A Primer on Estate Planning as a Writer

This content has been archived. It may no longer be accurate or relevant.

From Jane Friedman:

Awareness of estate planning issues can be especially important to writers because of the unique nature of property rights in written works. Proper planning ensures that the ownership of a writer’s works after his or her death will end up in safe and knowledgeable hands.

In addition to giving the writer significant posthumous control over his or her works, an estate plan can greatly reduce the overall amount of estate tax paid at death. Because valuations of written works for estate tax purposes are not precise, estate taxes may turn out to be significantly higher than might have been anticipated. Thus, it is very important for writers to reduce their taxable estate as much as possible.

An estate plan may be either will-based or trust-based. Each type has advantages, but both are legitimate forms of estate planning. Estate laws and probate procedures vary throughout the United States, and a plan that works well for one person in one state may be inappropriate in other situations. Proper estate planning requires a knowledgeable lawyer and sometimes the assistance of other professionals, such as life insurance agents, accountants, and bank trust officers.

The Will

A will is a unique document in two respects. First, if properly drafted, it is ambulatory, meaning it can accommodate change, such as applying to property acquired after the will is made. Second, it is revocable, meaning it can be changed or canceled before death.

When carefully prepared, wills not only address how the assets of the estate will be distributed, but also foster better management of the assets. Those persons responsible for administering the estate of a decedent are known as executors in some states and personal representatives in others. It may be a good idea for writers to appoint joint executors so that one has publishing or writing experience and the other has financial expertise. In this way, the financial decisions can have the benefit of at least two perspectives. If joint executors are used, it will be necessary to make some provision in the will for resolving any deadlock between the two. A lawyer’s help will be necessary to set forth all of these important considerations in legally enforceable, unambiguous terms.

It is essential to avoid careless language that might be subject to attack by survivors unhappy with the will’s provisions. A lawyer’s help is also crucial to avoid making bequests that are not legally enforceable because they are contrary to public policy.

Trusts

A common way to transfer property outside the will is to place the property in a trust that is created prior to death. A trust is simply a legal arrangement by which one person holds certain property for the benefit of another. The person holding the property is the trustee; those who benefit are the beneficiaries.

To create a valid trust, the writer must identify the trust property, make a declaration of intent to create the trust, transfer property to the trust (this is often a step that is missed and can create a multitude of problems), and name identifiable beneficiaries. Failure to name a trustee will not defeat the trust, since if no trustee is named, a court will appoint one. (The writer may name himself or herself as trustee.)

Trusts can be created by will, in which case they are termed testamentary trusts, but these trust properties will be probated along with the rest of the will. To avoid probate, the writer must create a valid inter vivos or living trust.

Advantages of Using a Trust

The use of trusts to prepare a trust-based plan will, in certain situations, have significant advantages over a traditional will-based plan. For example, the careful drafting of trusts can allow the writer’s estate to avoid probate, which in some states is a lengthy and expensive process. Similarly, the execution of an estate through a trust-based plan can ensure a level of privacy not possible in probate court. Although these kinds of provisions provide some control over the estate, writers are cautioned that trusts cannot adequately substitute for a will if used haphazardly. Professional assistance is strongly recommended.

Link to the rest at Jane Friedman

PG says that dying without a will and/or trust usually ends up being the most expensive and time-consuming way of handling an estate for an author or anyone else.

That said, a poorly-drafted will can also cause an immense amount of difficulty and expense.

As mentioned previously, you’re looking for an estate planning attorney who can answer your questions, including questions about state and federal death taxes and how to minimize them.

Large law firms will have estate planning attorneys, but are likely to charge more for a similar service than a medium-sized or smaller law firm. That said, the amount of the fee a large firm charges for creating an estate plan will cost less than a legal dispute about your estate after you die.

As mentioned in comments to a prior post, you will want to make certain your estate-planning attorney is familiar with the special issues that can arise with intellectual property. If you have any concerns about an estate planning attorney’s appreciation of copyright issues, it will be worth it to ask her/him to associate counsel specializing in intellectual property, preferably copyright law (as opposed to patents, trademarks, trade secrets, etc.).

PG suggests accessing online information about authors and estate planning to become generally familiar with issues, jargon, etc. Check more than one or two sites so you’re not getting someone’s pet theories, peeves, etc.

For the record, although PG has done some estate planning for authors and others, he doesn’t do so any more.