What happens to your digital assets and intellectual property (IP) when you pass away? What can you do to pass these intangible assets onto your loved ones? As a patent attorney working with many inventors and founders, how to pass on their intangible assets to heirs is the last thing inventors think about when they prepare their trusts and wills. This is a huge topic given the high value of IP assets and digital assets such as bitcoins and NFTs.

For example, in 2013, Kodak sold approximately 1000 patents related to digital photography for an average of $500K per piece. Google had purchased 17,000 patents from Motorola a few years before at roughly the same price per patent. Microsoft paid over $1.2M each for 800 patents that AOL provided in 2012. Microsoft also sold hundreds of patents to Facebook that year for $1M each. Available data revealed that the median price for U.S. Patents issued in 2016 was approximately U.S.$ 225,000, and the average price hovered at U.S.$ 360,000. Similarly, trademarks for business names can be worth millions, and bitcoin prices have gone through the roof. So how do you ensure that your valuable assets go to your loved ones when you are no longer around. Here are some things to remember.

In its most basic form, a last will and testament is a legal document in which you express your wishes as to how your property will be distributed after your death. A will lets you control what happens to your property and affairs.  The will can be used as a type of IP assignment to pass your intangible assets to your heirs.

What happens if you die without a will?

If you die intestate (without a will), your state’s laws on descent and distribution will decide who will inherit your property. The laws of distribution and descent vary from one state to the next, but generally, your spouse, children, or, if none, other family members, would receive your property by default.

The state plan is often based on the legislature’s estimate of how people will dispose of their estates. It also includes protections for minor children and beneficiaries. The plan you receive may not reflect your wishes. Some of the protections that are included may not be needed in a peaceful family. You can modify the default state plan by making a will. You can also exercise control over many personal decisions that the general state default provisions do not cover.

What is a Will?

You can make a will that determines how certain property you own at the time you die. However, your right to dispose off property however you wish may be restricted by forced heirship laws in most states. These laws prevent you from disinheriting spouses and children.

Many states have spousal right of election laws, which allow a spouse to claim certain interests in your estate regardless what your will or other documents regarding the disposition of your property. Your will doesn’t govern the disposition of property that is controlled either by beneficiary designations, or by titling. It passes out of your probate estate. These assets include property that is titled in joint names and has rights of survivorship.

They are payable on death accounts, life and retirement plans, accounts and employee benefits, as well as property titled with joint names and property that is payable on death. These assets will pass to another person automatically upon their death. Your Will does not apply to them, unless they are payable by your estate according to the beneficiary designations. Your probate estate is limited to the assets that are subject to your will or to the state’s intestacy laws, if there is no will.

The probate court, also known as the surrogate’s, orphan’s, may have jurisdiction. Reviewing beneficiary designations is an important part of estate planning. Important to remember that the status of property as part of your probate estate does not affect whether it is taxable for estate tax purposes.

Passing Your IP to Heirs

Like any other personal property, IP can be left to anyone by way of a will which acts like assignments of assets. The IP will be left to the next of kin if the owner dies without leaving a will. IP can be placed in a trust for the benefit of a person or charity. To pass on IP assets to your heirs, you should include them in your will or trust. It is also important to ensure that the assets are properly registered and documented so that they can be easily transferred to your heirs. Additionally, you should consult with a lawyer or a financial advisor to ensure that the transfer of assets is done in compliance with all legal and tax requirements.

Next we discuss how a will can recite intellectual property. Here is how you can pass on intellectual property.

Taking inventory of intellectual property

First, take stock of all your intellectual property. There are several categories of IP:

  • Copyright
  • Patents
  • Trademarks
  • Trade secrets

Copyright, patents, trademarks, and trade secrets are all forms of intellectual property (IP) that protect different types of creative and innovative works.

  1. Copyright: Copyright protects original works of authorship, such as literary, dramatic, musical, and artistic works, from unauthorized reproduction, distribution, and display. Copyright does not protect ideas, only the expression of those ideas.
  2. Patents: Patents protect new and useful inventions, such as machines, processes, and manufactured items, as well as certain types of plants and discoveries. A patent gives the holder the exclusive right to prevent others from making, using, and selling the invention for a certain period of time.
  3. Trademarks: Trademarks protect words, phrases, symbols, or designs that identify and distinguish the source of goods or services from those of others. They can include brand names, logos, and slogans.
  4. Trade Secrets: Trade secrets protect confidential business information, such as formulas, patterns, compilations, programs, devices, methods, techniques, or processes, that give a business a competitive edge. Trade secrets are protected under the laws of each state, and under Economic Espionage Act of 1996 for some cases.

Each type of IP has its own set of rules and requirements for obtaining and maintaining protection, and each can be enforced in different ways. It’s important to consult an attorney with experience in IP law to help you determine the most appropriate form of IP protection for your needs.

Copyright law, as the US Copyright Office explains, protects original works of authorship, including literary, dramatic and musical works. Although copyright may not protect facts, ideas or systems, it can protect the way they are expressed.

