August 01, 2016 GPSolo | Best of ABA Sections

Intellectual Property Law: Preparing IP Clients for Creative Executorship

Ellen F. Brown

Creative clients may go on to have active and lucrative careers long after their deaths. A client’s posthumous income may even be greater than what the client earned while alive. When a creative person dies, if the work is to remain profitable, someone must step in and actively oversee the intellectual property (IP) in the creator’s stead. There are also noncommercial issues to address, including how best to nurture the decedent’s legacy. As one court noted in the context of literary rights, posthumous oversight “requires a delicate balance between economic enhancement and cultural nurture.” (In re Estate of Hellman, 511 N.Y.S.2d 485, 488 (Sur. Ct. 1987.)) So whose job is it to handle this important balancing act?

For many creative estates, these sorts of issues can be dealt with proactively by having the creative client appoint a “creative executor,” a person whose specific task it is to manage the IP rights and to bring in and oversee outside assistance as needed. The position can take a wide variety of forms, but in general the goal is for the designee to step into the decedent’s shoes for purposes of overseeing the posthumous career. There is scant legal authority on the subject of creative executorship. The concept of creative executorship is not included in any estate administration statutes and is mentioned in only a handful of published judicial decisions. As a result, many lawyers and creative professionals are not as familiar with the concept as they should be and may be missing out on an important aspect of estate planning for their IP clients. To fill that gap, the following discussion offers an overview of how creative executorship works and presents an array of options for how your clients can incorporate such an advisor into their estate plans.

The authority and duration of executorship. As of this publication, no state in America has a statute recognizing creative executors as having the power to make decisions on behalf of the estates they represent. As a general matter, only personal representatives, trustees, and, ultimately after an estate closes, beneficiaries have that authority. Creative executors technically serve solely in an advisory role.

There may be situations, however, in which your client will want the creative executor or trustee to have decision-making authority and the power to act on behalf of the estate. This may be necessary where the personal representative is entirely unskilled in handling creative assets or where the portfolio of intellectual property is large or complex. Or it may be a simple matter of efficiency: A creative executor who is monitoring patent infringements may be more effective in that role if he or she does not have to obtain the personal representative’s signature on correspondence or pleadings. Where these types of considerations are involved, it may be appropriate for your client to appoint the creative executor as a general co-representative or co-trustee of the estate. Before taking that step, though, keep in mind that personal representatives and trustees have broad power over all of a decedent’s assets. Your clients may not want the creative executor to have such expansive authority, and thus the language appointing the person as co-representative or co-trustee should be crafted carefully to grant the designee power over only the creative assets.

Your clients should consider how long they want the creative executor to be involved in managing the intellectual property. If your client wants the creative executor to have a long-term role after the estate closes, it may be advisable to put the intellectual property into a trust or other legal entity and have the creative executor serve as trustee or manager with the income going to the beneficiaries.

Care must be taken when drafting the documents appointing a creative executor, whether it be a will, trust document, or employment contract. The term “intellectual property” is not statutorily defined and can theoretically incorporate a broad array of assets. To avoid complications later, it is advisable for your client to identify specifically which property interests will fall within the creative executor’s domain. It is also important to specify in the documents what standard of care the creative executor should follow.

The selection process. Your client will have to identify a person who can be trusted, who is familiar with the body of work, and who “gets” what the client wants to accomplish with the work. There is also the matter of affinity for the task. The ideal candidate will be organized, meticulous, familiar with the type of creative rights involved, capable of weighing in on a wide variety of legal and financial issues, and savvy enough to know when to seek advice from others. Although the person does not need to be a lawyer, accountant, or branding expert, a creative executor should be comfortable working in and dealing with people in those fields. But more than a nose for business is required: Protecting an artist’s creative legacy requires vision, sensitivity, and nuance. Advise your client to consider the full scope of each candidate’s suitability for the role.

Where conflicts of interest are a potential problem, your client may want to consider hiring an independent professional representative through a bank, trust company, or consulting firm to serve as creative executor. Because they do not have a vested interest in your client’s estate, such firms presumably can be trusted to give objective advice. But professional executors will not be ideal in every case. Such services can be expensive, and care will have to be taken to find a firm that is well attuned to the particular needs of creative estates.

Ensuring the creative executor’s success. An important first step in ensuring that a creative executor succeeds in the role is making sure that the person is willing and eager to take on the job. To that end, encourage your client to inform the designee of the selection while the client is still living rather than having the person notified after the death. The designee should be told what the expectations and priorities are and be given the opportunity to ask questions. Preferences about business and legacy issues should be communicated and discussed openly to make sure the designee is in accord with the creator’s wishes. Also discussed should be whether compensation will be provided, and if so, on what basis.

Your client also must leave matters in good order. Estates holding intellectual properties face unique challenges that are best dealt with proactively. It is essential for your creative clients to have sound estate plans in place. The better the plan, the better the chances the creative executor will be effective in managing the creator’s posthumous career. Likewise, the more organized the decedent’s work product and papers are, the easier it will be for the creative executor to be effective.

Finally, your client will want to prepare the creative executor for the work ahead. The designee should be provided with a detailed overview of the client’s body of work along with contact information for interested third parties. It may even be advisable to make personal introductions to agents, publishers, dealers, and licensees while the creator is still living. If your client prefers to keep his or her business matters private while he or she is alive, all the necessary information should be readied ahead of time for presentation to the creative executor immediately upon the client’s death. Consideration also should be given to whether the designee might benefit from training, such as a primer on the type of intellectual property included in the estate’s portfolio.

ABA Section of Intellectual Property Law

This article is an abridged and edited version of one that originally appeared on page 36 of Landslide®, January/February 2016 (8:3).

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CLE AND OTHER PROGRAMS: Annual Intellectual Property Law Conference; multiple CLE webinar/teleconferences throughout the year.

BOOKS AND OTHER RECENT PUBLICATIONS: Antitrust Issues in Intellectual Property Law; ANDA Litigation: Strategies and Tactics for Pharmaceutical Patent Litigators, 2d ed.; A Legal Strategist’s Guide to Trademark Trial and Appeal Board Practice, 3d ed.; Fundamentals of Intellectual Property Law.

Ellen F. Brown

Ellen F. Brown is a lawyer and award-winning freelance writer. She can be reached through her website, ellenfbrown.com, or on Twitter @ellenfbrown.