How is a trademark connected to one's personal estate planning? Why is estate planning important if you own a trademark? If you are a small business owner, you protect your building with commercial insurance. You write a business plan, you put your time and energy in your business to become successful. You take steps to promote your business. Do you take the time and money to fully protect your business assets and your personal assets? Let's look at why a trademark is important for your business, and why you need to think about it in your personal estate plan.
Why is a Trademark Important?
What is a trademark? Trademark is an area of law in which a word, phrase, symbol, design, or a combination of these identify your goods or services.According to one of the top Trademark attorneys, Morris Turek of YourTrademarkAttorney.com, a trademark embodies “the qualities and characteristics of the products and services with which they're used.” The trademark “offer us an assurance of product quality and consistency.” Why is a trademark important?
Small business owners may use a trademark locally, within their state, in a country, or even internationally. Common law protects the local use of a trademark. Local use limits the trademark to the geographic region of the business. State registration protects a trademark within the state where the business exists. A federally registered trademark is enforceable against infringement. Since it is such an important part of doing business, the business owner needs to consider its value as an asset in his /her estate planning.
Trademark as an Intellectual Property Asset
Why is a trademark an intellectual property asset? To be a valued asset, the trademark must be in use. Trademarks serve consumer welfare interests. Trademarks make products easily identifiable. Consumers tend to associate a business, its products, and quality, to the trademark. Trademarks play an important role in a business' branding and building trust. Therefore, Trademarks are a use property right connected to another business concept – goodwill. Goodwill produces a valuable trademark asset. Trademarks is an intellectual property asset and is important in a business succession plan. It is important to take care of an IP asset in a person's estate plan.
Often trademark attorneys name the business entity as the owner. Why? Remember a trademark represents the business, its product, and the business' reputation. The business provides the goods and services. Individual ownership may exist if it's a sole proprietorship or there is an Intent to Use (ITU). For more information on filing a valid application, visit YourTrademarkAttorney.com. It is important to file the trademark correctly or it can be invalidated.
As part of the business goodwill, the value of intellectual property is fast becoming a hot topic in estate planning. Therefore, ownership and the license to use the trademark, is being revisited. Trademark ownership and its role in estate planning is fast becoming an important part of a person's estate plan and a business owner's succession plan.
Trademarks and Estate Planning
If the business owns the trademark, how does it become part of an estate plan? Perhaps the owner considers gifting the trademark? Well, it's individual ownership creates issues. Gifting assets may cause a gift tax. Perhaps, gifting a valuable asset is not the best solution.
Last Will and Testament
A Last Will and Testament is a basic plan and is better than nothing. It does not take care of a trademark in the event of incapacity. If left in a Will, it is an asset. As an asset, it will go through the probate process. However, a trust is a solution for your trademark and estate plan.
Your Trademark and Your Living Trust
A Trademark may be assigned to a Trustafter the application approval. The trust may own the trademark. The Trust licenses the trademark to the business. The trustee exercises quality control of the assigned trademark use. It is important to incorporate a trademark license agreement between the trust (licensor/owner) and the business entity that is assigned the trademark use. The license agreement is filed with the United States and Patent Office. Your business operating agreement and your estate plan need to complement each other.
Death and Incapacity
When a person dies or becomes incapacitated, what happens to a Trademark in a Trust? First, the trademark must still be in use. The license agreement must be reviewed. It's crucial that the Trustee understand how to maintain the Trademark's validity and to work with a person with knowledge to guide the valuation process. The Trustee of the trust continues exercising control over its use by an entity. By being placed in the trust, the beneficiary continues the enjoyment of the trademark's value. As a trust asset, the trademark does not go through the probate process. In addition, the trademark in a trust becomes an important asset in business succession planning.
Your Estate Planning Attorney
Don't leave your Intellectual Property and your estate plan up to chance. I work with intellectual property attorneys in a team approach to take care of your IP assets. Your Trademark Attorney helps you with trademarks. I help you with Estate Planning! To make sure your document spells out exactly what you want it to say and do, call me at 314-332-0011 or Book time with Sheri Tucker for your complimentary consultation.