Wealth Matters: Fertility Treatments Produce Heirs Their Parents Never Knew

While this may sound bizarre, posthumously conceived children can become a quandary for the rich and the not-so-rich alike. The problem is always about money. The rich worry about who will get their assets after they are dead, while people of more meager means have turned to the courts in the hope of collecting federal benefits.

“We’re going to see a flurry of activity on this, because new technologies are ballooning,” said Sharon L. Klein, managing director at Wilmington Trust and chairwoman of the trusts, estates and surrogate’s courts committee of the New York City Bar Association.

“You read about women in their late 20s and early 30s who are saving their eggs and want to focus on their careers and haven’t met the right partner yet,” she said. The woman’s eggs could be used to produce a child even if the woman never wanted the eggs used after her death.

The law is clear on one thing: when a trust document does not address the issue, Ms. Klein said, “children born with the new technology are entitled to inherit with the same rights as a natural-born child.”

Consider the example of a sick person who, before undergoing chemotherapy that will cause sterility, donates sperm or eggs to be frozen, in hopes of having children later. The patient intends to have the children after recovery. But should the patient die without something in writing stating this intent, the surviving partner could have a claim on that genetic material and could use it to produce a child.

Other possibilities exist. A couple who has embryos left over after having children through in vitro fertilization could, instead of destroying them, donate them to a woman, essentially giving her a child they created. That could have unintended consequences. “It’s not inconceivable now that if the father and mother of that embryo were to strike it rich, the child born of that other woman could say, ‘Those are my genetic parents,’ ” said John M. Olivieri, a partner at White & Case. And if the child says that, chances are he or she would ask for a share of the genetic parents’ wealth.

“Posthumous reproduction is the perfect storm of competing interests,” said Susan M. Wolf, professor of law, medicine and public policy at the University of Minnesota School of Law. “There’s the surviving partner who wants to reproduce, the interests of the deceased while they were alive or as they memorialized them, the pre-existing kids who don’t want their interest diluted and finally the kids who are brought into the picture but who may be financially most at risk.”

Several lawsuits have already tested this issue, and many more have been settled privately, lawyers said.

In 2007, the New York County Surrogate’s Court decided in the case In re Martin B. that two posthumously conceived children could benefit from a trust created by their grandfather, Martin B., for his two sons and any grandchildren. (Real names were not used in the suit to protect the children.)

The case was brought jointly by Martin B.’s wife and the widow of their son, whose frozen sperm had been used to conceive two children three and five years after his death. They wanted to know whether the posthumously conceived children were descendants for the purpose of the trust.

The answer decided whether tens, if not hundreds, of millions of dollars from the estate of Martin B. went to those children or if all of it was divided among the surviving son and his children.

What made this case even more intriguing was that Martin B.’s wife had the ability to divide the assets in the trusts her husband set up as she saw fit. Lawyers on both sides said even if her posthumously conceived grandchildren were not considered, she could have cut her living son out of his inheritance.

This article has been revised to reflect the following correction:

Correction: August 30, 2013

An earlier version of this article included outdated information about the status of New York legislation that would set guidelines for the inheritance rights of posthumously conceived children. The state Senate did not take up the legislation in the most recent session, which ended in June; it is not awaiting Senate action in this session. 

DealBook: Never Mind Facebook; Winklevoss Twins Rule in Digital Money

The Winklevoss twins, Cameron and Tyler — Olympic rowers, nemeses of Mark Zuckerberg — are laying claim to a new title: bitcoin moguls.

The Winklevii, as they are known, have amassed since last summer what appears to be one of the single largest portfolios of the digital money, whose wild gyrations have Silicon Valley and Wall Street talking. The twins, the first prominent figures in the largely anonymous bitcoin world to publicly disclose a big stake, say they own nearly $11 million worth.

Or at least $11 million as of Thursday morning — when trading was temporarily suspended after the latest and largest flash crash left a single bitcoin worth about $120 and the whole market worth $1.3 billion. At one point, the price had plummeted 60 percent.

