ESTATE PLANNING FOR WRITERS

(with a side note on electronic estate planning.)

by Robin Roberts

*Note from Sarah — Robin Roberts is my lawyer and he’s very, very good, so listen to him.  However I want to add ONE thing to planning your elife if you’re a writer.  I get sent novels, short stories, etc by friends, merest acquaintances and total strangers to “read and give me an opinion.” Most of the time they don’t get downloaded, and it’s not even because I don’t intend to read them — it’s more that I have a mind like a sieve.  If you’re a friend, a regular commenter or a friendly acquaintance and waiting for me to read your stuff, poke me.  But if I like the person, they do. If these are already published, I put them in my ebooks drive (i.e. the books I buy/get to read.) But if the person wants comments and editing, it goes on the work drive.  So, suppose I drop dead tomorrow.  Given my tendency to write under names even they don’t know, how does my family figure out which books are mine?  Well… I keep them under a directory called Other People’s Writing.  If they can’t figure it out from that, I can’t help them. And now listen to Robin who knows a lot more about this stuff.*

Sarah and I were discussing some deep philosophical concept via email (either ICANHAZCHEESEBURGER pictures or the best way to word a Craigslist ad for selling the boys) when she sent me a completely out of topic message: “if you have time and patience, would you do a post about electronic estate planning for writers”.

So what can I do?  Here are some more or less random thoughts based on my years of estate planning and probate practice.

Estate planning for authors must be more carefully thought out than ordinary estate planning. Authors have a unique form of property in a copyright of a work.  It is “intangible” property – in contrast to tangible property like cars, personal possessions or real estate. (Even bank accounts are “tangible” in the definition that I’m using).  And in the more common vernacular of “intangible”, your heirs may not even think of that form of property in dealing with your estate.

In ordinary estate planning, one aspect of what we consider is whether or not the client’s estate would have to undergo the probate process upon death – the court administration of an estate.  Most states have some form of easy non-court process – often nothing more than a sworn affidavit and a copy of the death certificate to claim property – for heirs to obtain their inheritances for small estates but what a “small estate” can be varies greatly from state to state.  Sometimes a court appointed executor for the estate ( or personal representative as called in other states ) can have powers that make such a court probate useful even if the estate would qualify for “small estate” handling. We can also use trusts – revocable (aka “living”) or irrevocable – to organize an estate to avoid probate.

Authors, with their unique forms of assets, can use a couple of mechanisms to make it easier for their heirs to handle their copyright works upon their death.  Certainly a well-drafted will can operate on an estate.  Finding an estate planning attorney who also understands copyright can be important because of some of the statutory issues in US Copyright law, e.g., the Section 203 right to terminate transfers has a specific list of who succeeds to the right upon the author’s death.  Consider that you may wish to separate control of your copyrights from the monetary benefit.  In other words, you may wish to appoint someone to have the power to license your works after your death to control how your work is exploited that is different from who you want to receive the revenue from those works.  That may require that your estate plan create some mechanism like a trust to hold those copyrights.

Another mechanism is to use a corporation or limited liability company to control the ownership of the works, then use your estate planning to decide who keeps control of the corporation and who receives revenue from it.  Perhaps using more complex structures like voting trusts to keep control the corporation in the hands of a trusted administrator while seeing that your heirs receive the benefit of the proceeds. That can be more complex to set up during your lifetime but less work for your heirs.

 

Now for this purpose, trusts are very useful and there are lot of really neat things you can do with trusts that are well drafted. The original purpose of trusts was to separate the benefit of property like income, rents, profits etc. from the control of the property.  But you won’t find a trust that is designed to work with intellectual property assets like copyrights and trademarks in a Nolo Press book or software will drafting programs or online legal document services. Estate planning firms charge serious money for drafting trusts and explaining to you how to use them.  Indeed, the latter is the real problem.  I can’t tell you how often I run across someone who has paid thousands of dollars to a law firm to draft a trust, then failed to fund the trust i.e., failed to transfer into the trust the property that its supposed to control.  If you don’t know how to use a trust, you’ve bought very expensive but not very soft toilet paper.

Now what did Sarah mean by “electronic estate planning”?

Today, so much of our lives are online, especially for people who feed themselves with words.  So much of our lives are also in our email, on websites, in forums and such.  Even outside of the literary world, when we handle estates we are finding a lot of trouble dealing with the deceased’s online life.  Some of it is obvious, like online banking.  If you don’t get mailed bank statements, it can be a struggle finding financial accounts.

So everyone needs to keep some records of where their accounts are, their email accounts with passwords (well, except for the ones you use to pay for your porn website subscriptions … don’t ask …), websites that they own, and such.  And it can be a good idea to have a list of online forums if you have a significant online life.  Our online lives are becoming more significant.  I greatly miss some online friends or acquaintances. There have been many times that I’ve been truly grateful that someone was able to come online and tell me of an online friend’s passing because they knew about that forum.  (This can also be true for a serious illness, some of us were very concerned about our ability to reach Steven Den Beste last year during his recovery from his stroke.)

