The Alcor Patient Care Trusts

Introduction

In the early days of cryonics, patient storage was paid for by periodic payments from still-living relatives. This system simply did not work, and resulted in the loss of a number of patients—but never at Alcor. That is why Alcor funding minimums include enough money for indefinitely long storage costs.

At Alcor, patient storage costs are paid from two separate but interrelated Trusts: the Alcor Patient Care Trust, and the Alcor Care Trust Supporting Organization. The difference between these two Trusts, and how they are interrelated, is explained below.

This conservative funding arrangement is designed to cover the cost of patient storage solely from the income from the Trusts, thereby assuring that such funding will continue indefinitely into the future. This arrangement is one of the reasons our members have confidence in Alcor.

It doesn’t do any good to use the most advanced techniques to get our members into cryopreservation unless we can keep them there, as well as build capital to eventually fund revival and reintegration. Ongoing care for cryopreservation patients is the number one element of our purpose in being cryonicists, and financial protection for the patients is a critical component of this. There is no use in starting this possibly centuries-long project, if we don’t do centuries-long financial planning. Providing this kind of protection through a conservative, long-term view of storage costs is one of the main reasons why cryopreservation costs so much.

When an Alcor member is cryopreserved, a significant portion of the member’s funding is placed into the Alcor Patient Care Trust (see Schedule A for amounts). The investment income from this money is then used for the ongoing storage costs. Alcor accepts only secure funding arrangements where the entire funding amount is available within a few days after the legal death of the patient. Most people arrange this through a simple life insurance policy, with Alcor as the beneficiary, although other arrangements are possible.

Because of our non-profit 501(c)(3) charitable status, Alcor does not keep separate funding accounts by patient. All patient care funding is grouped together in the two Trusts so that all patients are treated equally (with the exception of the inherent differences between whole-body patients and neuro patients).

Creating the Alcor Patient Care Trust (PCT)

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 Patient Care Trust to shield the fund from either of these possibilities.

A trust is a legal entity which holds assets for the benefit of certain other persons or entities (who are called the beneficiary or beneficiaries). The trust is managed by a trustee or trustees (the PCT has five trustees).

Creating the PCT turned out to be much easier said than done, and the process ended up taking almost eight years. The unique business Alcor was in necessitated the breaking of new legal ground in creating this Trust. For one thing, although the patients are supposed to be the true beneficiaries of the Trust, the patients have no legal existence and hence could not be the beneficiaries (instead, Alcor was made the beneficiary).

Over a period of nearly four years, Alcor consulted with several expert trust attorneys who did nothing more than educate Alcor on the difficulty of creating this Trust. Finally, in 1995, Alcor found an Arizona trust attorney, Larry Stevens, who was willing to take on the task. “Yes, this can be done” he said, “but it will require some unique legal thought.” Alcor needed to write much of the Trust itself because only Alcor could understand what it wanted to accomplish, and there was a lot of internal debate on exactly how to do that. Within the next three years, the final draft of the PCT was written by attorney Larry Stevens and former Alcor President Steve Bridge, with input from Alcor Board members, various attorneys, and other thoughtful reviewers.

In May, 1997, the original PCT document was approved unanimously by the Alcor Board of Directors and the five original Trustees. The final amendments made in 1999, making the PCT irrevocable, were also approved unanimously by both the Alcor Directors and the Trustees. 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, but the PCT is nevertheless is a separate legal entity that provides liability protection for these assets.


Creating the Alcor Care Trust Supporting Organization (ACT)

Over the years as the PCT 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 number. Two attorneys we asked about this advised us that it was extremely unlikely that the IRS would approve that kind of separation without lengthy and expensive court proceedings. They also felt that the PCT, still being part of Alcor, was not as secure from outside lawsuits as it could be. However, they did have experience with the IRS approving trusts 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.

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. Creating the ACT also turned out to be much easier said than done, and the process ended up taking more than three years.

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. Once that was successfully completed, the Alcor Board of Directors, the Trustees of the PCT, and the Trustees of the ACT worked carefully to put together an ACT Operating Agreement that details the relationship between the three entities. This was unanimously approved by all three Boards on October 11, 2017. Finally, on March 21, 2018, over $12 million in funds were transferred from the PCT investment account at Morgan Stanley Smith Barney, LLC, to a new ACT account also held at Morgan Stanley.

The primary function of the ACT is 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 used is the same as that which was pursued by the PCT Trustees.


The Trust Agreements

You can read the entire Alcor Patient Care Trust (PCT) Agreement and the Alcor Care Trust Supporting Organization (ACT) Operating Agreement in the Library section of the website. Below are a few highlights of how the Trusts operate in practice.