To skeptics, the frenzy over the bitcoin network created by anonymous programmers in 2009 looks more like the mania for Dutch tulip bulbs in the 1600s than the beginnings of an actual currency.

“To say highly speculative would be the understatement of the century,” said Steve Hanke, a professor specializing in alternative currencies at Johns Hopkins University.

Whatever else it is, bitcoin has become the financial phenomenon of the moment.

In addition to the identical twins, Silicon Valley investment firms, while not holding bitcoins, are starting to show interest in the technology.

On Thursday, a group of venture capitalists, including Andreessen Horowitz, announced that they were financing a bitcoin-related company, OpenCoin.

Sean Gallup/Getty ImagesA sticker on the window of a pub in Berlin signifies acceptance of bitcoin for payment. Few places accept the digital currency.The New York Times

The Winklevosses say this week’s tumult is just growing pains for a digital currency that they believe will become a sort of gold for the technorati.

“People say it’s a Ponzi scheme, it’s a bubble,” said Cameron Winklevoss. “People really don’t want to take it seriously. At some point that narrative will shift to ‘virtual currencies are here to stay.’ We’re in the early days.”

While little is known about the creator of bitcoin, or if it even was a single person, the work involved serious programming chops, building a system that could live on borrowed computer space around the world. It was determined that only a finite number of bitcoins could be created — the count is currently around 11 million. New coins are “mined” by programmers who solve mathematic riddles and can sell their coins on upstart exchanges.

For now, there are few places where bitcoins can be used. One marketplace is an online bazaar, Silk Road, where narcotics are reportedly the main wares for sale. But bitcoin believers imagine a future where the e-cash can be used at their local Starbucks. The Winklevosses have paid in bitcoin for the services of a Ukrainian computer programmer who has worked on their Web site.

“We have elected to put our money and faith in a mathematical framework that is free of politics and human error,” Tyler Winklevoss said.

This is not the brothers’ first gamble on an unproved technology. As students at Harvard, the twins founded a social networking site, ConnectU, and enlisted their schoolmate, Mark Zuckerberg, to help them build the company. After Mr. Zuckerberg went off to start Facebook, the brothers sued him, accusing him of stealing their idea — a story that was dramatized in the movie “The Social Network.” The case was settled with the brothers being given $20 million in cash and Facebook shares that are now worth more than $200 million.

They have parlayed that fortune into Winklevoss Capital. Their first two investments were in Hukkster, a start-up shopping Web site and SumZero, an online community for professional money managers.

The brothers began dabbling in bitcoin last summer when the dollar value of a single coin was still in the single digits. To keep their holdings secure from hackers, they have taken the complex codes that represent their holdings off networked computers and saved them on small flash drives, putting the drives, in turn, in safe deposit boxes at banks in three different cities.

It’s hard to verify how the Winklevoss holdings compare with other bitcoin players, given the anonymity of accounts, and the twins say they believe that some early users of the system probably have holdings that are at least as large.

A Maltese company, Exante, started a hedge fund that the company says has bought up about 82,000 bitcoins — or about $10 million as of Thursday — with money from wealthy investors. A founder of the fund, Anatoli Knyazev, said his main concern was hackers and government regulators, who have so far mostly left the currency alone.

These investments were all in an uncertain state on Thursday after the big price swings and the shutdown of trading on Mt. Gox, a Japanese-based company that claims to handle 80 percent of all bitcoin trades. Mt. Gox said in a statement that the problems were a result of the currency’s popularity, making it impossible to process all the incoming orders. It added that it was not the victim of hackers but “instead victim of our own success!”

The 6-foot-5 Winklevoss brothers were unfazed. The brothers said they took advantage of the low prices to buy more.

“It has been four years and it has yet to be discredited as a viable alternative to fiat currency,” Tyler Winklevoss said. “We could be totally wrong, but we are curious to see this play out a lot more.”