X-Message-Number: 15985
From: "John de Rivaz" <>
References: <>
Subject: Re: Cryo-fund
Date: Sun, 1 Apr 2001 11:25:04 +0100

> From: "Thomas N" <>
> Subject: Cryo-fund
>
> Late at night I cant recall but have a vague memory of an idea for a
Cryo-funding.
> Paying it all in advance for suspension is somehow dead money.

Not as far as the cryonics organisation is concerned - it can invest it and
earn from it. It is dead money as far as the patient is concerned, I agree,
unless he regards the investment gain as a gift to the cryonics provider.

> On the other hand the providers get jitters of nonfunding.
> Would some gladly invest in a fund fixed for paying, with certain
investment-rules and possibility of  some withdrawal if there is a good
increase?

One method used in the UK to avoid death tax (I think it has now been
declared illegal, or rendered impotent by punitive tax laws against trusts,
I can check if anyone is seriously interested) is to set up an irrovocable
trust for a minimal amount and then loan money to it. This method looks
applicable to cryonics. This money is paid back at 5% per year for 20 years
and as it is a repayment of capital, the payments attract no tax penalty.
The money loaned to the trust is invested and hopefully over 20 years the
investments will have grown to a sum in excess of the original, despite the
5% withdrawals. These plans frequently involve life insurance, because they
have been produced by life companies as a way of getting more business.
However there is no reason I can see why they would not work equally well
from a legal point of view and better from an investment point of view with
the loan being invested directly into a mutual fund, such as Invesco
Technology, or an Open Ended Investment Company such as Henderson Technology
or a Unit Trust such as Aberdeen Technology.

> I certainly would consider it.
> It may even do for Alcor.

That depends whether it fits in with the ideas of their legal advisors. I
would doubt whether they would consider it as safe as a US life policy from
a company or insurance agency their practice recommends to its clients.

>
> John de Rivaz as manager?
>
> I feel secure with a fund partly in cash, gold, bonds, global-stocks and
one free part, perhaps 20% of each.

I thank you for your confidence, but I would need some support in choosing
the best way to invest in gold or bonds. It is easy enough to get
professional advice in these areas if you have a fund to invest, though.

Personally I decided to ride out the boom and bust bubble in the technology
sector, as deciding when to sell is too difficult without hindsight. My gut
reaction would have been January 2  2000, but with hindsight this would have
been wrong. (With hindsight, selling on March 11 2000 and buying back about
now after paying capital tax would have resulting in laundering the
portfolio of tax at no cost. That is to say the value of the portfolio would
be about the same as it is now but without a potential tax penalty to pay if
it were suddenly realised now.)

I would imagine that investors in a fund that I managed could be
dissatisfied with this. They would expect a fund manager to be able to match
foresight with hindsight in the short term, which I cannot do. (No one else
can either, but some are better than others.) In the long term I remain
convinced that on average technology will grow by 25% per year. (Obviously
if you invest on top of a spike this isn't so, nor at the bottom of a
trough - in the latter case it is higher. We are *not* in a particularly
large trough below the 25% curve at the moment, by the way.)

I don't know whether this applies in US law, but in the UK potential capital
gain tax penalties die with the owner, ie when you die there is no capital
gains tax only death tax to pay, and there is a "wealth on death limit" of
about a quarter of a million pounds. Exceeding that limit costs you more
than exceeding a speed limit, though - the rate is 40% on any excesses. Of
course, these laws are highly favourable to UK people funding cryonics by
way of a trust. It is effectively tax free, even if Alcor still offered
services here (Alcor reference relevant to single people only).

As far as an underwriting trust for cryonics is concerned, I would recommend
that some formula be worked out on the basis of how many members there are,
how safe the various forms of funding are, and the likelihood of fund being
required at short notice. This amount should be retained as cash.

It should be remembered that if there is a call on the fund for a failed
life contract or other payment method, the money may not be lost forever.
The fund would in effect be paying the cryonics company for the debt, and if
the lawyers could resolve the problem and collect the money from the
patient's estate eventually, the cryonics company wouldn't get paid twice,
the fund would get the money back from the failed arrangements. The fund
manager would have to make a judgement as to whether the chances of lawyers
recovering the money are high enough to warrant the fees, mental stress and
time that such action would take.

An alternative method, which may be of greater benefit to the cryonics
movement as a whole, is for the fund to have a number of prepaid memberships
in hand with each cryonics providers whose members are covered by the fund.
These memberships could be bought by instalments paid for out of market
profits.

Really the managers of all of this should not be someone like myself with no
legal and accounting qualifications, who would need expensive advice to set
it up in a tax and regulation free country. It would need someone qualified
in appropriate professions and committed to cryonics willing and able to
give of his time to do all of this. Many professions have understandable
rules against members giving time away for free to causes they support, but
again if the proposed fund was in a tax and regulation free country this may
not be a problem.

But if this proposed fund is going to want large sums of money all in one go
then it will get few takers. Most people will want to consult their lawyers
before parting with thousands of dollars and either this advice will be
expensive or negative, or in many cases both. The only way it might just
work is for the individual contributions to be low enough for people to be
willing to take the risk. What sort of figures would they be? It is
difficult to say, but I doubt really whether there would be enough people
willing to put money up to make it work on the basis of a few hundred
dollars or so.

The other thought that comes to mind is for the cryonics organisations
themselves to determine a level of risk and run the same sort of scheme.
Each member would have to make a down payment for whatever type of funding
he uses. These are all put into a special kitty and used to fund defaulters.

Prepayment is obviously perfectly safe from the cryonics provider's point of
view, so there is no down payment.

Life insurance from a US insurer is deemed to be fairly safe, so the down
payment is low.

Payment from a trust is deemed to be fairly safe, so the down payment is
low.

Life insurance from a foreign insurer is deemed to be less safe, so the down
payment is not as low.

Payment from a will is deemed to be subjected to the uncertainties, delays,
opportunism and injustices of the probate system, so a downpayment is high.
(in fact organisations run this at present - the downpayment for this is on
the basis that the minimum has to be paid by another methods and wills can
be used for excesses.)

Hope this helps

Sincerely, John de Rivaz
my homepage links to Longevity Report, Fractal Report, music, Inventors'
report, an autobio and various other projects:
http://www.geocities.com/longevityrpt
http://www.autopsychoice.com - should you be able to chose autopsy?

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