Parties involved in a high net worth divorce usually divide the value of tangible assets, such as real estate, cars, and other items obtained throughout the marriage. Furthermore, spouses divide assets with an assigned and discernable value, like retirement funds, stocks, bank accounts, or pensions, while intellectual property also must be divided if acquired during the marriage. Intellectual property typically includes intangible assets that are much more difficult to identify and value, such as:
- trade secrets
- rights of publicity
When the property was created or obtained during the marriage, it is presumed to be marital property and therefore subject to equitable distribution.
Determining Intellectual Property Rights in a High Net Worth Divorce
Intellectual property rights are typically awarded to the spouse who created or obtained the intellectual property. Nevertheless, the non-creator spouse is also entitled to financial interest if the work was created throughout the marriage. Common issues that may arise when addressing intellectual property rights:
- Inventors may not always hold the patent for their intellectual idea - there could be co-creators and co-investors holding an interest, or circumstances in which an investor has fully funded the creator's idea and doesn't have full access to their intellectual property rights, being offered instead only a percentage of the proceeds.
- The presence of shareholders - in most companies, shareholders hold shares of the intellectual property created within the company - regardless of who created it.
- Patents are often not subject to division - an inventor is likely under contract with an employer to assign all patent rights; therefore, no marital property exists since it is company property.
- Derivations of intellectual property - intellectual property derivatives created during a marriage can provide significant value. The non-creator spouse might be entitled to the arising economic interests, including licensing fees, royalties, and profits.
- Intellectual property can be hidden during the divorce proceedings - this can become problematic when the disadvantaged spouse is unaware of what was created by their partner.
The most complex part of distributing economic interests in intellectual property during a high net worth divorce is the valuation of the intellectual property and any derivations:
- Accurate valuation is critical - intellectual property may not be owned only by the creator, and the value of such assets can be obscure and include projected growth.
- Validation and ownership of the asset - should be applied to ensure that all shareholders are accounted for. Transactions should also be considered and any key milestones that took place in the property's lifetime.
- Transactions - discovering and analyzing any transactions that the intellectual property assets have been involved in.
- Key milestones - establishing a timeline related to intellectual property assets. Intellectual property possesses significant economic value but often gets left out of marital asset allocations due to the complications in identifying and valuing these assets.
Determining what portion of the intellectual property value is attributable to the marital estate and which one is allocated to the creator spouse's separate property can be a complicated process.
You Can Trust the Experienced High Net Worth Divorce Attorney at The Law Offices of Sean M. Cleary
If you are involved in a high net worth divorce and have intellectual property or believe that your spouse may own intellectual property, it is advisable to seek the assistance of an attorney who is skilled in delivering a beneficial outcome. The proficient high asset divorce attorney at The Law Offices of Sean M. Cleary has the knowledge required for your particular case.
Contact us today for a free consultation, and we will provide assistance throughout this difficult circumstance and promptly answer all your questions while guiding you throughout every step of your case so you can take a break from the demanding matters of a high net worth divorce.