Copyright protection generally lasts for works created after January 1, 1978. This includes 70 years. A copyright can provide revenue for author estates long after the author has passed away. To be copyrighted, material does not need to be registered. Copyright is created when the material is permanently attached to a tangible medium of expression, such as written down. To enforce copyright, however, the copyright must be registered.

Patents protect inventions such as formulas and machines. Unlike copyrights, a patent doesn’t exist until it has been granted by the US Patent Office or another country’s Patent Office. A patent lasts 20 years from the date of filing. It can also survive the death or incapacity of its inventor. A patent that is expired is not commercially valuable. Trademarks, Trade Dress and Trade Secrets are generally owned by businesses and not individuals. They pass on to the next owner of the business assets.

Other Electronic Assets

Other electronic intangible assets include:

  • Websites and Domain Names
  • Social Media Accounts
  • Cryptocurrency such as Bitcoin
  • Non-Fungible Tokens (NFTs)

Value of domain names and websites

The value of a domain name and website can be difficult to determine, as it can depend on a number of factors, such as the domain name itself, the content and design of the website, and the level of traffic and revenue it generates. Some of the ways to estimate the value of a domain name and website include:

  1. Comparable sales: This method involves looking at the sale prices of similar domain names and websites to estimate the value of the domain name and website in question.
  2. Earnings multiple: This method involves multiplying the website’s monthly or annual earnings by a multiple, such as a P/E ratio, to estimate its value.
  3. Cost of reproduction: This method involves estimating the cost of creating a similar website, including the cost of the domain name, website development, and marketing.
  4. Traffic: The number of visitors, page views, and audience demographics can also be considered in determining the value of a website.

It’s important to note that the value of a domain name and website can change over time, and can be affected by market conditions and other external factors. A professional domain name or website valuator or an experienced attorney can provide more accurate valuations.

Value of Social Media Accounts

If your accounts have many followers and are being monetized, social media accounts can be very valuable. You can download movies, music, or TV shows. These assets can be worth a lot. A McAfee survey in 2011 found that Americans value their digital assets at $55,000. The digital assets market has grown significantly in recent years. Millions of people globally, including 16% of adult Americans, have purchased digital assets—which reached a market capitalization of $3 trillion globally last November.

For online accounts, you should share the master password if you have a password manager and share a document that contains your passwords. Consider all the accounts and apps that you use on a daily basis through your password. Email, bill payment, shopping, social media and many other things. What will happen to these accounts when you are gone?

Remember to share Passwords for unlocking devices as well. Digital content devices such as tablets, phones, eReaders and gaming systems, all have value. You can pass them on to a family member or donate them to charity. You won’t know what you are giving away if you can’t unlock it. You might find sensitive information, such as tax returns or other financial data, in a folder on your desktop. You can either wipe it clean or set it up for another user if you unlock the device.

Value of crytocurrency such as bitcoin and NFTs

The value of cryptocurrencies, such as Bitcoin, and Non-Fungible Tokens (NFTs) can be difficult to determine, as it can be highly volatile and can change rapidly depending on market conditions, investor sentiment, and other external factors. Some of the ways to estimate the value of cryptocurrencies and NFTs include:

  1. Market capitalization: This method involves multiplying the total number of coins or tokens in circulation by the current market price to estimate the total value of the cryptocurrency or NFT.
  2. Metcalfe’s Law: This method, applied to Bitcoin, states that the value of a network is proportional to the square of the number of users on the network.
  3. Utility value: This method involves estimating the value of a cryptocurrency or NFT based on its usefulness or utility in a particular application or ecosystem.
  4. Scarcity value: This method involves estimating the value of a NFT based on the unique, one-of-a-kind nature of the token, which can be considered as scarce.

It’s important to note that the value of cryptocurrencies and NFTs can be highly speculative and that their prices can fluctuate significantly. It’s important to do your own research, consider your own risk tolerance and consult with a professional financial advisor before making any investments.

Now Take Action For Your Heirs

Given the high value of IP and digital assets, your heirs must be able access your IP and digital assets. According to the New York Times, many Bitcoin millionaires are unable to access their wealth due to having forgotten or lost their passwords and the electronic identifiers that allow access to the Bitcoins.

According to CNBC, a British citizen accidentally threw his hard drive containing the password to access his account with a large amount of bitcoin on it out and he asked local officials to allow him to search it in a landfill.  As reported, James Howells (35-year-old IT engineer, Newport, Wales) claimed that he discarded his device during a home clean-out in 2013. He claimed he had two identical laptop drives and that the one with the cryptographic key needed to access his bitcoins was the one he misplaced.  He told CNBC that there is a good chance that the platter in the drive is still intact.

Data recovery specialists could rebuild the drive, or read data directly from it.  According to Howells, he owned 7,500 bitcoins that, at current prices, would have a value of more than $280 million, and the only way to get it back would be to recover that data from the hard drive that he tossed in the garbage eight years ago.  The same lesson can be applied to your will, you need to have that information in a place that can be accessible to your loved one.