X-Message-Number: 9908
Date: Wed, 17 Jun 1998 20:04:50 -0800
From: American Cryonics Society <>
Subject: Re: Call for Input on Archetype Cryonics Trust
Rudi Hoffman wrote (# 9903) that he intends to redeem his promise to Jim
Halperin to "develop and promulgate" a "Perfect" cryonics trust. It is
also Rudi's intention to "become the foremost writer of life insurance to
fund cryonic suspension in the world." Both of those goals are laudable.
I have long believed that the success of cryonics marketing depends on
identifying occupations (and people within the occupations) which (who)
will benefit from the success of cryonics, and to encourage this mutualism.
My own background is somewhat similar to Rudi's. I have a degree in
Insurance and Risk Management, have been licensed to sell insurance in
California since 1974, and have sold over 200 life or annuity policies with
a cryonics society or cryonics trust as beneficiary. For the past several
years (because of a possible conflict of interest with my Governorship of
ACS) my insurance sales for cryonics has mostly been to existing clients,
or good friends.
I must preface the following remarks by saying that, like Rudi, I am not an
attorney. I also am not an expert on trusts. The following is simply my
understanding of certain trust considerations as they apply to the ACS
program.
As I have mentioned in previous posts, in about 1983, Jim Bianchi, an
attorney working for ACS, completed a legal review of our suspension
program and recommended certain changes. These changes included using
individual trusts for funding suspensions and long-term cryogenic storage.
Mr. Bianchi prepared a model trust for us, which (upon request) we send to
ACS members who are setting up trusts. This is not intended as a self-help
(fill in the blank) form, but for the member to take to his/her own
attorney. We had Mr. Binachi do a follow-up review in about 1991. We have
another review in process by a trust attorney (we have had one initial
meeting with him). I'll alert our attorney to Rudi's interest and
knowledge, and ask that he consult as needs arise.
I also mentioned the fact that many of our members use the "ACS Short
Forms" which means they don't establish a trust now, but instruct ACS to do
so, on their behalfs, when they deanimate.
The Bianchi model trust is a "charitable trust" which model he chose to
avoid problems of taxation, and the "rule against perpetuities." For a
trust to be charitable, there must be a benefit to the community in the
continuation of the trust. If indeed, there is progress in cryobiology, or
reversible suspended animation is achieved, or people in suspension are
reanimated, the community will benefit greatly.
In my opinion the "rule against perpetuities" is far down the list of trust
design problems. There are a number of strategies for dealing with the
perpetuities question which include:
1. Use of charitable trusts.
This was Bianchi's approach. He has a number of provisions in the model
trust which are intended to apply if the trust is found, by judicial
decree, to be subject to the rule. For example, should this happen, then
the trust is to continue during the life of the youngest member of the
American Cryonics Society then alive or in gestation, plus 20 years. This
could well be 120 years or more. Members may also choose to have trust
assets then distributed to ACS as a gift. While we can't bind a future
Board, it is certainly reasonable that upon receipt of such a gift, ACS
would elect to continue the suspension of the person whose trust was so
distributed.
2. Trusts in states which don't have the rule against perpetuities.
There has been discussion on CryoNet of this option already. The American
Cryonics Society has (thus far) preferred to use California trusts, since
we are in California, and understand California law better than the laws in
other states.
3. Establishment of a foundation, along with a trust.
This model was worked out over ten years ago and I haven't seen a legal
review of this option since. Under this plan, a foundation and a trust are
established at the same time. When the trust terminates, all assets are
then distributed to the foundation. A foundation has no time limit as to
how long it may run. The reason a foundation alone is not used, is that a
foundation is quite limited on its ability to accumulate capital
(generally, a foundation is expected to spend all yearly income on the
foundations' purpose).
A strategy I find attractive is for the cryonicist (or ACS acting for him)
to establish two trusts.
Trust one, would be clearly to benefit the individual in a selfish and
narrow sense with only incidental benefit to the community (society). It
might be established in a state which doesn't have the perpetuity
prohibition. It would be subject to taxes.
Trust two, would benefit cryonics and cryobiological research, with only
incidental benefit to the individual. It would be charitable, and written
in as air-tight a way as our attorneys can to preserve the trust purpose,
and to prevent successfully chalenges of its charitable status.
The policy ACS follows where we allow individuals to direct that ACS
initiate a trust for them in the future, but provide ACS discretion in its
implementation, has much to be said for it. The laws on trusts, and the
interpretation of these laws, are sure to change.
Funds under ACS management are currently mostly invested in mutual funds,
though each fund also has its own bank account where minimum balances are
maintained. The use of bank accounts is primarily for accounting purposes.
I appreciate Rudi's comments that he doesn't intend on trying to reinvent
the wheel. The problem we have, of course, it that a cryonics trust isn't
very much like a wheel. With a wheel, you can try the danged thing out,
right away, and see if it works. With a cryonics trust, we may think it is
"the cat's meow" until there is a challenge, and some judge unleashes the
dogs!
Thanks for the offer of help, Rudi. Ben Best is also doing a lot in this
area. Perhaps together we can have, if not the "perfect trust," at least
better ideas on how to use the trust option.
Long life,
Jim Yount
=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+American Cryonics Society
(650)254-2001
FAX (650)967-4444
P.O. Box 1509
Cupertino, CA 95015
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