It may seem obvious, but property division in divorce gets more complex the more there is to divide. Newlyweds with an apartment and a car do not have the same challenges ahead as a multi-decade marriage with a house, life insurance policies and revocable trusts.
But what happens when a couple needs to split an idea? As Marsh describes, intellectual property is the term for intangible assets that generate value based on their ability to compete under IP protections.
There are two types of IP more common to divorce and a few ways to evaluate their potential worth in order to divide them fairly between two separating spouses.
Copyrights
Copyrights protect a tangible form of expression like a book or work of art, rather than a subject matter. This form of protection goes to authors of original works whether they publish the piece or leave them unpublished.
Patents
This protection applies to inventions or new technologies and allows the owner to exclude others from making, selling, using or importing an invention. An owner may generate value by granting licenses for others to use that value
Valuation
As AccountingTools clarifies, it is impossible to assign an exact value to intellectual property. So valuation comes down to comparisons:
- Market price — the price that similar properties sell for in the present day market
- Appreciation — guesses at how an IP may continue or fail to generate value over future years
- Royalties — potential earnings based on previous income and future estimations
IP has a lot of sway in business agreements, but it is no different for married couples if one or both have assets like that. Spouses need these values evaluated accurately and divided equitably.
