Wealth Preservation for the Cryonically Suspended

© 2003 James Wm Clement*

James Clement

According to Benjamin Franklin, "In this world nothing is certain but death and taxes." Of these two certainties, cryonic suspension might make the former only a temporary state, rather than a permanent one. By immersing a person's body in liquid nitrogen immediately after death, Cryonicists hope to preserve the body and, more importantly, the mind of the person until advancements in science and technology allow the body to be unfrozen and repaired of the damage which caused the initial death and any damage caused by the freezing and thawing process. The primary technologies which must progress to allow for this repair are nanotechnology, artificial intelligence, neuroscience, and cloning.

Cryonics companies like Alcor suggest the funding of their suspension services through the purchase of life insurance, with the Company being named as the beneficiary of the policy. While this type of funding pays for the suspension services, what will the people who are being currently frozen, awaiting the miracles of future technologies, face financially if and when they are successfully reanimated? Money has been around nearly as long as humans have traded. Gold has been used as money for at least 40 centuries, and silver for about 25 centuries. The Romans had their Denarius, and the middle ages gave us the Thaler (later changed to daler, and eventually to dollar). It seems highly unlikely, even in the seemingly utopian world of nanotechnology capabilities of the future that money will become superfluous. Thus, what should a person planning to be suspended do to provide for his/her financial security in the world of the future?

At present, for purposes of the law, a cryonically suspended person is considered legally dead. Until such laws are amended, property owned by a deceased person is disposed of by statute or testamentary declarations. However, while alive, a person can plan or execute the transfer of property into one party's control for the benefit of another person via a legal entity called a trust. The trust can be established and funded before the person's death (an inter vivos or living trust) or pursuant to a will (a testamentary trust). There are several ways to go about setting up such a fund; independently or with a group (pool) of other participants. In the case of the former, the initial cost should range from US$3,000 to $5,000 and the annual maintenance cost should be about $1,000 and/or one-percent of the net increase in the value of the funds (paying the fund manager). The more elaborate the structure (primarily to provide redundant oversight), the more expensive it will be.

The source of assets for the Fund can come from the personal assets of the suspended person, from insurance or death benefits, and from gifts from relatives and friends.

Regardless of the legal entity used, the goal of the Fund will be:

1) preservation and/or growth of the value of the fund's assets;

2) protection of the fund from government encroachment (including forced disposal by operation of law);

3) protection of the fund from fiduciary fraud; and

4) utilization of the fund by the reanimated grantor/beneficiary.

I will attempt to review these goals in more detail and propose methods of achieving these goals.

The general economic possibilities of the future can be summed up in four periods:

1. Prosperity: A period during which the money supply stays stable or increases at a rate equal to improvements in production. During this period business, interest rates and unemployment is stable or getting economy is stable or growing, business is thriving, interest rates are low and stable, and unemployment is declining.

2. Inflation: A period when the supply of money increases, creating a rise in consumer prices. Depending on the rate of the money supply increase, prices might rise moderately or at a runaway rate.

3. Recession: A period during which the growth of the supply of money in circulation slows down and prices fall and the economy starts slowing down.

4. Deflation: The opposite of inflation. A period when the money supply decreases creating a decrease in consumer prices.

In his book Fail-Safe Investing, Harry Browne proposes protecting one's wealth for all four of these economic environments by creating a portfolio balanced between cash (currency), gold, stocks, and bonds. According to Mr. Browne's analysis of this portfolio over a 29-year history, it would have appreciated an average of 9.9% from 1970 through 1998, despite the numerous fluctuations in the economy (including the near-runaway inflation of the '70s, the stock market crashes of the '80s and '90s, and the periodic rise and decline in interest rates). The methodology for balancing the portfolio and suggestions for specific investments within the general categories are outlined further in his book.

