Simon Cowell's Cryogenic Goals Test Limits of Conventional Trust Planning

Simon Cowell's Cryogenic Goals Test Limits of Conventional Trust Planning

While former "American Idol" judge may not be 100% sincere about being frozen after death, the ultimate disposition of his $325 million fortune is serious business.

Known as “Mister Nasty” from his television persona, Simon Cowell recently spun heads by telling GQ magazine that he wants to be frozen when he dies.

He calls it “an insurance policy” that medical science will advance to the point where he can be unfrozen and cured of whatever he ends up dying from.

“If it doesn’t work, it doesn’t work,” he says. “If it does work, I’ll be happy.”

But either way, his lawyers are going to have to deal with the fine details: how to pay the bills for keeping his body -- or just the brain -- on ice and what happens to the rest of his money.

And if he’s thinking about being frozen, you can bet that other rich people around the world are at least flirting with the idea.

“I haven’t seen a steady stream of clients who are interested in this, but those I’ve worked with tend to be on the higher end,” says Virginia estate planner John Dedon.

“This will become more and more relevant as the science comes along.”

So far, the biggest cryogenic facility in the business, the non-profit ALCOR Life Extension Foundation in Phoenix, has frozen a little over 100 patients, with another 948 on the waiting list.

Paying the bills from beyond the grave

The service isn’t cheap, but when you consider that it could be centuries before doctors figure out how to grow new organs, much less thaw you out, the all-in cost is surprisingly reasonable.

For freezing the entire body, ALCOR asks for $90,000 upfront and another $110,000 put in trust for storage and monitoring. If just the brain is preserved, substantial discounts apply.

Middle-class cryogenics enthusiasts tend to pay with life insurance policies gifted to the storage facility. The insurance company pays because technically the person is dead, even though the whole point of cryogenic suspension is to reverse that situation down the road.

However, those fees would be pocket change for someone like Cowell, whose net worth is something like $325 million.

In fact, Cowell could probably set up his own cryogenic trust to preserve the rest of his fortune for the day he’s eventually revived, Dedon says.

“You’re basically looking to set up a dynastic trust, only with slightly different rules,” he explains.

“You often want some distributions to family or charity during the life of the trust, which basically replicates the traditional dynastic trust. But you want to preserve the bulk of the assets for the grantor to recover on revival.”

Dedon cites Delaware as a state where these trusts can be set up. Trust Advisor readers could easily add South Dakota, Nevada and Alaska to the list.

Florida estate planner Peggy Hoyt has drafted some of what she calls “personal revival” trusts and emphasizes the importance of those intermediate beneficiaries while the grantor is waiting to be revived.

As she points out, the family or charitable groups can still inherit if something goes wrong, and in the meantime, the trustee can make the required payments to the cryogenics facility.

Disinheriting your own descendants?

Simon Cowell’s lawyers have it relatively easy because he wants to give all his money away, so it’s just a matter of funding the cryogenics costs in perpetuity and then donating everything else to his favorite causes.

Less altruistic clients can theoretically re-inherit their own assets even though they’ve been declared legally dead, but this is of course purely hypothetical until someone is actually thawed.

“The law will be developing around this issue for many years to come,” Hoyt says. “How do you ‘undo’ a death certificate? What proof is going to be necessary?”

Because the trust received the assets before death, it can’t be “disinherited,” and any payments made to the other beneficiaries remain theirs.

Needless to say, the potentially long timeframe that these trusts have to run means anyone thinking about cryogenic suspension should make sure the trustees are in it for the long haul. A corporate trust company is a bare minimum here, and the more extensive its own succession plans, the better.

“Even if I were in a state that allowed it, I think I would be nervous,” says Pepperdine law professor Kris Knaplund.

“Who’s minding the store? California only allows trusts for the care of a grave or a headstone to run for 21 years, and after that, I guess, you’re on your own. These cryogenic trusts need even more rigorous oversight.”

Knaplund isn’t willing to speculate on whether a revived Simon Cowell could step back into his life and property after a century or two in the deep freeze.

As she points out, the legal code is always changing and a trust drafted under today’s rules may be grossly out of date by the time your clients come back.

“Who knows what things will be like in 300 years?” she asks. “If you created a trust for specific purposes in 1711, it is unlikely that it would function in the same way today, even if you might have wanted it to.”

That’s true of any dynastic trust arrangement, but here the added twist is that the grantor could actually be alive at the end of the day.

For Cowell -- and John Dedon’s clients -- it’s worth the risk of the legal ground shifting under you while you’re asleep.

“These people have the money and there’s a non-trivial chance of coming back,” Dedon explains. “There’s really nothing to lose and everything to gain here.”

Scott Martin, senior editor, The Trust Advisor Blog. Steven Maimes contributed to the research.

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