X-Message-Number: 18307
From: 
Date: Sun, 6 Jan 2002 22:49:05 EST
Subject: Spend Down

Driven from the Pack asks:


> Does anyone have any comments on the possible impact
>  of life insurance policies as noted above?
>  How about in the case where the cryo org (e.g., Alcor)
>  "owns" the policy, but the cryonicist makes the
>  payments?

The problem Jan Cotzee describes is very real and it does apply to the 
elderly. In fact, $2,000 in assets are allowed to be retained by Medicare, 
but no more. You must spend down to this level of assets before government 
financial assistance will kick in.

If you intend to transfer assets to avoid spend down this must have been done 
TWO YEARS prior to the start of the illness that causes government assistance 
to become necessary. Otherwise, as Jan points out, ALL assets can and likely 
will be seized, including insurance money. Further, persons receiving assets 
to avoid spend down may have their own assets seized or wages garnished.

If Alcor or your cryonics society owns your policy *and there is no buy back 
agreement* then you can escape asset seizure and spendown if the transfer was 
made 2 years before the illness... If you have executed a buyback agreement 
then the insurance is fair game for the government. If any attorney tells you 
otherwise, they are mistaken. I discussed this issue with HHS and California 
DHS officials repeatedly. A buy-back agreement is a tactic that has been used 
for insurance and other assets in similar contexts (including prepaid funeral 
arrangements) and has been found to violate the law. The assets will be 
confiscated if they are discovered. This might even happen after 
cryopreservation has occurred for several years. It happens routinely to 
families who have made such transfers and the Feds or State officials find 
out within the status of limitations (which is, I believe, 5 years, possibly 
7).

The IRS can seize any assets at any time for taxes owed, including insurance, 
even after the death benefit has been paid. They are quite ruthless about 
this; I've seen it done several times in non-cryonics situations. (It pays to 
investigate the tax status of the person you got a bequest from before you 
spend it!)

This kind of tactic used to be less common, however due to drug laws and 
tightened control over all aspects of banking and money handling the IRS and 
the Feds in general can track every dollar and every asset. They are getting 
remarkably good at this.

I have a fair amount of experience in this area (recent) because of friends 
with HIV who are in support groups and because I am in a support group for 
SOs of people with terminal illnesses. You learn a lot by listening to the 
horror stories of others. Also, the social workers are very helpful in 
providing detailed information, and additional first hand horror stories.

Big Brother is definitely here, NOW.

Mike Darwin

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