Dead on Arrival?

Turn the dial on the Wayback Machine to the fourteenth century. Intrepid knights from across England are saddling up their trustiest steeds to journey east on what came to be known as the Crusades. Those knights needed someone to take care of their lands and families while they were gone. So they invented the “trust,” a form of ownership where one party holds the title to a property for the benefit of someone else. They quickly discovered they could use trusts to avoid property taxes at death. Thus in 1682, Lord Nottingham instituted the “Rule Against Perpetuities,” now the bane of first-year law students everywhere.

Today, we use trusts mostly to avoid probate and taxes. Clever planners have spawned a whole alphabet soup of different variations for different goals: CLATs and CLUTs, CRATs and CRUTs, GRATs and GRUTs, NINGs, and DINGs, and QPRTs, QTIPs, and BLARTs. (I just made up that last one.) Most people would rather have dental surgery than learn what any of them mean. But now, there’s a brand-new flavor that raises tax questions we may not answer for hundreds of years.

Back when those original Crusaders set off to secure Jerusalem from the Muslims, life expectancy hovered around 30 years. (Bubonic plague plays for keeps.) Dying meant dying. Today, scientists are working to push lifespans past 100. But that’s not good enough for a hardy band of pioneers determined to cheat death entirely. So they’re spending up to $200,000 to freeze their bodies (or sometimes just their heads) in liquid nitrogen, typically at -320 degrees Fahrenheit, until they can be thawed and brought back to life. When will that be? 100 years from today? 1,000? (Will we finally have flying cars and personal jet packs?)

Freezing yourself for posterity raises some obvious financial questions. For starters, who’s going to keep the refrigerators running while you’re resting in icy peace? The Alcor Life Extension Foundation, which currently maintains nearly 200 patients in suspended animation, has established the Alcor Patient Care Trust to cover those costs. (Can you even imagine how creepy their lab must be?)

But who wants to wake up in 1,000 years with no money? That’s where the Personal Revival Trust comes in. The PRT is a specialized dynasty trust that lets you leave money to your future unfrozen self. The PRT raises even more tricky legal headaches. Does a frozen head qualify as an “ascertainable beneficiary”? How do you protect your future nest egg from angry relatives who were expecting to inherit your fortune? Will you have to pay back your life insurance benefits?

Finally, what will the IRS have to say about all of this? Will they (or the United States or our basic legal system) even exist when we’re reanimating frozen heads? Will PRT contributions escape estate taxes? Doctors can’t start freezing you until you’re legally dead, which triggers taxes on transfers to yourself – but what about transfers to your future self? And trust assets can compound to staggering amounts in the decades or centuries it takes for science to catch up with your dreams of immortality. A single dollar, invested for 200 years at eight percent, turns into $4,848,950 before tax. You can be sure the IRS will want a slice of that boondoggle. And what will your tax status be when you’re reanimated? Will you even be the same person for tax purposes?

Now we’ve reached the point of the story where we usually say, “Call us with your questions.” But not today – we’ll admit we’re stumped. At this point, it sounds a lot easier to just upload your consciousness to the cloud. But sooner or later, the IRS will want a piece of that action, too. It never ends, does it?