When Interests and Estates Combine Part 1

As we work with clients in developing their estate plan, we often talk with those that are considering starting, or have already started, a new business venture.   For the next few columns, we’ll discuss topics relevant to business owners and business owners to be.

Typically, the name of a business is one of the first issues resolved, but very often, clients give little thought on how to protect that name.  Usually, that is because they don’t think there is much to protect, or they are too busy with other matters.  However, there is no better time to protect the name than the start of its use because merely using a name in business does not automatically mean it is protected.  Additional effort is required, especially if the business intends to expand its geographic reach or protect against other businesses expanding in the same region.

Before discussing the effort required to protect a name, let us first make certain we understand how businesses can be named.  Of course, a business can be the same name as is registered with the Secretary of State; however, a business also has the option to use another name if the owners choose; you might think of the second name like the business’ nickname.

In business, that nickname is called a “trade name.”   A trade name is a word or a name used to identify and distinguish a business, vocation, or occupation from others.  For example, the Daily Sentinel is the name of the paper and the name we all use when talking about the newspaper, but it is not the name of the company that publishes it.  When there is a difference between the name of the company and the name under which it does business, the latter name is designated as its trade name.  In this context, you might have also heard reference to a “DBA,” (an acronym for “doing business as”) that is often used interchangeably with the term “trade name.”

And one more clarification always proves useful for our clients to understand:  a trade name is not necessarily the same thing as a trademark.  Next column, we’ll discuss that important difference and provide more information about protecting a business’ investment in its name and its brand.

To extend this idea to how a business owner, (or the estate) can protect the company’s “brand,” meaning its name, its trade names, its trademarks, and everything else the company does to market its products or services. A brand, even for a small company, is part of its value.

How does a business owner protect his or her brand from infringement or confusion caused by other companies’ similar names?  The first step is to use the name in commerce (website, social media, letterhead, business cards, etc.) and the second is to register the trade name with the State of Colorado, a step many businesses neglect to take.  In Colorado, the registration process is fairly simple. All business entities, including sole proprietors and general partnerships, must register for trade name protection through the Secretary of State’s website (www.sos.state.co.us.)

If you are questioning whether to register your trade name with the Colorado Secretary of State, it may be helpful to understand that the fees are not significant ($20 as of the date of this publication), but the benefits can be.  Registration of the trade name is not necessarily the final step in protecting your brand, but it adds an element of protection and is also one of the easiest ways to show the initial date a trade name was used.

If you have questions about how much protection your business name now has, or how you can increase that protection, spend some time on the Colorado Secretary of State’s website and then talk to your attorney about the proper steps, if any, that you need to take to protect the investment you have made in your business name.   If you are preparing your estate plan, consider the value that is included in your business’ brand; and if you are involved in the probate, or closing, of an estate, make certain that the brand is properly transferred to the new business owner.

Next column, we’ll wrap up this small detour into the world of small business ownership and address the difference between a trade name and a trademark and discuss how the business owner and his or her estate should handle the value created by both.

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© 2018 Brad R Wright & Steven J Wright