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Own Copyrights? There May Be Special Planning Required

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Posted on Mar 31, 2017 | Share this post: Like Us on Facebook Join Us on Google Follow Us on Twitter

If you are a creative person who puts your talents to work, you probably own copyrights, and it’s important to consider the special rules governing your rights in your estate plan.

Copyright law protects a person’s expression of an idea and gives the originator the right to reproduce it exclusively for a period of time.

Books immediately come to mind, but copyright covers a wide range of material: computer programs, apps, music, choreography, graphics, sound recordings, architecture, and what’s called “derivative works,” including translations, dramatizations, movies, etc.

Copyright protection stems from the Constitution (Article 1, Section 8, Clause 8).  Generally, if the work was created on or after January 1, 1978, the copyright lasts for the author’s life plus 70 years.  After that, the work enters the public domain.  (There are different rules for some specific situations such as works made for hire, works with multiple authors, anonymous works, etc.)

The physical form of the work (painting, print, CD, DVD, book) is separate from the copyright.  If you give someone a painting, that does not give them the right to make copies and sell them on Etsy.

So, even if you give away all of your things before you die, you haven’t given away your copyrights.  It’s important to consider copyrights separately.

Once you decide who should receive your copyrights (look ahead at least 70 years after your death), it can be fairly complicated to ensure it’s a gift that lasts.

Copyright transfers are not permanent.  Artists (or their heirs, if the artist is deceased) have termination or reversion rights to un-do prior transfers.  If an artist has transferred a copyright he/she can get it back, if certain rules are followed.  This rule is so that if a work becomes popular  years after a copyright is transferred, the artist (or his family) can retrieve the remaining value.  This can be a great thing for artists (here are examples of those who are trying), but it also can have unintended consequences.

Transfers can be un-done even if they were to an entity controlled by the artist, such as a trust or business entity like an LLC.  A termination right cannot be altered – it’s not assignable or waivable.  They belong to your heirs and cannot be taken away.  This means that, after you die, your spouse and children (and grandchildren if a child has died) can un-do any transfer you made during your life.  Spouses get 50% and children get 50% of the right — your spouse does not control the entire interest, and all children (from however many marriages) control their 50%.

There are different rules for pre-1978 and post-1978 copyrights.  For pre-1978 works, an artist (or, if deceased, his or her heirs) can terminate transfers for five years beginning on the 56th year after the transfer, and for post-1978 works, the artist (or if deceased, his or her heirs) can terminate transfers during the five years beginning at the end of 35 years from the date of the transfer.

Say you have a spouse and three kids and self-publish cookbooks as a hobby and sell them online.  You have a living trust and assigned all of your copyrights to your trust in 2010.  You name your daughter, who has helped edit cookbooks and develop recipes, as special trustee for the cookbook copyrights so she can develop and sell them, etc.  You die in 2030 and your wife dies on 2035, your daughter takes over and does a great job, and the cookbook sales take off.  Starting in 2045, the other two siblings can exercise their reversion rights (they have 2/3 of the right, more than 50%) and take the copyrights away from the trust.

If you have no spouse, children, or grandchildren, the right falls to personal representative (aka executor) or trustee.  So if you have no spouse or kids and instead assigned rights to your LLC run by a business partner, when you die, your personal representative could pull the rights back into your estate.

There is, however, a way to make the transfer permanent.  There is a specific “carve out” in copyright law for Wills.  Bequests of copyrights under a Will are permanent.  So, an artist can leave copyrights to a person, trust, LLC, etc., by Will, and that cannot be un-done.  Bequests under a Will, however, can trigger a probate proceeding, which most people want to avoid.  But probate may be a small price to pay to ensure the copyright goes to the right person.

This special area of the law may also be useful if you have a creative parent who dies.  You, your siblings, and your parent’s spouse may share reversion rights and have the ability to un-do transfers made.