  • As of May 1999, the Alcor Patient Care Trust is irrevocable. This means that the Alcor Board cannot ever cancel the Trust until the purposes of the Trust are fulfilled. Since the purposes of the Trust can be summarized as “keep all the patients in cryopreservation until they can all be repaired and revived,” this Trust is going to be in existence for a long time. The purpose of the ACT is the same.
  • Both Trust Boards shall consists of five persons each, all of whom must be cryopreservation members of Alcor. They have five year terms, staggered so that one term expires each year for each Board. Three of each Boards’ Trustees must have a relative or significant other currently in cryopreservation at Alcor (temporary exceptions can be made in cases when this is too difficult to achieve). No Trustee may be an employee of Alcor, or receive any compensation from Alcor or the Trust other than expenses incurred by carrying out duties involved in managing the Trust.
  • One and only one PCT Trustee must be a member of Alcor’s Board of Directors. Three and only three ACT Trustees must be members of Alcor’s Board of Directors (pursuant to legal requirements for a Type 2 Supporting Organization). No more than two persons may serve as both an ACT Trustee and as a PCT Trustee.
  • The members of the PCT Board are appointed by the Alcor Board of Directors. Members of the ACT Board are appointed by the ACT Board (pursuant to legal requirements for a Type 2 Supporting Organization).
  • Meetings of the ACT Board of Trustees and PCT Board of Trustees shall be joint meetings.
  • Either Trust may place limited funds into a research account intended for support of research into resuscitation of patients, provided certain income requirements are met (these requirements differ for each of the two Trusts).
  • When an Alcor member is cryopreserved, a significant portion of the member’s funding (as determined by the Cryopreservation Agreement) is placed into the PCT.
  • Alcor periodically bills the PCT for Alcor’s expenses related to patient care. The specific costs related to patient care are itemized according to a formula mutually agreed upon by Alcor and the PCT. In addition, the PCT pays for direct capital expenditures related to patient care, such as dewars and construction work on the Patient Care Bay.
  • The PCT shall at least once a year disburse to the ACT the amount of funds that are greater than required for expected payment of Patient Care expenses billed by Alcor.
  • If the PCT does not have the funds necessary to make a payment to Alcor or other entity for which the PCT is responsible, the ACT shall transfer enough funds to the PCT so that the payment can be made.

Trust Assets

As of December 31, 2019, the combined total assets of the Alcor Patient Care Trust and the Alcor Care Trust Supporting Organization were $17,975,453.40.

Alcor Care Trust Supporting Organization

Assets of the Alcor Care Trust Supporting Organization consist of an Investment Account held at the firm of Morgan Stanley, on the above date containing $15,106,721.66. This investment account was originally part of the Alcor Patient Care Trust and was transferred to the Alcor Care Trust Supporting Organization in 2018.

The Alcor Care Trust Supporting Organization invests in a combination of cash, diversified certificates of deposit, U.S. government securities, and U.S. equity instruments with annual rebalancing to generate returns similar to a balanced stocks, bonds, and commodities index portfolio without exposing the entire portfolio to market risk.

The investment account had a total annual return of 17.01% for 2009, 6.18% for 2010, 1.66% for 2011, 10.66% for 2012, 15.6% for 2013, 12.17% for 2014, -2.01% for 2015, 14.7% for 2016, 33.4% for 2017, -7.65% for 2018, and 18.07% for 2019.

Alcor Patient Care Trust

Assets of the Alcor Patient Care Trust include:

  • 95.65% of the shares in Cryonics Property, LLC, the limited liability company that owns the Alcor building (all other shares being owned by Alcor members). On this date these shares were valued at $999,903 which includes the book value of the land and building and cash on hand (income comes from rent paid by Alcor and other tenants in the building).
  • Capital equipment (primarily dewars) and leasehold improvements (capital improvements to the Patient Care Bay) valued at $773,319. These are carried on the books and subject to depreciation, but are not assets that would be liquidated.
  • A Research Account with a book value of $190,000.
  • A cash account in which income is placed (primarily from cryopreservations but also from Cryonics Property, LLC), expenses are disbursed (primarily to Alcor), and money is transferred to the Alcor Care Trust Supporting Organization. On the above date it contained $579,078.74.
  • An Accounts Receivable on the above date of $326,431.

