As we examined previously, certain clients may intentionally or forgetfully skip certain information on assets in discussions with their advisors. Other clients may give wildly inaccurate estimates of the value of their assets. When it comes to intangible assets, however, it's not surprising that clients don't necessarily understand their market value.
Intangible assets can take the form of copyrights, patents, trademarks, royalty rights, the rights to publicity, and many more variations. Copyrights not only cover books and music, but works of art and computer software. Since some rights do not require formal applications to government agencies, the client may not be aware that they own them or that these assets have commercial value and thus potential implications for estate planning. As with many other examples of working with the affluent, the advanced planning team creating the comprehensive plan for the client needs to include a member with experience relevant to the client's situation–in this case, someone who understands intellectual property, such as a patent attorney, entertainment attorney, or software attorney.
The task of the team is to identify the intangible assets, determine the value, and create a strategy for their financial and tax management.
Case Study: Marilyn Monroe
The death of Marilyn Monroe in 1962 led to a pivotal case in post-mortem rights to publicity, and created unexpected estate planning consequences for many others with these valuable rights. It also demonstrates the potential interplay with the intangible rights of others and their descendants.
Monroe left the bulk of her estate to Lee Strasberg, the famous acting coach. At Strasberg's death two decades later, most of his estate went to this third wife Anna, who asserted her sole right to control the publicity of the actress's likeness and image, which still had commercial value.
In particular, she sued the corporations set up by the descendants of photographers who had used Monroe as a subject: Milton Greene, a Look magazine photographer, and Tom Kelley, Sr., who had taken a nude photo in 1949 that became the first Playboy centerfold. Strasberg claimed the corporations had no right to further exploit Monroe's likeness and image. Since the photographers and Strasberg herself sold images prior to the lawsuit, her main interest was preventing the use of photographs in ways that she didn't approve. Her son was quoted at the time as saying, "We don't want Marilyn on tampons…We don't want her on cigarettes."
The photographers' copyrights in the images did not preclude Strasberg's claim to rights to publicity, according to a court ruling, which determined that postmortem publicity rights and rights in an image itself were separate. In another case, Strasberg sued the heirs of another photographer, Sam Shaw, for the use of an image on T-shirts sold at Target stores. Shaw was best known for the photograph of Monroe standing on a New York subway grate with her dress billowing from the rush of air.
Courts in New York and California ultimately ruled against Strasberg. In response, however, the California legislature responded to a revision of the state Civil Code that Governor Schwarzenegger signed asserting rights to publicity even to those who died before the date of enactment, January 1, 1985. Those rights extent to their heirs as well.
In his analysis of the case, Mitchell Gans, a professor of tax law at Hofstra University School of Law, sees a potential problem of the rights of publicity accounted for in an estate exceeding the value of liquid assets. Legislators in California (and in New York, where a similar update is pending) need to make adjustments to account for the estate tax impact, according to Gans and co-authors Bridget Crawford & Jonathan Blattmachr, in "Postmortem Rights to Publicity: The Federal Estate Tax Consequences of New State Law Property Rights," (Yale Law Journal, Pocket Part 203; 2008). Until that time, advanced planning teams need to consider the estate impact of these rights when developing plans.
