Cryonic Trust Blunders
We want to live forever and take our money with us. What could possibly go wrong? With all the focus on whether or not the technology will work, we too often fail to consider whether or not the financial side of the equation will work. When we aren’t even looking at the issue, we are far more likely to commit any number of the cryonic trust blunders.
Immortality’s Inescapable Draw
The impulse to extend life beyond our brief mortality is deeply rooted in our humanity. It is part of what we are. This nagging sense that there is something about us which death does not destroy has fueled religious and scientific pursuits for millennia. Each age has applied the best of its technologies to this challenge. In our day and age, medical advances have permitted us to extend life further than ever before. Likewise, they have given us new insights into the nature and duration of death, and the hope that science may yet deliver us from this seemingly inevitable destination. If we preserve our body but fail to preserve our wealth, we have committed the ultimate cryonic trust blunder.
The Cryonic Trust
The scientific potential for extended life would be incomplete and ultimately of far less value if we did not also have tools that allow us to extend and grow our worldly wealth into the future. At least two organization offer the technological services: Alcor, based on Scottsdale Arizona, and the Cryonic Institute based in Michigan. I have helped clients work with both organizations. Avoiding Cryonic Trust Blunders is all about combining effective legal planning with the technological devices.
Effective planning means each party does what that party is best equipped to do, and not what other parties are better equipped to do. For example, you don’t want your attorney in charge of the cryonic suspension or re-animation processes. Likewise, you don’t want the medical and technical experts in charge of your legal planning.
When we awaken on that bright day to find new life, we aspire to find our wealth there waiting for us with time’s accumulation of compounded dividends. Three significant developments of contemporary law make it possible to avoid Cryonic Trust Blunders in our legal planning:
- The abolishment of the Rule Against Perpetuities. In many jurisdictions world wide a Trust or similar entity has no mandatory expiration date and in theory can continue indefinitely.
- The Generation Skip Tax Exclusion. This is a little known and poorly understood feature of U.S. tax law. In somewhat over simplified terms, this is an exclusion from taxation on gifts that spans multiple generations. When combined with the newly possible perpetual trust structure, it makes it possible for wealth to grow over multiple generations without depletion from certain transfer taxes. This is a major part of what it means to establish a Dynasty Trust.
- The Tax Exempt status of certain types of legal structures. When tax exempt structures are incorporated into the cryonic suspension trust structure, it can completely eliminate all taxation on the long term growth of wealth. No taxes means increased compounding returns. Of course, there are trade offs. One of them is the cost of administration. But in most instances, a nominal 1% administrative overhead will be far less than whatever the alternative tax rate would be.
Cryonic Trust Blunders
Others will tell you how you can ruin the changes of re-animation by damaging the physical components of your person. Of similar importance, is how you can damage your hoped for financial future upon re-awakening. Preventing problems with the financial piece is our focus. Here are the major blunders we have seen people commit in the financial aspect of cryonic suspension planning:
Failure to Document
For some reason, people sometimes think that if they have an idea of what they want clearly fixed in their own mind, it will happen. Sadly, for others to implement such ideas, they must be documented. That is one of the vital functions of a Cryonic Suspension Trust. Just having a contract in place to provide for what happens with your human remains is not enough. Just having life insurance or some other funding mechanism to pay for the preservation of your remains is also not enough. If you have any other property or assets that are going to be introduced into the equation, it is vital to have a written, binding legal plan in place to govern the disposition of the assets as well as the remains.
Using the Free Trust
Some of the commercial companies that provide cryonic suspension services will provide a specimen trust document free of charge. These can be readily adopted with a minimum of hassle. Even if an attorney is engaged to review the document, estimates of the legal fees are fairly nominal. When such trusts give the cryonic suspension service provider any kind of role in the administration of the trust, or beneficial interest in the assets of the trust, it creates an inherent conflict of interest. Typically, the cryonic service provider will request that this conflict be waived. DO NOT WAIVE THE CONFLICT. Adopting the free trust and waiving the conspicuous conflict of interest is a huge blunder. It can create situations where the incentives of the parties in charge work against your goals and concerns. Be especially wary of trusts that give the cryonic suspension service provider all the power over the assets. Such free trusts were generally written by attorneys for other parties for the benefit of other parties, not you. You are far better off implementing a trust drafted by your attorney for your benefit to accomplish your goals and with checks and balance and independent supervision over those charged with implementing your goals.
