Download ASCAP's Estate & Trust Planning For Music Copyright Owners in PDF format.
Before we discuss estate planning in any detail, you should be aware of certain estate planning issues that are specific to copyrights. Knowing the quirks of copyright law is important to planning your estate and applying the techniques discussed in Parts II-VI below.
A copyright is a "bundle" of legal rights initially owned by the writer. With a few important distinctions, a copyright generally is like any other intangible asset of your estate. Thus, copyrights can be owned jointly, held in trust, transferred by gift or at death, and so on, just like any other property.
Inventory and Valuation
A first step in planning for the disposition of your copyrights is to know what copyrights you have and how much they are worth. Sometimes, even determining whether a musical work is still protected by copyright can be difficult. For that purpose, we recommend you seek the advice of a qualified copyright lawyer. Estimating the value of a copyright also can be difficult. We recommend that you seek the help of a qualified appraiser. Generally, the appraiser is likely to look at the income-producing history of the copyright, or, where available, the value that the marketplace has put on the copyright or similar copyrights. Having some idea of the value of your copyrights will make evaluating your estate planning options easier, and will also enable you to predict any Gift or Estate Taxes that may be imposed upon them. In addition, you should be aware that having your copyrights appraised by a qualified appraiser might be mandatory where the copyright must be reported on a Gift Tax or Estate Tax return.
Transfer of Deceased Members' Royalties
Given the unique needs of the estates of writer members, ASCAP permits the estate to sell or irrevocably assign the right to receive ASCAP writer royalties. ASCAP also permits living members to assign royalties irrevocably to a family member, living trust, or family-held company.
You are permitted, of course, to transfer to those heirs, legatees or other persons you designate in your Will your right, title and interest in any musical works, including the right of public performance, subject to any contractual licenses that you may have made in your lifetime. (For information about possible options for terminating those licenses, see the following three sections.)
As discussed in the next section, however, the copyright law has some wrinkles that dictate, in certain instances, who receives a writer's renewal or termination rights notwithstanding any instruction to the contrary in the writer's Will.
One element of copyright law to bear in mind when planning relates to the so-called "renewal term."
Remember that copyrights do not have an unlimited duration. Works created in 1978 or later (or created but unpublished before 1978) have a "unitary" copyright term that extends, in most cases, for the life of the author plus 70 years. These works therefore have no separate renewal term.
Instead, the concept of the renewal term is a creature of the "old" Copyright Act and affects only "pre-1978" works, meaning works in copyright before January 1, 1978, when a new U.S. Copyright Act took effect. For any of these works, the copyright term is divided into two: (1) an initial term of 28 years following the earlier of the work's (a) creation and publication with notice or (b) registration, and then (2) a renewal term of an additional 67 years. Because more than 28 years have passed since December 31, 1977 (the last day before the effective date of the "new" Copyright Act), all pre-1978 works that are still in copyright are now in their renewal terms. The renewal copyright could vest only in the following parties: (1) the writer; (2) if the writer is dead, the writer's surviving spouse and children, as a class; (3) if there are no surviving spouse or children, the writer's executor under the writer's Will; and (4) if the writer left no Will, the writer's next of kin under state law. These classes are often referred to as the "statutory heirs."
As first conceived, the renewal copyright vested in the first class of statutory heirs that contained any living members, so long as at least one member of that class had filed a claim for the renewal copyright in the last (28th) year of the first term. If no claim was filed, the work fell into the public domain, and the copyright could not be revived. To avoid this forfeiture of renewal copyrights, the law was changed so that any work published with notice (or registered) during 1964 and afterward renewed automatically, whether or not a renewal claim was filed. After this change, renewal claims could still be filed, and if they were, then the renewal copyright vested on the first day of the renewal term in whatever statutory heir was entitled to the renewal copyright as of the filing of the claim. If no renewal claim was filed, the renewal copyright vested on the first day of the renewal term in whatever statutory heir was entitled to the renewal copyright on the last day of the first term. Once vested, the renewal copyright became an asset like any other, freely disposable by the writer or other statutory heir(s) in which it vested (subject to ASCAP rules regarding transfer, if the writer was a member, and subject to the recapture rights discussed in the next section).
