The Pitfalls Concerning Copyrights That Every Estate Planning Professional Needs To Know When Representing Authors And Artists

A prerequisite for the estate planning professional is a working knowledge of (if not an expertise in) the Internal Revenue Code of 1986, as amended. For those professionals tasked with estate planning for authors and artists, however, a working knowledge of a different federal statute – the 1976 Copyright Act, as amended, which became effective on January 1, 1978 (the "1976 Act") – is also of great importance. If an estate planning professional does not have a working knowledge of the 1976 Act, the consequences to his or her client may be detrimental and could wreak havoc with the intended disposition of the copyrights associated with the client's creative works. The 1976 Act creates three potential pitfalls that an estate planning professional must consider when disposing of a client's creative works and the copyrights associated therewith, both during the client's lifetime and upon his or her death.

A Gift or Bequest of a Creative Work Does Not Transfer the Copyright

First, in order to transfer the creative work and the copyright during the client's lifetime or upon death, the client must specifically state that the copyright is being transferred with the creative work. A gift or bequest of a creative work, such as a painting, without a corresponding gift or bequest of the copyright will only pass the creative work to the donee or beneficiary. For example, if the client bequeaths a painting to a friend and bequeaths the residue of his or her estate to his children, the friend will receive the painting and the copyright will pass as part of the residue of the estate to the client's children. If the client intends to bequeath the copyright with the painting, the will must specifically bequeath the copyright to the friend.

Copyright Termination Rights Devolve Under Forced Heirship

Second, the estate planning professional must understand the uncertainty associated with transferring the client's copyrights during the client's lifetime or upon the client's death, other than by the client's will. The 1976 Act provides creators with the opportunity to exploit their "original works of authorship" by prohibiting others from profiting from the work for a limited period of time without consent.1 During that limited period of time, the creator can sell, lease, license, and gift the right to reproduce, distribute, perform, display, and prepare derivative works as one undivided "bundle of rights," or more commonly as individual intangible rights. The ability to separate rights from the bundle and transfer them independently enables the...