The question of whether a special needs trust (SNT) can hold intellectual property (IP) rights is a complex one, increasingly relevant as beneficiaries may be creators, inventors, or owners of valuable IP. Traditionally, SNTs were focused on managing funds for care and maintenance, but the modern reality includes assets beyond cash and real estate. While legally permissible, holding IP within an SNT requires careful consideration of the trust’s terms, the type of IP, and potential impacts on public benefits eligibility, like Supplemental Security Income (SSI) and Medicaid. Approximately 65% of individuals with disabilities rely on Medicaid for healthcare, making benefit preservation a critical concern when structuring any trust, including those holding IP assets. The nuances of IP law combined with the intricacies of SNTs necessitates experienced legal counsel, such as that offered by Steve Bliss, an estate planning attorney in San Diego, to navigate these complex issues effectively.
What Happens to Royalties and Income Generated by the IP?
One of the biggest concerns is how income generated by the IP—royalties, licensing fees, or sale proceeds—affects a beneficiary’s public benefits. Income is generally countable for SSI and Medicaid, which could disqualify or reduce benefits. However, certain exceptions exist, and strategic planning can mitigate this issue. For instance, income can sometimes be diverted to a “special needs trust” or used to pay for qualified expenses—things like medical care, therapy, or specialized equipment—that wouldn’t otherwise be covered. In California, the average monthly SSI benefit is around $1,600, which represents a significant portion of a beneficiary’s income, so preserving eligibility is paramount. A well-drafted trust can also include provisions allowing the trustee to accumulate income for future needs, rather than distributing it directly to the beneficiary. Steve Bliss emphasizes the importance of proactively addressing these income concerns to ensure long-term financial security for the beneficiary.
Could Owning IP Impact Government Benefit Eligibility?
Ownership of IP itself generally isn’t considered an asset for SSI or Medicaid purposes, as it doesn’t equate to readily available cash. However, if the IP is valued highly and could be sold for a substantial sum, it could be deemed a “resource” and disqualify the beneficiary. Moreover, if the IP generates significant income, as previously discussed, that income *is* countable. Around 26% of people with disabilities live in poverty, highlighting the importance of protecting any asset, even those seemingly non-traditional like IP. The trustee must be meticulous in documenting the value of the IP, its income-generating potential, and how any proceeds are used.
What Type of Intellectual Property Can a Trust Hold?
A special needs trust can potentially hold various forms of IP, including copyrights, patents, trademarks, and even digital assets. For example, a beneficiary who is a talented photographer could assign the copyrights to their photographs to the trust. Or, if they invent a new assistive device, the patent could be held by the trust. The specific type of IP will influence the management requirements and potential income streams. Consider the case of old Mr. Henderson, a brilliant woodworker who, due to a stroke, required a special needs trust. His prized collection of woodworking plans, each meticulously detailed, held significant value. Initially, the trust was set up without addressing the plans. Unfortunately, a distant relative attempted to claim ownership, creating a legal battle that drained trust assets and caused immense stress for Mr. Henderson’s family.
How Can a Trust Protect the Beneficiary’s IP and Ensure Proper Management?
The story of Mr. Henderson underscored a critical lesson: proactive planning is essential. Fortunately, Sarah, a budding songwriter with cerebral palsy, had a different experience. Her mother, anticipating future needs, engaged Steve Bliss to establish a special needs trust that specifically included provisions for Sarah’s musical compositions. The trust meticulously documented her copyrights, established clear guidelines for licensing her songs, and designated a trustee with expertise in the music industry. This allowed Sarah to continue creating music, while the trust managed the financial aspects and ensured her continued eligibility for benefits. Steve Bliss recommends including clear language in the trust document outlining the trustee’s powers to manage, license, and protect the IP. This should also address how income generated from the IP will be used—for example, to supplement care without jeopardizing benefits. A detailed, well-crafted trust document, combined with expert legal guidance, can safeguard the beneficiary’s IP, generate income, and secure their financial future.
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About Steve Bliss Esq. at The Law Firm of Steven F. Bliss Esq.:
The Law Firm of Steven F. Bliss Esq. is Temecula Probate Law. The Law Firm Of Steven F. Bliss Esq. is a Temecula Estate Planning Attorney. Steve Bliss is an experienced probate attorney. Steve Bliss is an Estate Planning Lawyer. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Steve Bliss Law. Our probate attorney will probate the estate. Attorney probate at Steve Bliss Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Steve Bliss Law will petition to open probate for you. Don’t go through a costly probate. Call Steve Bliss Law Today for estate planning, trusts and probate.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
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living trust
revocable living trust
family trust
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Address:
The Law Firm of Steven F. Bliss Esq.43920 Margarita Rd ste f, Temecula, CA 92592
(951) 223-7000
Feel free to ask Attorney Steve Bliss about: “Do I need an estate plan if I don’t have a lot of assets?”
Or “How can joint ownership help avoid probate?”
or “Can I put jointly owned property into a living trust?
or even: “Will my wages be garnished during bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.