Cryopreservation is all about extending life beyond its traditional constructs. To this end, hundreds have already put themselves in cryonic suspension after their legal death, and thousands across the world have signed up for the same. The belief of cryonicists that legal death is not the end of their lives is what makes them consider arrangements to preserve their assets for a life “after death”, even if it is only a hope at this point. This is done so that they have something to live off of upon reanimation/revival. From a cryonicist’s perspective, this is as important to them as funeral arrangements are to non-cryonicists. For an in-depth discussion on Estate Planning for cryonicists, click here.
As there is yet no conclusive proof regarding successful reanimation, cryonicists will potentially be spending decades, if not more, under cryopreservation. Therefore, in order to preserve their assets, they need the right instrument that can withstand the test of time, law, and other challenges. Trusts have been commonly considered the suitable vehicles for achieving this.
A trust is a legal instrument through which the person creating the trust (“Grantor/Trustor”), entrusts some or all of his assets into a trust for the benefit of a specified person or group of people (“Beneficiaries”). The trust is held by a Trustee, who is an independent party, bound by fiduciary contractual duties that govern the disposition of the trust and other terms.
Creating a trust for the purpose of holding a cryonicist’s assets is faced with certain challenges such as:
- The Grantor cannot be the Beneficiary himself as his legal status upon deanimation will be that of “deceased”.
- Property law in most jurisdictions stipulates a “rule against perpetuities”, which essentially prevents an individual from divesting his heirs by putting his assets into a trust beyond a certain period of time. This period differs depending on jurisdictions.
However, even amidst these challenges, there are various cryonics trusts, often called Personal Revival Trusts (“PRTs”) which are worked out in a legally sound manner, and made to last the longest time possible under law, if not forever. PRTs are essentially trusts created to hold the assets of an individual who has been cryopreserved during the period of their cryopreservation. There are many models of such revival trusts, and the prominent ones are as follows:
This was designed by Rudi Hoffman in 1999, in association with multiple estate planning attorneys. It is a modification of the dynasty trust. A dynasty trust is a perpetual trust that is designed to pass on wealth from generation to generation in a tax-advantaged manner. The Beneficiaries under this trust can avoid paying estate, gift and generation-skipping transfer taxes for the period in which the assets are in the trust. Therefore, in contrast to traditional living trusts, the dynasty trust transcends time and taxes, and gives the Grantor a hold over his assets “from the dewar”.
A dynasty trust also presents certain specific advantages to cryonics as it is not concerned with the “legally dead” or “not dead” status of the individual concerned. The grantor will appoint a trustee, generally a corporate trustee, to act according to the trust directives, in order to fulfill its objectives. An independent “conservator” can also be appointed to keep a watch over the trust. If and when resuscitation becomes a possibility, the procedure can be funded out of the assets in the dynasty trust. The remaining portion of the assets will then be transferred to the reanimated individual for their life after resuscitation.
However, a caveat to using such a trust to preserve assets is that they may be subject to the rule against perpetuities in jurisdictions where it still exists. However, this rule has been abolished in the state of South Australia, and in nearly 20 states in the USA. The same has been significantly modified in states such as Florida (up to 360 years), Nevada (up to 365 years), and Wyoming (up to 1000 years). These modifications can be taken advantage of, and trusts can be created virtually for perpetuity in such jurisdictions.
The American Cryonics Society (“ACS”), through it’s risk management approach, proposes to preserve its clients’ assets in two ways:
- Short form application: These application forms are filled in by the members themselves, demarcating the assets/funds to be preserved, and how they are to be used. Since the member does not establish a trust in this case, they direct ACS to establish a dedicated fund upon their deanimation, which will be used for the different purposes underlined in the trust. The minimum funding requirement in this case is $155,000.
- Establishment of a Trust: Here, the member hires an attorney and gets a trust deed drafted. Unless ACS is named as the trustee, they require a minimum funding of $155,000. Upon deanimation, ACS either becomes a successor trustee and manages the trust assets accordingly, or it establishes a dedicated fund to manage expenses, as well as preserve assets.
The funds in both the above cases are first used to defray the costs incurred for cryopreservation at the Cryonics Institute (~ $35,000), and for the procedures leading to cryonic suspension of the client. The balance will be kept in the Dedicated Fund, which acts as a backup in case of any unforeseen contingencies during biostasis. Subject to the instructions of the client, these funds can be used to enhance the cryopreservation, for periodic inspection by ACS of the facility, and for the reanimation, if and when it becomes possible. Upon reanimation, it proposes to return the remaining funds to the client, or if the law does not permit such a transfer, ACS will itself ensure the use of such funds for the personal needs of the revived client.