The important result of this renewal scheme is that the Copyright Act—not the writer or any party to which the writer transferred rights during the first term—dictated who was entitled to obtain the renewal copyright in a pre-1978 work not yet in its renewal term when the writer died. No matter what rights the writer granted in his or her contracts or Will, the Copyright Act would trump them (that is, unless the work was renewed during the writer's life). As an example, consider a writer with a spouse and child. Imagine that the writer had died in the first term of copyright before filing a claim to the renewal term. Here, the law provided that the renewal copyright belonged to the eligible statutory heirs, even if the writer had provided in his or her Will that the renewal copyright should go to, say, a parent, sibling, or charity. In other words, the copyright law would have trumped any contrary wish of the writer and required that the renewal copyright pass to the surviving spouse and child. Again, once the renewal copyright vested in them at the beginning of the renewal term, they became free to keep that copyright or transfer it like any other asset (subject to ASCAP rules regarding transfer, if they are successor members). They may also be entitled to exercise the recapture rights discussed in the next section.
(Note that the Copyright Act defines a person's "children" as "a person's immediate offspring," including all adopted and nonmarital children. For all copyright-related purposes, this definition trumps any other that might apply, including any definition under a state's inheritance law.)
Recapture of Renewal Term if Transfer Made Before January 1, 1978
When extending the renewal term as part of the new Copyright Act, Congress also provided a means for recapturing the extended term where rights had been assigned or licensed to third parties. Specifically, if a writer or one of a writer's statutory heirs entered into an agreement assigning or licensing a renewal copyright before January 1, 1978, whatever rights were granted could be recaptured for the renewal term's final 39 years. (Note that the only grants subject to this form of recapture are those made by the writer or a statutory heir while living, not any grants contained in their Wills.) If the writer is still alive, the writer may exercise the recapture himself. If the writer has died, the recapture may be exercised by the writer's surviving spouse and children (including grandchildren by a predeceased child), or, if there are none, by the writer's executor or administrator. The recapture provision applies only to works that (1) were published with a copyright notice or registered before 1978 and (2) are not works made for hire. The recapture must be exercised by following a specified notification procedure during the 5-year period beginning 56 years after the work was first published with a copyright notice or registered.
If that 5-year period ended on or before December 31, 1997 without the right of recapture having been exercised, the same parties have another chance to recapture part of the renewal term—this time, the final 20 years. This second option for recapture must be exercised during 5-year period beginning 75 years after the work was first published with notice or registered. (Note, however, that if the first window ended or will end after December 31, 1997, this second opportunity is not available.)
In both cases, the copyright law trumps anything the writer's Will says about who is entitled to any recapture. In other words, if the writer's Will says that "Person X" may exercise the recapture instead of the eligible persons listed in the Copyright Act, the Copyright Act overrides the Will. The prerogatives of the surviving spouse and children, or if there are none, of the writer's executor or administrator, to recapture portions of the renewal term are absolute, and the Copyright Act also makes unenforceable any agreement that attempts to waive this right.
In sum, when planning for the disposition of the copyright in a work that was transferred or licensed by the writer or one of the writer's statutory heirs, keep in mind the possibility that they may be able to recapture the rights for a portion of the renewal term.
Termination of Transfers For Works Created On or After January 1, 1978
The Copyright Act also affords an opportunity to terminate any transfer or license of works created by the writer (other than in the writer's Will) on or after January 1, 1978. To be clear, this right of termination applies only to agreements that a writer has made during his or her lifetime and not to any copyright grant contained in the writer's Will.
The right can be exercised by the writer him or herself or, if the writer has died, by the writer's surviving spouse and children (including grandchildren by a predeceased child). If the writer is not survived by any spouse, child, or grandchild, the right to terminate the grant passes to the writer's executor or administrator. The result in all cases is to recover all rights that the writer had granted, regardless of any agreement about the work to the contrary.
Termination can take effect only during the 5-year period beginning 35 years after the date of the grant, but a notice is required to initiate the termination. This notice must be sent between 2 to 10 years before the effective date of the termination. Because this termination right applies only to grants related to works made on or after January 1, 1978, the year 2003 is the first year that termination notices could have been sent, and 2013 is the first year that any will take effect.
When planning for the disposition of the copyright in a work that the writer has previously transferred or licensed, keep in mind the possibility that the grant may be terminated and the rights recovered.