Failure to Fund
It takes money to keep you alive. The captain of Ben Hur’s slave galley famously said, “We keep you alive to serve this ship. Row well and live.” It takes money to preserve our remains. We will also require money when we awaken in the future to enjoy that new life. Whether it is through life insurance or capital gifts, failure to set aside the requisite resources will doom the reanimation plan. In most instances, this will involve leaving all or some portion of your estate to pay for what must be done, and to provide for your future re-animated self. A trust is the most powerful and effective mechanism to get that job done and done right.
Failure to Have Oversight
Among Ronald Reagan’s quips is the oft quoted idea “Trust but verify“. A major blunder in establishing a cryonic suspension Trust happens in naming successor trustees. You don’t put the mouse in charge of the cheese. You don’t let the fox guard the hen house. Hopefully the metaphors are clear. Selecting the right Trustee is a crucial element of Cryonic Trust planning. There are many options available, including many non-bank options. We can help you sort this out.
Failure to Have Checks and Balances
Who will watch the watchers is an important question. The most robust plans with the best long term prospects don’t give complete control to a single party. Multiple parties are involved, each with a role to play. This creates checks and balances so that no one party derails or sabotages the plan. The parties may include a Trustee, a Trust Protector, Financial Advisors, and so forth. A critical element is that none of these roles should be played by the same party. Trust results in part from oversight.
Perverse Incentives
A major cryonic suspension blunder is to co-mingle regular estate planning with the cryonic trust planning. This can give other relatives an incentive to terminate or undue the cryonic planning. Other people and assets should be handled separately, through completely independent trusts or other estate planning devices. It is important to remember that our planning has an impact on others. Particularly when their is an expectation of an inheritance, it is extremely important to make sure that the needs and expectations of others are addressed in the over all plan. This is a fundamental element of what we call “integrated planning.”
Likewise, considering how the players get paid is also part of the checks and balances referenced above. If each of the players have their own independent incentives to preserve and grow the cryonic suspension trust rather than plunder or destroy it, the long term prospects for the plan are greatly improved.
Failure to Plan for Tax Issues
Death and taxes are the two inevitable elements of life as Benjamin Franklin humorously remarked. If we don’t have a plan for how the tax consequences of a cryonic suspension trust are going to be managed, the politicians have a plan for us. Their plan will involve maximization of tax revenue. That goal is often in conflict with your goal of maximizing the future financial growth of your plan for your benefit. One example of how this can be structured is to have a tax exempt element of the plan built in, or the capacity to convert the plan to tax exempt status when and if appropriate.
No Safety Net
We don’t like to think about it, but sometimes things don’t work out the way we hope. There are a variety of circumstances that will render our death irreversible notwithstanding the most amazing scientific discoveries. What is the back up plan? Often, this involves tax exempt charitable structures. Again, it is important to avoid creating perverse incentives so that the watchers have an incentive to shut down the plan. For example, it makes no sense to give your cryonic suspension service providers an economic incentive for your remains to no longer be viable. If they get all the money with no further obligations once your remains cannot be revived, where will their loyalties lie far in the future when all the people you know and work with today are no longer in the picture. One of the biggest blunders I have found in reviewing some cryonic trust plans is how and in the manner in which a back up plan is or is not implemented. You are far better off deciding what will happen in a worst case scenario situation than surrendering that decision making power to someone else.
Failure to Facilitate Change
No matter how clever we are in designing and establishing a cryonic suspension trust plan, unanticipated events are going to happen. Things are going to change. Failure to recognize or acknowledge that can destroy the best plans. The plans that survive and thrive over time will have built in mechanisms to address changes in technology, taxation, politics, family, and other circumstances. This often is correlated with the various roles in the checks and balances.
Avoiding Cryonic Trust Blunders
We can help you navigate through the various challenges to establishing a viable financial structure to match the technological aspirations of a future life. Doing one without the other defeats the purpose. The initial discussion is complimentary.