An interesting option offered by ACS is to hold assets in trust for non-members as well. However, in such cases, the instructions have to be spelled out very specifically, and ACS will not have any say over the quality of the non-member’s cryopreservation. By putting their assets in trust with ACS, the non-member will be diversifying their asset management, thereby spreading their risk.
The Alcor Life Extension Foundation has two trust models which its patients use, should they decide to preserve their assets upon legal death:
Through this model trust document, Alcor aims to facilitate the asset preservation of its members during their suspension in liquid nitrogen. This trust model is essentially a template containing all the necessary specifications required to create an Asset Preservation Trust for those who are/wish to be cryopreserved. For instance, the Custom Future Income Trusts created by Mark E. House is modeled on the Alcor Asset Preservation Trust. This provides wide scope for customisation by the client, as long as it is within the bounds of Alcor’s requirements. In this way, individuals can take this model of trust to their attorneys, and get a trust deed drafted on these lines. However, this trust requires a minimum funding of $500,000.
This is an alternative trust option by Alcor for those members who wish to preserve assets valued at less than $500,000. It is thus a cheaper option compared to the Asset Preservation Trust. After drawing up the trust with the help of an attorney, it is funded only upon the legal death of the patient. The cost for setting up the trust is $5,000 at present, and the minimum funding upon deanimation is $25,000.
In contrast to the other trusts, MIFIT works on two levels, The Multi-Investor Future Income Trust itself, and MIFIT Investments Inc., a corporate entity. The assets of the patient, which they decide to preserve, will be put into the trust upon legal death. These are later invested into MIFIT Investments, Inc., in return for shares. The incorporated entity further invests the funds into a diversified portfolio. Upon revival, the funds corresponding to the shares held by the trust which the revived person constituted will be paid to them, subject to capital gains tax deductions.
This is a cash-only trust, and therefore, the assets set aside by the patient to be funded into it will be liquidated before being put into MIFIT. With this cash, the Trust will purchase shares in MIFIT Investments, Inc., whose only shareholders are the Trusts created thus far. Furthermore, MIFIT Investments Inc. pays a corporate tax annually, thereby minimising certain yearly expenses which would have been incurred otherwise if it had to be taxed at the Trust level.
The MIFIT, having no income or expenditure, is not liable for income tax during the period of cryopreservation. In order to protect the assets of those cryopreserved and further minimise expenses, the corporate entity’s expenditure for performing investment and administration functions is capped at 1.5 percent. Since it will not distribute any dividends to its shareholders, i.e. the MIFIT Trusts, they will not have to pay any tax on them. Correspondingly, the only asset in each of these MIFITs are the respective stocks purchased in MIFIT Investments, Inc.
No One-Size Fits All
The above-discussed types of asset preservation trusts are only modifications of already existing traditional trusts. However, in the case of each individual, the trust has to be drawn up after taking into consideration their unique position, and needs. Apart from the fundamental provisions of the trust, the purpose of the trust, i.e. the intention for it to hold assets until the revival of the grantor, must be laid out in specific terms. The Grantor can also make provisions for distributions to legal heirs, during and after their lifetime, so as to keep them from legally challenging the creation of a trust in a Court of law. However, it is generally advised to keep these distributions minimal. It would also be safe to appoint a Trust Protector, and delimit their powers and duties.
Additionally, there are organisations such as the Asset Preservation Group, which meets and discusses issues about best ways to preserve assets during biostasis, and the Reanimation Foundation of Liechtenstein, which will set up and manage a trust fund for cryonicists so that they will not be revived as paupers.
With the advent of cryonics, asset preservation mechanisms are also coming to the fore. However, due care must be exercised by individuals willing to preserve their assets during cryopreservation. The trust instrument must be legally tight, and have the ability to outlive the creator, into perpetuity, until revival from biostasis becomes a scientific and technological possibility. Hurdles such as the inability of a person under cryopreservation to be the beneficiary, and the rule against perpetuities, must be navigated to prevent unnecessary legal complications. An ideal case of asset preservation, therefore, will be one that accomplishes all this, while availing tax-benefits.