Summary of Alcor Care Trust Supporting Organization Investment Account
September 30, 2020
Cash and Equivalents $72,598.84 0.47%
Stocks / ETFs $11,189,407.11 71.77%
Government Securities $28,328.18 0.18%
Certificates of Deposit $4,299,565.32 27.58%
TOTAL $15,589,899.45 100%
Summary of Alcor Care Trust Supporting Organization Investment Account
December 31, 2019
Cash and Equivalents $445,007.54 2.95%
Stocks / ETFs $7,316,550.41 48.43%
Government Securities $25,782.08 0.17%
Certificates of Deposit $7,319,381.63 48.45%
TOTAL $15,106,721.66 100%
Summary of Alcor Care Trust Supporting Organization Investment Account
December 31, 2018
Cash and Equivalents $553,904.11 4.58%
Stocks / ETFs $3,782,113.24 31.25%
Government Securities $24,220.97 0.20%
Certificates of Deposit $7,742,847.43 63.97%
TOTAL $12,103,085.75 100%
Summary of Patient Care Trust Investment Account
December 31, 2017
Cash and Equivalents $770,066.98 5.34%
Stocks / ETFs $5,054,006.54 35.04%
Government Securities $24,718.97 0.17%
Certificates of Deposit $8,574,426.66 59.45%
TOTAL $14,423,219.15 100%
Summary of Patient Care Trust Investment Account
December 31, 2016
Cash and Equivalents $783,352.80 7.39%
Stocks / ETFs $4,035,864.54 38.07%
Certificates of Deposit $5,781,160.16 54.54%
TOTAL $10,600,377.50 100%
Summary of Patient Care Trust Investment Account
December 31, 2015
Cash and Equivalents $279,644.94 3.02%
Stocks / ETFs $3,872,062.07 41.90%
Certificates of Deposit $5,089,950.86 55.08%
TOTAL $9,241,657.87 100%
Summary of Patient Care Trust Investment Account
December 31, 2014
Cash and Equivalents $155,197.39 1.68%
Stocks / ETFs $4,635,647.20 50.05%
Government Securities $18,804.15 0.20%
Certificates of Deposit $4,451,477.98 48.07%
TOTAL $9,261,126.72 100%
Summary of Patient Care Trust Investment Account
December 31, 2013
Cash and Equivalents $511,702.90 6.20%
Stocks / ETFs $4,422,269.95 53.56%
Government Securities $19,559.97 0.24%
Certificates of Deposit $3,302,497.42 40.00%
TOTAL $8,256,030.24 100%
Summary of Patient Care Trust Investment Account
December 31, 2012
Cash and Equivalents $486,980.26 6.99%
Stocks / ETFs $3,204,837.30 45.99%
Government Securities $20,341.71 0.29%
Certificates of Deposit $3,256,691.47 46.73%
TOTAL $6,968,850.74 100%
Summary of Patient Care Trust Investment Account
December 31, 2011
Cash and Equivalents $14,589.47 .24%
Stocks / ETFs $2,186,516.95 35.88%
Government Securities $58,002.36 0.95%
Certificates of Deposit $3,835,742.91 62.93%
TOTAL $6,094,851.69 100%
Summary of Patient Care Trust Investment Account
December 31, 2010
Cash and Equivalents $195,299.93 3.52%
Stocks / ETFs $1,934,387.13 34.83%
Government Securities $111,667.83 2.01%
Certificates of Deposit $3,311,576.56 59.64%
TOTAL $5,552,931.55 100%
Summary of Patient Care Trust Investment Account
January 31, 2009
Cash and Equivalents $208,926.86 15.19%
Stocks / ETFs $220,728.20 16.05%
Corporate Fixed Income $191,994.99 13.96%
Government Securities $178,612.78 12.98%
Certificates of Deposit $575,314.30 41.82%
TOTAL $1,375,577.13 100%

Trustees

Current members of the Alcor Patient Care Trust (PCT) Board (1 and only 1 must be an Alcor Director):

Tim Freeman, Chairman (term expires May 2022).

David Brandt-Erichsen, Secretary (term expires May 2023). David has been signed up with Alcor since 1987 and has been a long-time volunteer for Alcor in various roles, in the 1990s as Sign-Up Coordinator and in 2004 as a major contributor to creating a new Alcor website, spending many hundreds of hours formatting all of the available material for the web. Since then he has been primarily responsible for adding updates to the site (both before and after the current site design was created). David’s background is as a research technician in molecular genetics. Now retired, he devotes much of his spare time to volunteer work for non-profit websites. Besides his work with the Alcor Website Working Group, he is webmaster for the Natural Arch and Bridge Society, for Compassion & Choices Arizona (which is trying to establish legislation in Arizona for the right to assistance in dying such as currently exists in Oregon, Washington, and Vermont), and for the Elverhøj Museum in Solvang, California (which was formerly the family home he grew up in). In addition, he has almost single-handedly created the world’s largest internet source of information about space settlement and space solar power for the website of the National Space Society. David has also been a volunteer hiking guide for numerous trips into the canyon country of southern Utah.

