Estate Planning Checklist for Trademark Owners

Many business owners have a unique estate planning concern – trademarks!

Like other assets, trademarks are valuable assets that deserve special attention during the estate planning process. This is a space that potentially creates overlap between personal estate planning and business succession planning.

When dealing with estate planning concerns related to trademarks, it is essential to consider several key aspects to ensure comprehensive coverage. The following is a cursory checklist of the important steps when considering trademarks through estate planning:

1. Identify & Document Ownership of Trademarks

It is very important to verify the current ownership of the trademark and ensure that it is properly registered with the United States Patent and Trademark Office (USPTO) or with relevant state authorities.

• Inventory All Trademarks that are owned: First, start with creating a list of all registered trademarks, common law trademarks, and trademark applications, including registration numbers, filing dates, and descriptions of each mark, within the owner’s portfolio.
• Organize Trademark Documentation: It is imperative that all relevant documentation is properly stored and organized. All related documents, including registration certificates, applications, renewals, and licenses, should be kept in a secure location such as a fire-proof safe.
• Access to Digital Information: In addition to protecting the physical documents, it is also important to make sure the named fiduciary, such as the executor or trustee, has access to any online trademark portfolios or platforms where the trademarks are managed.

2. Determine the Value of Your Trademarks

Determining the value of the trademark portfolio is a very involved and potentially complicated step.

• Conduct a Trademark Valuation: When valuing a trademark, it is important to work with an intellectual property (IP) valuation specialist to determine the economic value of the trademarks based on factors like market presence, brand recognition, and licensing revenue.
• Establish Revenue Streams: If a trademark generates income through licensing agreements or brand partnerships, it is also imperative to clearly document all revenue sources.

3. Decide on Ownership Transfer Options

An important step of the estate planning process when considering trademarks is deciding who will be the beneficiaries of the mark and how it may be transferred to them.

• Plan for Transfer to Beneficiaries: During this step, it is important to specify whether trademarks are to be transferred directly to beneficiaries or through a trust. Any transfer should include clear instructions to avoid disputeslater.
• Consider a Trust for Trademark Management: Similarly to other assets, placing trademarks in a trust can streamline management, especially if beneficiaries may be minors or there are multiple heirs. However, transfers may also be accomplished through documented assignments. It is imperative to ensure that such transfers comply with relevant statutory requires and is properly documented.
• Prepare Successor Guidelines: Another issue to consider is how trademarks may be managed after the death of the original owner. This includes successor guidelines such as licensing terms, renewal timelines, and quality control to maintain brand integrity.

4. Address Trademark Management & Maintenance

• Notated and Record Renewal Timeline: It is commonly known that trademarks must be renewed during their lifetime. Therefore, one must ensure that trademark renewal dates are well-documented and specify who will be responsible for keeping registrations current.
• Monitoring and Enforcement Provisions: Similarly, to ensure a trademark maintains its uniqueness, a degree of monitoring for other similar trademark uses and registration applications is necessary. Defining the guidelines for quality control to protect the trademark’s distinctiveness and value and identifying steps to monitor for infringement and manage brand reputation is an important aspect of this process both during an owner’s lifetime and beyond. Enforcement of trademarks may involve litigation or arbitration, both of which must be considered in the estate planning process.
• Designate a Successor Manager: In cases in which trademarks require ongoing management due to licensing agreements and the like, it is best to designate a qualified manager or trusted person to oversee the trademarks. Such a person may be a beneficiary with the ability and means to serve as the manager or a third-party such as an IP attorney who regularly provides these services to various trademark owners.

5. Consider Tax Implications

• Assess Tax Liability: As a valuable asset that potentially may be income-generating, a trademark may significantly impact the value of an estate and potentially pose a tax liability. It is imperative to coordinate with a tax advisor, such as a CPA or tax attorney, to understand the potential estate tax implications of your trademarks. 
• Reduce Tax Burdens: As with any asset, the goal is always to minimize its tax liability. One must consider tax-efficient transfer options with their tax advisor, such as lifetime gifting or structuring a trust, to reduce the estate’s overall tax liability.

6. Plan for Trademark Licensing and Royalties

• Outline Licensing Agreements: Existing licensing agreements may outlive an owner. Therefore, it is important to detail any active licensing agreements and the terms involved. This includes royalty distribution instructions and possible conditions for renewing or terminating licenses. This step will ensure that any burden to beneficiaries from the income generation aspect of a trademark is minimized.
• Identify Beneficiaries for Royalties: Specifically identifying the individuals or entities who should receive royalty income and providing instructions for managing these payments over time is a crucial step in estate planning for one’s trademark portfolio.
• Address Licensing Disputes: Another precautionary step would be to identify and delineate any potential licensing dispute resolution steps for challenges that may arise with licensees after the death of the owner.

7. Communicate with an IP Attorney and Estate Planner

Estate planning for trademarks requires working with several professionals such as an accountant, an intellectual property attorney and estate planners.

• Work with an IP Attorney: An intellectual property & trademark attorney can assist with ensuring the trademark itself is handled in accordance with the owners wishes, and as permitted by law, through the use of various licensing agreements and monitoring systems.
• Align with Your Estate Planner: The estate planning attorney, however, must be made aware of these assets and how they are legally held by the owner during their lifetime so that they may be effectively incorporated into the estate plan.

8. Consider Long-Term Business Goals for Trademark Assets

• Decide on the Future of the Brand: When a trademark is tied to a business, outlining the vision for the brand’s future is very important in an estate plan. This includes indicating whether the mark should remain with the family, be sold, or be merged with other assets.
• Potential Sale of Trademarks: If an owner’s business exit plan is that the business should eventually be sold, the owner must outline how the trademark should be valued and transferred to retain its worth.

9. Prepare Detailed Instructions for Executors or Trustees

Depending on the level of planning desired by the owner and the complexity of the trademark portfolio, it is important to prepare very detailed instructions for the management of one’s trademarks.

• Create Detailed Instructions: A fiduciary may not necessarily be familiar with the management of trademarks. So, it is imperative that detailed guidelines on managing, renewing, and enforcing trademarks, including any licensing contracts, are provided. Granted, in most cases, more complex trademark portfolios would be managed with the assistance of a professional.

10. Regularly Review and Update Your Plan

Similarly to most assets, a plan for the handling of trademarks is not a one-and-done process. An ongoing review and changes to the plan may be necessary.

• Annual IP Review: Each year, owners must conduct a review of their trademark portfolio to ensure any existing estate plan includes any new trademarks, changes in value of existing marks or still reflects the intentions of the owners related to beneficiaries, named fiduciaries etc. During this stage of the process, IP professionals will ensure that existing trademarks remain compliant with existing laws.
• Update Beneficiary Information: This yearly review should include a re-evaluation and updated list of beneficiaries and other designated individuals involved in managing or inheriting trademark rights.

Conclusion on Estate Planning & Trademarks

Typically, the prime objectives of estate planning for trademarks are not only to protect intellectual property but also to ensure that the legacy and brand value built over years by the owner are preserved and carried on according to their vision.

Working closely with both IP and estate planning professionals can provide peace of mind, knowing that your trademark legacy will continue to be a valuable asset for your family or business for years to come. If you are seeking to protect your trademark portfolio through your estate planning efforts, feel free to contact us to get the discussion started.