Antony Caulfield, Private Client Partner, sets out some of the points you should consider if you own any literary assets or other intellectual property that you would like to leave to someone in a Will.
This note should not be taken as exhaustive and it does not constitute legal advice. The issues surrounding intellectual property and Wills are complex and you should always seek the advice of a Solicitor.
It is commonly supposed that the most important decision when you make a Will is who to leave your assets to, known as your “beneficiaries”. That is undoubtedly the main consideration, but arguably as important is who will be responsible for administering your estate when you die, known as your “Executor”. Unlike some other legal systems, under English law your assets do not automatically pass to your chosen beneficiaries when you die. Instead your estate must be “administered” as part of a process of ensuring your assets properly pass to your beneficiaries. It is the task of your executors, sometimes also called Personal Representatives, to undertake that administration. So in fact the first question should be, “who do I trust to administer my estate and ensure my assets pass to my beneficiaries?” or “who will be my executors?”
Executors must be appointed in a Will. If you do not make a Will then the intestacy rules determine who is responsible for administering your estate, and that may not be who you want it to be. So first, you must make a Will and ensure it is valid. Next, you must decide who your executors will be. This is particularly important if you own literary assets or other intellectual property that is capable of being left to someone in a Will. A common example is an author receiving royalties from publishing rights. In many cases published authors will have an agent or a royalty-collection company which deals with that aspect of their affairs and they will have intricate knowledge of the relevant assets. Someone having detailed knowledge of your affairs is one reason to appoint them as an executor of your estate as it should be easier for them to prepare the required documentation when you die.
You can appoint as many executors as you want in your Will but only four are able to take out a Grant of Probate to your estate. It is only the people named on the Grant of Probate who have the formal authority to administer your assets. An exception to this rule is where you appoint different executors to administer a specific portion of your estate, as could be the case with literary executors. In that case you can have up to four additional executors limited to your literary estate. So you could appoint your solicitor or your spouse or children as executors of your general estate and your literary agent as executor of your literary estate. Your solicitor, spouse or children would therefore be responsible for ensuring your property, personal belongings, bank accounts, investments etc. pass to the relevant beneficiaries while your literary executor would be responsible for dealing with your literary assets. It is important to note that a limited company cannot be appointed as executor of a Will (a trust corporation can but that is beyond the scope of this note).
When you die your literary executors will need to take out a separate Grant of Probate from your general executors. This is to ensure that the authority to deal with the different aspects of your estate is properly recorded on a document issued by a court. The literary Grant of Probate will be expressed to be “limited to the literary estate” and this will appear on the Grant of Probate itself to ensure anyone looking at it can clearly see who is responsible for that part of your estate. Your general Grant of Probate should then be drafted to clearly delineate the responsibility and ensure there is no confusion.
Your literary executors will need to value your literary assets for Probate and Inheritance Tax purposes. There are various rules governing how this should be done and there is no one-size-fits-all approach. Sometimes it will be valued based on the average of the previous five years of income produced by the assets but in other circumstances, for example where the income is highly variable, that may not be appropriate. It will be for your literary executors to agree a figure with HMRC if it is not clear what the figure should be. Once a figure has been agreed and any Inheritance Tax paid (where appropriate), and all other aspects of the estate have been dealt with, the assets can be transferred to relevant beneficiaries under the Will. Sometimes royalty rights are held within a company structure and your literary executors will need to consider transferring the company shares to the beneficiaries. It will be for the beneficiaries to decide how to receive the assets due to them under the Will, but with royalties there may be no realisable capital value, in which case the only value is in the income that the assets will produce over time. That will also be a consideration for the beneficiary in terms of their personal tax affairs and they may need to consult an accountant.
We would always recommend consulting a solicitor when you make a Will, but particularly so if you are a published author who receives royalties or if you own any intellectual property that may have value. They key message is that your intellectual property will form part of your estate when you die and fall to be administered by your executors. It is therefore extremely important that you carefully consider who you want to be responsible for administering your literary estate, and remember that it is possible to appoint different people to do this from the people who administer your other assets.
At Gaby Hardwicke we have a number of experts in Will preparation and Private Client practice generally and we will be happy to assist you to ensure your affairs are in order. We also have experts in intellectual property law and can advise you in relation to any copyright, designs, registered designs, trade marks or patents you may own.
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