The New York Times reported in late-June that after 14 years of litigation progress is being made on finally settling the estate of the Godfather of Soul, the late James Brown. Despite his clear intent that his estate goes for the benefit of underprivileged children in South Carolina and Georgia, no scholarships have been granted. The only real beneficiaries of the estate have been the lawyers. What could have been done to avoid this spectacle?
To begin, it is worthwhile to have a basic understanding of what music copyrights are and how they can be handled in an estate. Imagine a bundle of sticks tied together with rope. These are the copyright for each musician—a bundle of legal rights bound together by a common creator.
Most important of these rights is the right to play or perform the music publicly—the so-called performance rights. Because when a music artist dies, this bundle can fall apart and certain performance rights are “lost.” The first thing to do is to count out how many sticks the musician has. In other words, make an inventory of their copyrights. At the same time, it should be noted who has legal relationships with each copyright—the agent, the publisher and so on. Once the bundle of copyrights are inventoried, one can think about how and when those copyrights will be transferred, either during the artist’s lifetime or at their death.
Transferring copyrights can be tricky, though some organizations such as ASCAP, which collect royalties on behalf of their members, permit transferring a music artist’s copyrights by transferring their membership in the organization to his or her heirs. There are exceptions to this, however.
Copyrights are not perpetual. Rather, in estate planning circles they are considered to be “wasting assets” akin to pumping oil out of the ground. Eventually, the well goes dry and there will be no more money coming in. How long an individual’s copyrights will last depend on whether the music was created before or after January 1, 1978. Before 1978, the initial term of the copyright is 28 years, which can be renewed for an additional 67 years. These pre-1978 rights do not vest—in other words, become transferrable—until the last year of the initial term, which is January 2006 at the latest. If the musician died before the pre-1978 rights vested, there are different rules on how the rights are transferred.
Copyrights after January 1, 1978, can be transferred at any time, but the creator or their beneficiary can terminate that transfer. The termination of transfer is limited to the five-year period after the 35th anniversary of the date of the transfer. The beneficiary is determined by statute—first is a surviving spouse, if any, then to surviving children or grandchildren. In creating an estate plan for a musician, it should be noted when the copyright was transferred and when the five-year period for termination will begin. And this information needs to be kept up to date.
From there, musicians can handle the transfer of ownership as they would with any other assets. They can designate an “artistic executor” for their copyrights, who can serve alongside a fiduciary who handles the financial investments of the estate. Since copyrights can be transferred during a musician’s lifetime, the copyrights can be put into a living trust that the musician can control but which is not included in the probate estate.
So, would James Brown have avoided the lengthy controversy that is still going on in the South Carolina courts? Perhaps not, but helping musician clients gain a firm understanding of how their copyrights can be transferred, and who gets their termination rights, coupled with some creative planning, makes it less likely to result in long-term litigation. Regarding James Brown’s estate, hopefully a solution will be found that funds the scholarships. And if so, Mr. Brown, wherever he is, will “Feel Good.”
Matthew Erskine is managing partner of Erskine & Erskine in Worcester, Mass., which provides legal and fiduciary services for unique assets.
