© C in a Circle - Splitting Heirs: Paying Royalties After Your Death

In the same way that you can leave your personal belongings, your house or your car to whomever you want, you also can leave your royalties to the person or organization of your choice. But to make that happen upon your death, you have to execute a valid will under the law of the state where you were living when you died.

By Gary Roth

It is a truism that most people, of any age, don’t like to think about their ultimate demise because it is either too distant or too near. Yet the fact of the matter is that estate planning is the only way to assure that those people whom you want to inherit your property do.

Although the laws of descent and distribution vary from state to state, state law allows you to make a will setting forth who you want to get your property. The law also determines who owns your property if you don’t have a will when you die (called dying “intestate”) or if your will is faulty under the rules set out by the state.

While many songwriters and composers own copyrights, many don’t. But even writers and composers who have transferred their copyrights to a publisher still retain royalty rights, under their contracts with their publishers and their PROs. If you own your own copyrights, the publisher royalties go along with them. Writer royalties, on the other hand, being creatures of contract, need to be thought of as distinct from the copyrights that generate them.

In the same way that you can leave your personal belongings, your house or your car to whomever you want, you also can leave your royalties to the person or organization of your choice. But to make that happen upon your death, you have to execute a valid will under the law of the state where you were living when you died. You (or, as is recommended, your lawyer) should specifically state that your music royalties should go to your chosen beneficiary. If you don’t leave your royalties by name, they would get lumped into the property you leave to the one named in your will as your residuary beneficiary, that is, the person or organization who gets “the rest” of your estate not given away specifically by name in your will.

What you have to be careful about is that if you don’t own copyrights, your will should mention royalties. Know what you have when you sit down with your attorney to draft your will, and make sure that your disposition makes it clear what it is you are leaving. For example, if all of your copyrights have been assigned to publishers and your retained interest in your songs is purely a royalty interest, a bequest of “my copyrights” to your spouse won’t give him or her anything.  If what you really own are just royalty rights, your royalties instead will go to the residuary beneficiary (if there is one) or to your intestate heirs - more on those to come - if you don’t. And if you own both copyrights and royalty rights, you need to be clear as to which of those you are bequeathing. Deal with them both, either together or separately. Specific words matter. A royalty payer can guess at what you meant but it can’t interpret the words of the will to make it work the way they think you would have wanted it. It has to be implemented the way it reads. You have to use precise language to pass what you own to whom you want to have it. Too many times imprecisely written wills have caused expensive court battles among heirs. That’s something I’m sure you wouldn’t want to leave your family.

Your lawyer will know how many persons are needed to witness your will and otherwise make it valid under law. But keep in mind that if you move to a different state after you signed your will, you should consult an attorney in your new state to make sure that your will is also valid there given the way it was done in your old state. The law of your resident state at death is the one that counts for your royalty and copyright bequests. Since most state laws on will creation are similar, it should survive a move, but it’s worth checking to see if you need an extra witness, for example.

Some of you know that the U.S. Copyright Law has its own inheritance clauses that deal with who your copyright renewal heirs are.  But since any copyrights created after 1977 have no renewal term, I am not going to discuss that here. However, if you are a spouse or child of a deceased songwriter, composer or music publisher who wrote or owned any pre-1978 compositions that were less than 29 years old when he/she died, be aware that the Copyright Law, not the will, controls who gets the U.S. royalties from them, if they are different heirs than your husband or father named in the will. Contact the publisher and PRO who represent the songs if you aren’t being paid on those.

Wills cost money to do, but it’s money well spent if your royalty assets are large enough or expected to be large enough in the years to come, or just to be sure that your property is left to the people you want to have it. There are software programs that allow you to create your own wills at home, but if you have lots of assets of different types, you’re better off consulting a lawyer. If your entire estate is just your personal belongings and your copyrights and royalties, you might be okay with the software as long as you confirm that what comes out of your printer has been prepared and gets witnessed properly.

In some states, a handwritten, or holographic, will is acceptable, as long as every word is in your handwriting and it’s signed and dated. That certainly would save you money for a simple estate; you can sit down at your kitchen table and write up a valid will. But don’t rely on a handwritten will doing its job of passing your property unless you check that your state allows it. And if it does, remember - be clear and precise as to who gets what.

All that being said, most people, alas, never get around to executing any kind of will. As a result, when they pass away, the payers of their royalties have only one authorized place to go to determine who inherited them-the laws of intestate succession of the state where the writer/composer or publisher lived at death.

Most intestate succession, or intestacy, laws are of the same bent, namely, leaving personal property-royalties and copyrights are considered intangible personal property-to a surviving spouse and children. If that’s who you want to get your royalties anyway, you could let the intestacy laws control your estate. But there are considerations that come into play when using intestacy as your estate plan that you might not have thought about and not have accepted if you did. Do you want your children to get their hands on your royalties at their ages at your death? (If they are minors, the money would likely be paid to their surviving parent or guardian. But is your 18-year-old child mature enough to responsibly handle all that money)? Is your surviving spouse the parent of all of your children? If not, does he or she know where all your other children live so your publishers and PROs can contact them for payment of their share of royalties? Do you want to disinherit one of your children? If you are not married and have no kids, do you want your parents or siblings to inherit your royalties? (That’s usually who does in the absence of a spouse or children). Do you want royalties from certain songs to go to one person and from other songs to another person? If you are a partner in a publishing company, do you want your partner, instead of your family, to acquire your share of the company’s copyrights? Do you want to leave some royalties to a charity?

Those are only a few of the considerations to think about before avoiding doing a will yet another day. Only a will allows you to answer those questions the way you’d like. Intestacy requires the same result for everyone in your state who has no will. Your state legislature determined what you’d likely want to do with your personal property and wrote the law that way, but you may have wanted to do it differently. That’s what you can accomplish with a will-but only if you create one.

So there you have it. Use a will to give away your copyrights and royalties to whom and how you’d like. Die without one and your state’s law decides who gets what and how much of it. If I’ve whetted your curiosity as to what your particular state’s law says, here is a link to a pretty good website that sets out all of the state intestacy laws: http://mystatewill.com/

For your family’s sake, it is important that if you have done a will to let them know that and where it is, because your royalty payers will want to have a copy of it after you die so they can pay out your royalties in accordance with your wishes. If you haven’t yet done a will, you should at least tell your closest relatives to contact your PRO and all your publishers after you die so they have contact people to arrange for continued royalty payment under the state law. Although PROs and publishers try to locate family members of their deceased writers and publishers, they don’t know who your heirs will be when you eventually die, so they won’t know who they are looking for. That makes it difficult to find all of them - if they ever do - and delays getting your royalties from them into the hands of your beneficiaries.

Unfortunately, royalty payers are not among the class of businesses that are allowed by law to accept beneficiary designations, so you can’t settle the whole matter by filling out a form with them as you do with your life insurance company to indicate who to pay after death. Instead, get your family tuned into your royalty and copyright assets and pointed in the right direction to inherit them. That way the success you have had -or will have had—in the music business during your lifetime will generate a legacy of income that your family, or whoever else you’ve decided to benefit, will enjoy for years beyond.

Posted Oct 13, 2009

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