field.

If you feel your estate is large and complex enough to need a literary executor, you’ll want to be sure to give them every tool they will need to perform their job. Here are some of the things they will need:

• Access to royalty reports and financial records. If you have an accountant, include his/her contact information. This will provide an immediate understanding as to the size and complexity of your estate.
• A complete list of your literary works along with the copyright registration that goes with each.  Specify the persons, organizations, and contact information to which the rights under your copyrights are granted. Include all works, published and unpublished. You might wish to specify which of these works may be published after your death and which ones you wish to remain unpublished.
• Any contracts with publishers, studios, distribution platforms, artist, agents, and printers. Include all names and contact information along with copies of any licensees. Don’t forget items such as cover art and illustration contracts, audio deals, or translation contracts. If there are works that need to be published after your death your literary executor will need the names and contact information of your cover artist, editors, formatters, and marketing people in order to maintain the branding of your works.
• Passwords and log-in information for every sales platform, website, and social media site related to your publishing business. This should include domain names and their expiration dates, email accounts, and any service that you or your company utilize to market your books. Also include any cloud databases that contain your work and any email services used to advertise. Anything that has an auto-renewal should be listed with the amount being billed and the expiration/unsubscribe date/deadline. You might also wish to include any online chat-rooms or forums that you visited on a regular occasion so that your literary executor may visit them and inform them of your passing.
• Banking information. Any accounts related to your business as well as any checks, credit, or debit cards attached to them.
• You should include a copyright page template, list of ISBN’s, a DCMA takedown notice, and documentation that grants your literary executor the power to bring a lawsuit for infringement of your copyrights.
• Documents pertaining to how long you wish your literary executor to serve, who their replacement will be, and who will act as an alternate if needed.

Some things to remember:

The right to terminate a copyright license flows to the authors spouse or children, not to the literary executor. The literary executor does not have the right to terminate a copyright license.

Under the Copyright Act of 1976 (and the extension act of 1998), the term of the copyright is for the life of the author, plus a renewal term of 70 years. Copyright renewal rights are assigned to the author’s heirs (the spouse, children, or the author’s next of kin). This is regardless of whether the author assigned the renewal term of copyright to a third-party, or some other entity, prior to their death. If the authors next of kin are dead, then the literary executor is required to file the renewal in the name of the estate. There are differences in this general rule for renewals of older copyright work due to changes in the law (Copyright Renewal; Copyright Renewal System; Copyright Terms)

If you have elected to transfer your copyrights to your LLC you can utilize estate planning mechanisms to stipulate what happens to your company. These devices will determine who controls the corporation, who receives the revenue, and who has responsibility for any literary works that are held by the corporation. 

So how does this work?

The first step is to list every copyrighted or potentially copyrightable work you have made. Split that list into its two respective parts and determine what needs to be addressed. What works have been registered? What works need to be? Where is the paperwork for each? Are there any licensing agreements involved? Where is the documentation regarding those licenses?

Once you have that, determine who will be your executor. Is this person capable of maintaining your copyrights and publishing business? Will you need a Literary Executor? Who will that be?

Who gets what? Divide the pie and clearly describe who gets what from your estate. Define any restrictions and timelines you wish to be in effect. Who gets the profits and who gets the actual assets? Make sure you cover the entire length of the copyright period.

Hopefully, you are consulting with a lawyer throughout this period. They can advise you on the plethora of options available to you and help keep your will or trust as crystal clear as possible. Ambiguity is not something you want in your will. An estate attorney can also help you with the tax implications for your estate. There are several strategies for minimizing tax burdens ( such as a trust ), and you will want to address them thoroughly before signing.

Before you have your will completed its important to speak with the executor about both its existence and their roll in it. If you intend to have a literary executor it’s important that the first executor know why that person is needed and what they should expect from them. You should speak with the literary executor as well and inform them of how you would like them to handle your collected works following your death.

As part of your “Spring Cleaning” you and your lawyer should revisit your estate plans every two years in order to adjust the will/trust as needed to accommodate personal, career, family, and property changes.

Say no to video

In a world where everything is captured on video, you may be tempted to simply turn on your computer, aim the camera at your smiling face, and dictate your wishes into it. While this has been made popular in numerous novels and movies, there’s one key issue with doing this.

It won’t create a valid will.

For a will to be valid in the eyes of the court, it must be on paper and signed. In most states, it must also be dated and signed by two witnesses. In the event that the will is contested, those witnesses will testify, if necessary, that you appeared to be of sound mind and acting of your own free will.

However, if you strongly suspect that your last wishes will be challenged, it doesn’t hurt to video the actual signing of the will, perhaps with your lawyer and the two witnesses asking you some key questions beforehand. While not considered substantiation, it can serve to demonstrate that you were indeed of sound mind and not being manipulated when you signed the document.

Conclusion