Alcor News

Alcor News

News Blog of the Alcor Life Extension Foundation

Alcor creates a new trust for Patient Care funds

When Alcor created the Alcor Patient Care Trust (“PCT”) in 1997, our purpose was to create a safe place to grow and protect the funds reserved for care of Alcor’s cryopreserved patients. The number one purpose of Alcor is and has to be to maintain the already cryopreserved patients. Who would trust a cryonics organization which couldn’t do that?

The Patient Care Fund (before it was a separate Trust) was originally part of Alcor’s regular internal fund accounting system. By late 1991, this fund approached one million dollars and was by far the largest segment of Alcor’s assets. The Alcor Board realized that a better way was needed to protect this money. For one thing, it was a possible “deep pocket” in any potential lawsuit against any part of Alcor’s operation. For another thing, there was the potential temptation to use the fund for other purposes during tight financial times. So the idea was born to create a legally separate Trust to shield the fund from either of these possibilities.

We were advised to create the PCT under Alcor’s corporate tax ID number to take advantage of Alcor’s tax-exempt non-profit status. Over the years as the Trust funds grew ever larger, Alcor’s leaders began to look for a way to separate the PCT further from its Alcor corporate existence and to provide the Trust with its own tax ID. Unfortunately the two attorneys we asked about this advised us that it was extremely unlikely that the IRS would approve that kind of separation without a lengthy and expensive court proceeding. They also felt like the Patient Care Trust, being part of Alcor, was not as secure from outside lawsuits as it could be. However, they did have experience with the IRS approving a Trust which took the form of a Type 2 Supporting Organization, which could have its own separate existence, tax ID number, and 501(c)(3) tax status.

https://www.irs.gov/charities-non-profits/charitable-organizations/supporting-organizations-requirements-and-types

Fortunately we had set up the PCT to include the ability “to form any other separate legal entities to hold title to the assets of the Trust in order to carry out the substantive provisions of this Agreement.” And of course, Alcor always has the right to set up other entities.

While a Type 2 Supporting Organization did seem like a useful organization to create, it had one provision that we struggled with: The majority of the Directors (or in this case, Trustees) of a Type 2 Supporting Organization had to be Directors of the Supported Organization – in this case, that means Alcor Directors. While the new Trust would be much safer from outside “attack,” we worried that we might create something that was more vulnerable to inside manipulation from future Alcor Boards of Directors. We think we have solved that problem, however, by keeping the PCT Trustees directly involved in the distribution of funds and payment of expenses, as described below.

The Alcor Care Trust Supporting Organization (“ACT”) was created on June 6, 2016 and approved by the IRS as a tax-exempt 501(c)(3) organization on June 20, 2017. Since then the Alcor Board of Directors, the Trustees of the PCT, and the Trustees of the ACT have worked carefully to put together an ACT Operating Agreement that details the relationship between the three entities. Funds were transferred from the PCT to the ACT on March 21, 2018. As they have been for many years, the funds are in the custody of Morgan Stanley Smith Barney, LLC, but are now managed by the ACT Trustees.

The purpose of the new ACT is primarily to hold the Patient Care investment funds and to invest them in such a way as to allow them to grow at the fastest rate that is consistent with a low level of risk. The strategy being used is the same as that which was pursued by the PCT Trustees.

The PCT continues in existence with the primary purposes of initially receiving the Patient Care funds from Alcor after each cryopreservation and paying the quarterly bills for Patient Care Expenses. At the end of each year (or more often, if warranted), the PCT will pass along excess funds to the ACT for investment. If expenses exceed what the PCT has on hand, the ACT is specifically authorized by the ACT Operating Agreement to return funds to the PCT sufficient for the payment of Patient Care expenses. This arrangement also allows the two Trust Boards to be a potential check on each other and on the Alcor Board of Directors.

At some point in the future, we also anticipate that the ACT will provide funding for research into the technologies necessary to resuscitate our Patients.

The ideal arrangement would be that each Trustee Board include three members who have a relative or significant other in cryopreservation at Alcor. This is sometimes difficult to accomplish; but we are actively looking to increase our pool of qualified future Trustees. For now, we allow no more than two Trustees to be on both Trustee Boards. As we increase our pool of potential Trustees, we anticipate less duplication. The Patient Care Trustees are elected on staggered terms (1 Trustee comes up for election each year) by the Alcor Board of Directors. The Alcor Care Trustees are self electing (by law), also on staggered terms.

The current members of the PCT and ACT Trust Boards are:

Patient Care Trust:
Michael Riskin (Alcor Director)
Robert Schwarz
Michael Korns
David Brandt-Erichsen
[One currently open seat]

Alcor Care Trust Supporting Organization:
Michael Riskin (Alcor Director)
Brian Wowk (Alcor Director)
Andy Aymeloglu (Alcor Director)
Stephen Bridge
Michael Korns

On March 21, 2018, the Patient Care Trust assigned $12,707,650.65 in investments and cash to the Alcor Care Trust Supporting Organization. The Patient Care Trust retained $700,000 in cash as a cushion for Patient Care expenses in 2018, as well as its ownership position in Cryonics Property, LLC (the company that owns the building that Alcor occupies), and its ownership of Patient dewars and related equipment.

The full text of the ACT’s Articles of Organization, Operating Agreement (the equivalent of Bylaws), and other documents can be found on the Alcor website here:

http://www.alcor.org/AboutAlcor/patientcaretrustfund.html

Northern California Alcor 2018 April meeting

HOSTED BY: Zeng and Tim graciously agreed to host the Northern California Alcor April meeting at their home.

WHEN: April 15th, 3:00 – 6:00 PM

WHERE: 381 N Fernwood Circle, Sunnyvale, CA 94085

RSVP: 408-329-0394

Please bring some food to share

Careful with the address: There is 381 S Fernwood Circle nearby. That house has a beautiful front garden while ours has unhealthy bushes.