The role of a trustee is expanding.  Trusts are evolving to harness medical advances. With the use of stem cells and other genetic material babies born today are expected to live over 100 years.

As part of this evolution, new state laws now make extracting live sperm from a dead body for later reproductive use legal. Cryobanks around the country are receiving customer deposits of frozen reproductive cells which include stem cells, cord blood, sperm, eggs and embryos. The courts have held that genetic material is property, like securities and may be bought, sold or transferred.

Unclaimed and abandoned property or genetic material in these banks, including sperm or embryos can be used to create a child through in vitro fertilization (IVF) without the knowledge or consent of the owner. This child, if conceived by a former wife or ex-girlfirend may have rights to an ultimate inheritance from the owners estate.

To account for this material, estate planners have begun to recommend adding provisions to their client’s trusts to be sure this property is managed properly after death – requiring trustees to understand this new language and take on new responsibilities.

Frozen Heirs

The process begins by storing sperm or an egg with the idea that a child may be born after the death of one of the parents. In the past, a child would be born after the death of his or her parent only if the father died during the pregnancy or the mother died during delivery. Most state’s laws account for this and protect an after born child to permit that child to inherit from the deceased father or mother. In other words, a child conceived during the parents’ lives is protected and is considered a lawful heir.

In 1999 everything changed with the birth of Brandalynn Vernoff, the first known child in the United States conceived with the sperm of a dead man. Brandalynn’s father, Bruce Vernoff, was only 35 when he died in 1995 from an accidental overdose of prescription medications. Thirty hours later, at the behest of Vernoff’s grief-shattered family, a doctor extracted five vials of Vernoff’s sperm and stored them in a sperm bank. In 1999, using advanced reproductive technology, a team of specialists posthumously fertilized Bruce’s widows’ eggs. The result was Brandalynn who arrived March 17, 1999 – almost four years after her father drew his last breath.

This is called posthumous conception. It is now possible and with the use cryopreservation, a family can complete its family formation objectives after the death of one on the parents.

But there are still pieces of this puzzle that need to be understood. First, how does a trustee arrange for collection of live sperm from their dead clients corpse? And, second, what inheritance rights does a posthumously conceived child have from their father’s estate?

First, as trustee, you should know, in advance, if the medical powers of attorney require the executor or trustee of the estate have sperm extracted and cryopreserved. Of course, you can avoid all of this ahead of your clients death by advising them to deposit eggs or sperm in a cryobank.

Hurry, We Need a Urologist

I interviewed Theresa M. Erickson, an astute and knowledgeable family formation lawyer based in San Diego, California. Erickson says, depending where you are “finding someone to extract sperm from a corpse may prove difficult.” She added, “most urologists are reluctant to perform the procedure.” Sperm is not preserved indefinitely in a dead body. It should be extracted within 36 hours or less. Although she said, ”one doctor told her that it can be good for up to one week.”

Therefore, for the trustee, when you receive one of these trusts, be sure you have a willing urologist available on-call as you never know when your client may suffer an accidental death. You might start by asking for a referral from Los Angeles Urologist Dr. Cappy Rothman, the physician who extracted the sperm in the Vernoff case. He is also a co-founder of the California Cryobank.

Once you have multiple vials of your deceased clients sperm, you as trustee, will need to get it deposited into a cryobank. To get clear on this, I interviewed Scott Brown, from the California Cryobank, America’s biggest and oldest sperm bank. Brown says is easy to make a deposit. This is usually handled though the physician that collected the sample. However, they will take a direct deposit from a trust company on behalf of their trust client. Opening an account and making a deposit is not like depositing money with Bank of America. Brown says you should have your attorney draw up an agreement. This agreement should be clear as to who is the sperms owner.

The next step for the family it to decide what to do with the sperm. This decision has to be made quickly. California laws say the sperm must create a child within 2 years from the death of the donor, or the child will not have an entitlement to an inheritance. It is legal to use the use the sperm beyond two years, but the child will not see any money from the estate.

All of these thorny issues involving family formation after death of a spouse should be spelled out long before the death of a family member. I found one estate planning law firm in Denver that deals with these issues head on. I interviewed Teresa C. Baird, last week. Her firm, Fairfield and Woods, PC  provided a sample trust provision for attorneys to address the inheritance rights of posthumously conceived children.

Barid gives her clients an intake questionnaire before drafting a will or trust. Baird always asks the question about cryo banking genetic materials — “its good practice.” She also asks, “what would you like to happen in the event of your death, would you like sperm or eggs deposited into a cryobank?”

Baird says the legal authority in this area is ”murky” at this time, but will likely be better defined as this practice increases. Baird says, “it is essential that planning take place, beginning with an critical conversation,  as very few courts have addressed these questions.”

Questions of Control

Both attorney’s Erickson and Baird agree that genetic property or materials need to be accounted for both before and after death.

While alive, any deposits made in the cryobank need to be correctly titled to either the owner of the material or the trust that governs its disposition. Therefore, when an estate planner creates at trust provision that requires the redemption of sperm or embryos from a cryobank it is important that the trustee have proper standing with the depository.

Brown from the California Cryobank says the instructions as to what to do with the material must come from the owner or the person who has a power of attorney. While alive this agreement should have specifics as to who has the right to contribute and withdraw these materials.

In following the death of the owner of such material it is important to specify in any trust provision that, in the case of sperm, that it be used only by a specific individual and for a limited time period.  Erickson pointed out that in a case where a celebrity or multi-millionaire that had former wives or girlfriends “you don’t want them coming forward and claiming the sperm and therefore a right to a child and its rightful inheritance.”

In addition to what may be available to a trust company client for legal remedies there are certain measures that the owner of sperm should do to keep track of his genetic property.

A Mischievous Mistress

Here is a hypothetical situation that might exist in the absence of controls of sperm. Let’s say you have a client who is 70 years old and is worth $100 million. He is married, has three children and a wife. In addition to his family life he has several mistresses, one of which has a hidden agenda.

As our multi-millionaire has frequent sexual relations with his mistress he is strict about using a condom.

At the end of each episode the mistress politely removes the condom filled with semen, takes it into the bathroom, and flushes the toilet. But instead of discarding the condom with the semen, she stores it in a plastic bag. After he leaves, she promptly takes it down to a cryobank and deposits it under her name.

Over the span of a ten year relationship she may have made dozens of deposits.

Then one day the multi-millionaire suddenly dies. He is not around to make any claim one way or another to have fathered another child but our mischievous mistress becomes impregnated with the multi-millionaire’s sperm, announces to the estate she is pregnant with his child. Her lawyers come to the trustee perhaps you, to  include her child in the class of beneficiaries for distributions to his children. At the end of the it is her word against the estates as to what the intent of the deceased client.

Of course this is a hypothetical but it can happen. There are two things that might be done when advising a multi-million dollar client:  1) Make certain that estate planning documents are crystal clear who are and are not legitimate children, entitled to the inheritance.  2) If one is having an affair it might be a good idea to take your soiled condom out the door with you!

As reproductive medical technology improves and more genetic property including sperm, eggs, embryos, stem cells and more get stored at cryobanks there will become an ever so important requirement for trust administrators to understand this new science and to be thoroughly familiar with how to both control and manage your client’s genetic property.

Jerry Cooper, senior editor, The Trust Advisor Blog. Steven Maimes contributed to the research.

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