A prolific artist operated a design enterprise for more than 40 years, painting unique patterns on custom furniture sold across three continents. A sudden health crisis accelerated succession planning for the creative. Advisors valued the business at over $12 million. Yet, the enterprise relied almost entirely on the artist’s personal skill. As a going concern, it could not continue without significant alignment across restructuring, knowledge management, and exit planning with tax and legal considerations. Tangible assets, including inventory, business records, and the like were accounted for. However, the nebulous asset, intellectual property (IP), remained underutilized and undervalued. In succession planning, the IP was not valued nor was it assessed for potential licensing and protection across borders. Establishing a framework for business succession incorporating planning for cross-border use of intangibles could significantly increase the value of the business and the estate.
Protecting Potential Value in Creative IP
In creative and innovation-oriented enterprises, the most valuable asset is one that may not be fully monetized or commercialized. They are often omitted or undervalued on the financial records and discounted because they do not generate significant revenues. Copyrights in design portfolios, trademarks identifying a brand, and distinctive patterns that can be licensed globally are wealth in their own right. Where these are not separately documented, valued, and segregated, they risk being treated as residual goodwill in an asset sale.
Creative IP Segregation and Holding Structures
Strategic families and enterprises protect intellectual property through segregated holding companies. Separating IP from the operating business creates clarity of ownership, simplifies valuation, and preserves continuity even when operations cease. The operating company pays royalties to the IP holding company. Upon an exit, the IP can be retained, licensed, or sold independently of physical operations. It can also be part of the family legacy, incorporated in trust structures and family-owned management enterprises generating royalty and licensing opportunities for generations.
In the artist’s case, absent segregation, the entire design portfolio risks being transferred once in a lump-sum sale, stripping heirs of future licensing opportunities. With a holding structure, the same portfolio could generate multigenerational income through controlled commercialization.
Succession Beyond the Creative Founder
Governance establishing a sound framework ensures continuity even when the artist is no longer active. Succession planning should establish:
- Decision-making authority over licensing and commercialization.
- Revenue allocation methods among heirs, investors, or trusts.
- Protections against dilution or misuse of the intellectual property (brand).
Without governance, successors may litigate, investors may withdraw, and value can fragment. With governance, IP becomes an enduring legacy asset, generating revenue and cultural relevance long after the founder’s lifetime.
Creative Commercialization Across Borders
Commercialization extends IP beyond a one-time transaction. Designs may be licensed into manufacturing, digitized into online libraries, or franchised under a controlled brand system. Global enforcement ensures that protections extend across jurisdictions. Without coordinated registrations and treaties, IP rights may disappear at borders. With them, they become globally tradable assets. Reconciling IP protection systems between borders requires integration of IP laws with valuation and cross-border tax implications to preserve value and commercial viability.
The Creative Legacy in Intellectual Property
When a founder’s talent is inseparable from the enterprise, continuity requires developing structures that outlast the founder. IP holding companies, trust ownership, and governance systems allow the family to preserve and direct the use of creative assets even when the creator is gone. Legacy of a creative can be best preserved through establishing a structural framework that can adapt to intergenerational change.
Framing A Creative Legacy
Wealth accumulated by a creative entrepreneur or founder can be fragmented and lost if the business is liquidated without considering protecting the creative’s IP separately. IN succession planning for creatives, intellectual property should be segregated, protected, commercialized, and governed with a custom framework across generations. Innovation without protection dissipates. Protection without commercialization stagnates. Commercialization without governance collapses. When all three align, creativity can become a lasting legacy.