X-Message-Number: 11028 Date: Mon, 4 Jan 1999 13:35:42 -0500 From: "Stephen W. Bridge" <> Subject: More on Escrow Accounts To CryoNet From Steve Bridge Chairman of the Board Alcor Life Extension Foundation January 4, 1999 In reply to Message #11014 From: (Rick Pierce) Date: Sat, 2 Jan 1999 10:40:19 EST Subject: Re: CryoNet #11005 - #11010 .rm70 >To Steve Bridge: >I am not an accountant or a lawyer, nor do I know anything about >estate planning and I do not mean to drag out this discussion of >escrow accounts however, I am a Real Estate Developer and we do this >all the time and there is not any work to speak of. I have clients >that will enter into a deal and leave a deposit with the Brokerage >Agency which they put in an escrow account. This is not income to >the Brokers and they release it upon request. For the Brokers it is >a non-event. The only work required is to make a record of the >deposit. I have monies that have been sitting in there for years >that I have just never bothered to collect, at least not yet. Rick, I am also not an accountant or lawyer, merely experienced at working with those who are, while running Alcor for four years. Now that I see your more detailed explanation, I realize that an important consideration is missing -- have you ever held "escrow" accounts for people who are *legally dead*? Escrow accounts are typically for a specific, temporary purpose such as paying taxes on a house and not designed as saving accounts or trusts. In any circumstance I am familiar with, if an individual died with money in an escrow account for his house payments, that account would become part of the *estate* of the deceased (or rolled over to ownership of the wife, if the house was in both names). At that point, the escrow account would no longer be under any control of yours (although possibly under your temporary "management"), but would eventually become the property of his heirs. Clearly this would not work for a reanimation account. In fact, Alcor *does*, in a sense, have something like escrow accounts for a few members. When a member wishes to pay cash for his cryopreservation in advance of death (a small number of people do this), Alcor does not spend that money. We place it into an FDIC- insured account at a bank and do not touch it until that person's deanimation. Until that time, the funds do not belong to Alcor. We treat that account as a "conditional donation." If the condition of legal death occurs, then this money becomes the property of Alcor as a donation. If the individual changes his mind about Alcor or about cryonics, then he regains custody of the funds. This is not a HUGE amount of work, it is true, although setting up an account for each person requires several hours of someone's time (not a small consideration for a full-time staff of only seven -- only two of which are involved in banking affairs). And since these accounts are usually in CDs of various lengths, Alcor's bookkeeper has to keep track of them and Alcor's President has to decide with each rollover how long a certificate to purchase. But these accounts do not continue after a person's legal death. And that, I understood, was what you were looking for: something that the cryonics company could hold until the individual's revival, then return it to him. Trying to fight relatives and probate courts over the ownership of escrow accounts ("But he's coming back for this money, your Honor! Really!") sounds like a LOT of work to me. As I understand it, to hold onto funds after legal death, would require something more like a TRUST. >So it occurred to me, why couldn't this work for Alcor, an >organization with an obvious interest in making this work. If not >Alcor, a separate entity created for this purpose overseen by Alcor. >Alcor (or whoever) could even be paid for this service and still be >non-profit. Trusting that our money will still be there in 500 years >is difficult enough, but if we have to trust someone, who can we >trust more than Alcor? There may well be something here, Rick; but finding out will be expensive. Alcor will have to consult attorneys and accountants, who will have to research the matter to see if it is possible, and if so what would have to be done to protect Alcor's tax-exempt status. The answer may turn out to be, "No, it has to be a Trust" -- which we already thought. If the answer turns out to be, "Yes, there is a simple way to make this work" -- then we have to draw up standardized legal paperwork. Since we already have some systems in place, via trusts, to hold funds for the future, Alcor is unlikely to spend $2-3K (minimum) to research escrow funds. Fred Chamberlain, Alcor's President, has many other things to do. However, Rick, you still might be able to influence the development of this. This could be your contribution to cryonics. 1. *Sign up for cryopreservation with a cryonics company*, if you have not done so already. No one will fund legal research to benefit someone who might not join. It is always better to get the basic cryonics protection in place first, then to do what you can to make it better. If you plan to wait for cryonics or for some cryonics company to be perfect before you join, then you might as well purchase that charming corner lot at the cemetery now. 2. *Tell your cryonics company that you will pay for the research into the escrow question*. If your idea is right, you benefit. The cryonics company also benefit since they will be able to offer a new option that may persuade a handful of new people to join them, so the cryonics company should then be willing to pay for the actual development of the paperwork. If escrow cannot work or if it can only work when combined with a Trust, then the cryonics company has not compromised other funding needs to find this out. ************* In reply to: Message #11018 From: Thomas Donaldson <> Subject: Escrow accounts and the expense of cryonics Date: Sun, 3 Jan 1999 22:12:08 +1100 (EST) >As I understand it, Alcor makes a promise that it will provide you >with whatever is left after it has suspended you, kept you in >suspension, and revived you... if you provide more than the minimum >amount. I would not be surprised if other cryonics societies make a >similar promise. Because of the problems above, there is no way in >which such promises can be given any LEGAL FORCE by a cryonics >society domiciled in a country or state which appropriates money as >described above. Sorry, Thomas, that is not correct. Alcor specifically does NOT make such a promise, even for funds over the minimum amount. To make such a promise would be illegal and probably fraudulent under today's laws. Suspension funds are a donation to Alcor and cannot be returned. What we HAVE discussed is the possibility that: 1) IF the laws change in the future, and 2) IF there are funds left over, and 3) IF some future Alcor Board of Directors is persuaded that this is a reasonable and legal thing to do, Then it is POSSIBLE that some of those funds might then be returnable. However, the default is that the funds are *unreturnable* donations and the default might well stay that way forever. Alcor also created something many years ago called a "Suspension Research Endowment", which, if chosen by the individual member, may hold some of the funds over the suspension minimums. This *may* work to give additional suspension protection to that individual (as opposed to the pooled group of patients and funds) in case of financial disaster or the need to pay for another company to provide care. Even the legality or practicality of that is unknown and untested. Future laws may treat these accounts differently from minimum suspension funding; however, I do not believe the SRE would be any more "refundable at reanimation" than any other part of the suspension funding. Personally, I have never encouraged SRE's and consider a Trust to be much safer. Steve Bridge Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=11028