But an author also has to consider how to organize for his heirs or executors the intangible assets of his writing business.  The copyrights that he holds, are they registered?  If not, is there documentation of the work sufficient to establish when it was created and published?  If they are registered, is there a list of all the copyrights for the heirs/executor to use to find them? What accounts are setup with Amazon, Nook Press, Smashwords etc. and what are the account credentials?

And pen names pose a special problem.  Some are only decorative, in that the copyright is registered in the author’s real name. Compare “S. Andrew Swann” works with the copyright page in the name of Stephen Swiniarski for example.  But its possible to register a copyright in a psuedonym that is opaque to the Copyright Office. Have you done this and if so, are there records in a convenient place for your executor to find?

Some authors use the tradename or “doing business as” registrations of their local Secretary of State to be able to accept royalty checks in their opaque pen names, do your records include these filings so that your heirs/executor can locate them and renew them if needed?

These problems are also among those more easily solved by an author owning a corporation or limited liability company that has in its records those works, or even has the works registered in its name as works for hire (see Kevin J. Anderson and his use of Wordfire Inc.)

 

Robin D. Roberts

http://www.robertsandroberts.net

 

CROSSPOSTED at Mad Genius Club

 

23 responses to “ESTATE PLANNING FOR WRITERS

  1. I had two thoughts after giving this to Sarah. First a note on terminology:

    Will – a document in which one describes how one’s property should be distributed after death and appoints a person to represent the estate (Executor or Personal Representative are common terms for that person). State requirements for a valid will vary slightly from state to state.

    Power of Attorney – a document that gives another power to act on your behalf while you are still alive. A Power of Attorney expires upon your death.

    Probate – the court supervised administration of an estate.

    Trust – an entity set up to separate control of property from the benefit. Some trusts are created by the operation of the will – Testamentary Trust – and do not exist until the will is carried out in a probate.

    (“Living Will” and Medical Powers of Attorney have nothing to do with property but about medical care decisions)

    • Second: I don’t know if its something in the air but on two occasions this week, I spoke to someone about their parent’s estate planning. Both persons start out their discussion with me with: “You see, I’m executor of my parent’s estate ….” Wait a minute, I replied, I thought your parent was still alive? “Well, yeah but my parent named me executor in their will, so doesn’t that mean that I can do X, Y and Z?”

      No. Being named executor in a will is completely meaningless before that person’s death. And not least because they can change their will. A Will is not a document that confers any powers before death. And except for small estate administration if applicable in your state, an executor (or Personal Representative) has no powers until a court has appointed them.

  2. A thought about Digital Reality for writers & non-writers alike: Whose name (credit card) are the e-scriptions in? When you stop paying the bills do the family Kindles and Audible accounts become disabled? Will the self-renewing news accounts (e.g., PJTV) keep charging to your credit card until the heat death of the universe?

    It would be terrible for the family to not only lose you but to lose access to the e-reader & the audio-books but have to keep paying for your Amazon Prime anyway.

    Of course, it won’t be your problem.

  3. What would be the reasons for separating control over copyright from receipt of royalties? Is it to prevent crass monetary desire from strip-mining the estate, turning any and every thing the author ever wrote into merchandise the way the record companies did Jimi Hendrix’s unpublished oeuvre? Ensuring that manuscripts deemed to embarrassing for publication are erased and their storage devices slagged rather than turned over to some hack to convert into publishable variable stars?

    Considering the vast number of times in any given week that Sarah or one of the other authorial hons drops a “that gives me an idea for a story” comment, it is easy to imagine an anthology of works “from an idea by Sarah Hoyt.”

    Now I think on it, I think we’ve even discussed such an anthology based on the letter-load of story ideas RAH sent to Theodore Sturgeon.

    • What if you want a minor to get the royalties, but leave control over the copyright with an adult guardian or a literary trust? That’s another scenario that sprang to mind.

    • RES, sometimes you don’t trust the wisdom of the persons you want to receive the money. But another reason might be if you just don’t know if splitting up control would work. Say you have five children who don’t seem to ever agree on anything. Perhaps you’d lodge control of the copyrights in the hands of the one child whose judgment you trust, but split the revenue among all of them. Else licensors would have to hunt down all five to get signatures on license agreements etc.

      • Well, for instance, my sons might have trouble agreeing the sky is blue. (Depends on whom they marry, it might be easier to give ONE control and both royalties.)

    • And that MIGHT happen through Baen. Fingers crossed.

  4. I’m stymied until I can settle on an heir. My husband & I are childless, all siblings and parents gone, and only misc. cousins remain. We have no obvious heir. Now before you all go and volunteer, what’s it like to try and come up with an institutional heir? It would have to be some sort of literary trust or something like that, but I am intimidated by (a) identifying something appropriate and (b) figuring out how that would work and (c) ensuring they were “in the publishing business” somehow.