Compound interest is the interest which is calculated not only on the initial principal but also on the accumulated interest of prior periods. This principle can be applied to the profits from any investment (dividends, capital gains, etc.) not just interest. If those profits are subjected to income tax, there is obviously less to reinvest and earn profits than if the profits are not taxed. Over a 40-year period, this difference in having investments compound tax-free rather than taxed is enormous. Assuming a 40-percent tax rate and an annual appreciation of 10%, a portfolio starting at $10,000 would be worth $76,861 at the end of 40 years, whereas the same portfolio untaxed would be worth $281,024. That's a 366% increase in the portfolio via the compounding of the tax savings.

There are numerous jurisdictions in the world which allow the accumulation of wealth without taxation. Such jurisdictions are known as tax havens. To a limited exception, the United States is a tax haven for non-resident non-citizens (the U.S. generally doesn't tax interest or capital gains earned by foreigners). Although the Internal Revenue Service has a long-standing history of fighting the usage of tax havens by U.S. citizens, there are many legitimate ways to do so and reap the benefits of low or no-tax jurisdictions. The offshore investment world is less regulated than what most Americans are used to, and is ripe with scams, over-zealous and often ignorant (as to American tax and securities laws) promoters. The cost of going "offshore" will be slightly higher than staying "domestic," and will require a great deal more due-diligence regarding the selection of the fund management. Because the laws are so complex in this area, it is extremely advisable that anyone wishing to utilize offshore tax havens do so only with the assistance of a reputable consultant.

Regardless of the legal entity used, or the initial domicile of such entity, it will be important to safeguard it from legal encroachment. This can happen through the expropriation of the property, an increase in the tax rates applied to the assets or profits of the entity, or by changes in the laws protecting and regulating such entities. It is important that the organizing documents (charter, trust deed, by-laws, etc.) allow for a "Protector," who can legally change the domicile of the entity, should something unfavorable happen in its initial jurisdiction. It would also be prudent to maintain the physical assets (cash, shares, bonds, and bullion) in different countries, which have a long history of stability and preserving property rights.

Just as it's important to protect the assets of the entity from expropriation and taxes, it's possibly more important to protect them from embezzlement, fraud, or incompetent management. The entity documents need to set up a checks and balances approach to internal management, require independent auditing, and forbid self-dealing (where the trustee or managers pay themselves or companies they own for property or services).

Despite the protections necessary to ensure that the assets will be available when the person is reanimated, the documents need to be flexible as to the types of payments which can be made on his/her behalf before, during, and after reanimation.

Before: the cost of reanimation may be significantly more than the amount funded for the cryonic suspension. Also, it may be advisable to change the way the body is preserved, or treat it with special processes, which might be beyond the financial ability of the Cryonics Company. In any case, the funding of these processes or treatments might fall on the Fund rather than the Cryonics Company.

During: it might be possible that certain improvements in human genetics, bio-mechanics, or nanotechnology might be accomplished during the suspension period which the person would like to take advantage of while he/she is being reanimated (examples might include the repair of defective genes, and the installation of enhanced body parts including sense organs, memory storage, and brain functions). These procedures might be expensive and

hence not covered by the normal reanimation fees paid for by the Cryonics Company. The Fund might be able to take advantage of these improvements and incorporate them into the reanimation process.

After: at this time we don't know whether a person will be physically and mentally healthy immediately upon reanimation. Under some scenarios, a person might lose part of his/her memory and need to be "retrained" how to move, speak, understand, etc. Further, the society that such person is reanimating into may have progressed such that new skill, language, or understanding will be necessary before they can safely be discharged into the world. Liken this to being a child again. Under any of these scenarios, it would be desirable for the Fund to be able to pay for the maintenance, supervision, schooling, or therapy of the person until he/she is capable of self support. Finally, upon the person's full recovery and assimilation into society, the fund should disperse the assets back to the person to utilize as he/she sees fit during the remainder of their lifetime.

Suspension/Reanimation Research & Support: I personally believe that this is a highly desirable purpose, but that the funds for such should be left to a dedicated trust or research organization rather than lumped together wit the wealth preservation fund. This research trust or fund should have many of the same safeguards as the wealth preservation fund, but would be created with the specific purpose of spending its income rather than preserving same.