Fran Finney (term expires May 2025). Fran met her spouse Hal when they were undergraduates at the California Institute of Technology. They married in 1979, Hal working in computer science/cryptology, and Fran going on to get her Masters in Physical Therapy. Fran and Hal became members of Alcor in 1992. In 2009 Hal was diagnosed with ALS, a disease that progresses to complete paralysis. Initially Hal planned to extend his life as long as was medically possible, and in 2012 he was put on invasive ventilation. However, as Hal’s disease progressed, it became clear that ALS was taking away his ability to control eye movement, his only remaining means of communication. Hal and Fran proceeded with their plan to have Hal cryopreserved once he could no longer communicate. Hal had his life support withdrawn and was cryopreserved at the Alcor facility in Scottsdale on August 28, 2014. Fran was able to attend and witness the cryopreservation. Fran now works as a consultant for the ALS Association, helping people living with ALS and working to find a cure.

Michael Riskin, Ph.D., CPA, Treasurer (term expires May 2024). Michael is a member of the Alcor Board of Directors. Biographic information can be found on the Alcor Board of Directors page.

Michael F. Korns (term expires May 2021). Mr. Korns has engaged in advanced computer science research in the areas of pattern recognition, natural language processing, high performance compilers, analytic database engines, machine learning, and computational finance. Mr. Korns has held numerous positions in industry including: research staff member at IBM; Chief Scientist Tymshare Transaction Services; Chief Scientist Xerox Imaging; Chief Scientist Objective Software; and Chief Scientist Investment Science. Mr. Korns has authored numerous publications, and his research interests are currently focused in the areas of: analytic database tool development, machine learning including symbolic regression, and computational finance. His website is www.korns.com. He and his wife have been Alcor members since 1986.

Current members of the Alcor Care Trust Supporting Organization (ACT) Board (3 and only 3 must be Alcor Directors):

Stephen Bridge, Chairman (term expires September 2021). Steve became involved in cryonics in 1977 and was the co-founder and original co-editor of Cryonics magazine. He was the President of the Alcor Life Extension Foundation from 1993 to 1997. He led Alcor’s move to Scottsdale, Arizona in 1994 and was the chief architect of both the Alcor Patient Care Trust and the Alcor Care Trust Supporting Organization. Steve is an Alcor advisor and a Co-Manager of Cryonics Property, LLC, which owns the building that houses Alcor and its patients. He is a graduate of DePauw University and Indiana University. Steve is a retired librarian in Indianapolis, Indiana, where he lives with his family.

Andy Aymeloglu, Secretary (term expires September 2021). Andy is a member of the Alcor Board of Directors. Biographic information can be found on the Alcor Board of Directors page.

Brian Wowk, Ph.D., Treasurer (term expires September 2025). Brian is a member of the Alcor Board of Directors. Biographic information can be found on the Alcor Board of Directors page.

Michael F. Korns (term expires September 2022). Michael is also a Trustee of the Alcor Patient Care Trust and his biographical information is above.

Michael Riskin, Ph.D., CPA (term expires September 2024). Michael is also a Trustee of the Alcor Patient Care Trust as well as a member of the Alcor Board of Directors. Biographic information can be found on the Alcor Board of Directors page.


A testimonial on the formation of the Alcor Patient Care Trust in 1997 by attorney Gary Meade

As an attorney as well as an Alcor member and someone who has a loved one in cryopreservation, I am pleased to give my wholehearted professional and personal endorsement of the Alcor Patient Care Trust. I believe the Trust will provide the best means of legally protecting the patient care fund assets, thereby helping to ensure the long-term care of the patients in cryopreservation. That is the reason I enthusiastically agreed to serve as a Trustee and Chairperson of the Trust [Gary served from 1997 to 2002].

Conceptually, the Trust is an excellent idea. The assets in the patient care fund have been placed in trust, to be held by the Patient Care Trust as a separate legal entity. This will provide the maximum legal protection for these assets, both against claims by others as well as possible misuse for purposes other than patient care. The Trust Agreement requires the Trustees to act in accordance with the Trust’s legal purpose, which is “providing care” for the patients in cryopreservation. The Alcor Life Extension Foundation is the legal beneficiary of the Trust, and as such has the absolute legal right to enforce the Trust Agreement and ensure that the Trustees act in such a manner.

The Trust itself is well-planned and skillfully crafted. This is the first trust ever established to care for those who are legally dead and who therefore have no rights under the law. This presented some novel legal challenges. The drafters of the Trust overcame these and I believe the completed Trust successfully accomplishes everything it was intended to do.

Everyone with an interest in cryonics owes a tremendous debt of gratitude to those who worked so hard to set up the Trust, including the outside trust counsel, the Alcor Board, and especially Steve Bridge. Of course, those having the greatest such debt are the patients themselves. It may be presumptuous of me to do so, but I would like to extend on their behalf a most sincere “Thank you” to all for a job very well done.