    In a perfect world, I’d find some up-and-coming author or group of authors and donate in that direction (assuming they were business-like enough to add my backlist to theirs — don’t laugh, I’ll have a backlist by then.) Or a non-profit of the same sort.

  5. Hey, Sarah. *poke*

  6. Okay, guyz, the legal algorithm works this way:

    If you don’t have a will or other instrument, the state gets to decide how your estate gets distributed after you croak. For more information as regards how it gets distributed, google the name of your state and the words ‘intestate succession’. In short, it gets distributed to your spouse, your kids, your parents, your siblings, etc. in pretty much that order. If ya ain’t got a spouse (kids, parents, sibs, etc), then google the name of your state and the words ‘escheat’ or ‘escheatment’ (quick hint: if ya croak without any spouse or relatives, it goes to the state).

    If you have written a will, and then you croak, those who come after you have to deal with a little thing called ‘probate’. It’s a process by which the court gets to decide whether your will is valid, and whether your property will pass to who you decide it will go to, or to those who contest the will (hint: the saying should actually go: ‘where there’s a will, there’s a contest’). Oh, and did I mention that lawyers have to be called in to do the work? Guess what: they don’t come cheap. If you’re (somewhat) lucky, you’ll croak in a state like California, where there are statutory limitations on how much the shysters can gouge you for, er, charge you. Even so, I’ve helped to probate about twenty estates in California, and I can assure you, it is a twenty-four carat pain in the @$$ to do so. Count on spending a year or so to do so, and a lot of time and effort.

    If you have set up a corporation or a trust, and have managed to transfer your rights to your intellectual property (copyrights, trademarks, patents) to it, then you might be okay, if you have also chosen competent people to act as your corporate directors/trustees. Of course, if you haven’t transferred those rights before your death, see the paragraph above, concerning probate. You’ll (or your kin) will need to go through that particular gauntlet to get your assets in gear.

    Of course, if you use a corporation, you will also have to pay the corporation fees/taxes/etc. In California, the last time I looked, the bite is about $1,000.00 per year at minimum. If your name happens to be Stephen King or J.K. Rowling, count on it being a lot more. And if you do not pay, your corporation is in default. Bad news.

    In short, I would suggest that the aspiring author, before he or she expires, get a trust set up, a pour-over will to give the means of transferring any property he/she’s failed to transfer, and to get as many of his/her assets transferred into the name of the trust or its trustees. Oh, and get someone who has some business and legal knowledge to be the trustee(s)/executor(s).

    You could probably do worse than to check out the author of the original weblog posting to see whether he has the knowledge/skill set/bar card to help you out. If not, try an agent who also has a J.D. and an MBA.

    • “You could probably do worse than to check out the author of the original weblog posting to see whether he has the knowledge/skill set/bar card to help you out.”

      Did you read Sarah’s intro? Robin IS her attorney. I’m not going to get into my concern over your advice to “google” intestate laws because there are so many sites with bad information out there, not to mention that most folks’ eyes glaze over legalese. That said, every one of us who writes needs to check with an IP attorney and one well-versed in intestacy laws of our state to set up what is needed to make sure our work, and our families or loved ones, are protected.

      • Yes, this also makes me wonder what in heck the commenter thinks I am. No, I wouldn’t put up just ANYONE’s post on legal matters. Geez. If he thinks that badly of my sense, why does he read my blog?

    • Will contests are very rare in actuality. People often think that avoiding probate is the only goal or at least avoiding the cost of probate. But depending on the state, probate may not really be that expensive and can have benefits such as dealing with the deceased’s debts.

      Too often, people “solve” the problem of probate by putting houses in their kids’ names. Ignoring the occasional outright theft of the property by dishonest son or daughter, usually the result of such “thrift” is a tax bill – from screwing up the basis in the house – several times more expensive than good estate planning would have cost.

  7. bernardbrandt

    Dear Amanda and Sarah:

    Yes, as a matter of fact, I HAVE read the intro, and know that Robin is Sarah’s attorney. This writer is left handed, and therefore, is wont to give left-handed compliments, and was attempting (in addition to filling in some blanks which I believe were left by Robin in his essay) to compliment Robin.

    I would respectfully request that you two not get your collective panties in a bunch, and take offense only when it is meant. It seems that there is quite enough of that going on in the SFWA just now.

    Cheers.

    • Dear bernard,

      The problem with left-handed compliments is that, unless done somewhat cleverly, they frequently come off as back-asswards rather than left-handed. This is especially troublesome on the interwebz where nobody can see with which hand you diddle yourself.

      As this blog has recently seen an excess of would-be trolls the present proclivity for knicker-knotting is at a higher than normal level, resulting in a penchant for shooting first and reading the entrails afterward.

  8. This is an increasingly important topic for authors and bloggers. Especially now that several states are progressively moving forward with new legislation that addressed digital asset management and creates specialized powers of attorney for this area. Looking forward to seeing what develops.