The Price of Potential:

Classification and Valuation of Cryogenically Frozen Embryos in Equitable Distribution

by Catherine Pappas

Law and Valuation:Spring 2001


Abstract

Ever since 1978, when the first baby produced through in vitro fertilization was born, the procedure has ignited a wealth of legal and ethical quandaries that still spark debate twenty-three years later.One of the most recent debates revolves around the fate of the remaining frozen embryos from in vitro fertilization procedures.This paper discusses the branch of that debate relating to couples who have divorced, and wish to divide their marital property.Recent litigation has attempted to answer the question whether to classify the frozen embryos, as property, person, or some special category of its own.While the only case law on the subject has placed the frozen embryos in a quasi-property classification hidden from long arm of equitable distribution valuation, academic commentaries have called for the material to be classified as property and subject to equitable distribution in divorce proceedings.However, no commentator has proposed a method of valuation which could adequately account for the unique value of the material in its potential to create human life, and the many uncertainties that may arise.While the traditional method valuation in equitable distribution is through fair market methods, the lack of any legal markets for frozen embryos creates an impediment to such an approach.However, by examining methods of valuing other assets that lack legal markets, such as professional degrees and illegal goods, one can determine the fair market value of the underlying asset.Yet, this method of valuation, while effective in some respects, fails to truly value the potential for human life.This potential can only be valued by a method that accounts for both the flexibility and the uncertainty which the frozen embryo provides.In my opinion, either a weighted cost of capital or an option pricing model approach provide the most accurate methods of valuing the frozen embryo for the purposes of equitable distribution.

Introduction

Over 6.1 million American women, ten percent of the country’s reproductive age population, struggle with infertility.[1]Due to the fact that more and more couples are delaying their attempts at conception, this number will most likely rise in the future.However, as the rate of infertility increases, so does the breadth of possible reproductive options for infertile couples.Whereas fifty years ago the term“test-tube baby” would more likely appear on the back of a comic book than a scientific journal, since the 1978 birth of Louise Brown, the first such “test-tube baby”, the term of in vitro fertilization (“IVF”) has passed through the gate of fiction to reality. This paper attempts to examine the effects of the process on property division methods in family law.It will examine two issues; first whether frozen embryos would constitute marital property for purposes of equitable distribution and second, how would such property be valued if the embryos are considered property.

While courts have determined that reproductive material is a form of property for estate purposes, no case law exists which has classified pre-embryos as marital property subject to equitable distribution.However, there is a push in academia, and a mind-set in America, which attempts to assert that providers of genetic material, i.e. the sperm and ova, possess an ownership right in the material which amounts to a property right.This view is rejected by other groups of society that believe that frozen embryos are a form of human life, and therefore any attempt to classify them as property and include them in property distribution is inequitable and unethical.This paper does not purport to answer this fervent discussion of when life begins, or even assert that embryos should be considered as property for the purposes of equitable distribution, but rather tracks the trend to classify the embryos as such, and attempts to outline dangers and tactics in valuation of cryogenically frozen embryos.

Equitable Distribution

Equitable distribution, the most common form of property division grants the court discretion to divide property classified as “marital property” equally, or if an equal division is not possible, the court will attempt to make an equitable division, in order to sever the products of the marital relationship in a fair manner.[2]The rationale for equitable distribution lies in the assertion that each party contributed equally to the marriage, and therefore any products of the marriage should be split equally.

In order to determine which property should be divided among the parties, i.e. which are products of the marriage, the court must classify the property as either marital or separate property.The North Carolina equitable distribution statute classifies all property acquired during the marriage, except for gifts, as marital property.[3]This includes property acquired through the “joint effort” of both spouses[4] and any property where title rested in joint ownership or where separate property was converted from separate to joint ownership.In contrast, all property earned or acquired prior to the marriage is presumed separate property.[5]In addition, most jurisdictions, including North Carolina, classify any property acquired by gift or devise during marriage as separate property, unless evidence exists to show the parties transferred the property as a gift to the marital estate.[6]

What is Property?

Before one determines whether frozen embryos should be considered property, and what type of valuation method should be adopted to follow such a claim, one must state a clear definition of the term “property”.The common man’s definition of “property” can be most effectively considered in terms of tangible assets.[7]However, in legal terms “property” refers to an aggregate of rights that are guaranteed and protected by the government.[8]The Encyclopedia of American Jurisprudence describes the concept of property as;

the right and interest or domination rightfully obtained over such object, with unrestricted right to its use, enjoyment, and disposition.In other words, its strict legal sense property signifies that dominion or indefinite right of user, control, disposition which one may lawfully exercise over particular things or objects; thus property is nothing more than a collection of rights.

This inclusive definition of property includes any collection of rights, including rights over intangible objects, such as trademarks, investment property, and patents.However, while “bundles of rights” may be a form of “property” in a technical sense, it does not follow that groups of rights will be classified as property in all legal contexts.

An Understanding of In Vitro Fertilization

A determination of whether frozen embryos should be classified as property requires a clear understanding of the process of the in vitro fertilization procedure (“IVF”).IVF is usually a treatment for women with damaged or absent fallopian tubes, or a treatment used to circumvent infertility caused by endometriosis or male infertility.The procedure requires the doctor to monitor the development of ripening eggs in the ovaries.When the eggs are at a desired stage of development, the doctor collects the eggs from the female donor, and the sperm from the male donor.The eggs and sperm are then combined in a laboratory and are provided the correct conditions for fertilization and early embryo growth.Finally the embryos are transferred to the uterus for implantation, and hopefully a child will result.Any remaining embryos will then be cryogenically frozen.The fate of these frozen embryos often depends on whether the first stage of implantation was successful.[9]

The process of in vitro fertilization was first used in 1981.[10]Since 1981, over 45,000 babies have been born in the United States as a result of this procedure.The average success rate for live births per egg retrieval is 22.8%.[11]Among those women under the age of 35 who have infertility problems without a male factor, 25% of them have a chance of having a child through IVF.This success rate increases with the number of cycles of attempted embryo implantation.[12]Among the 78% of pregnancies through in vitro fertilization that result in live births, 50% of such births are singletons, 24% are twins, and 5% are triplets or more.[13]

The cryogenically frozen embryos are often used in numerous attempts at pregnancy.As the gamete providers, the donors have rights to use, possess, and preserve the embryos.The American Medical Association grants the donors the right to use the frozen embryos themselves, donate them to other parties, or permit them to thaw and dispose of them.[14]The couple can also donate the embryos for research purposes, provided the research is conducted in accordance with the Council’s guidelines for fetal research, and the embryos aren’t transferred to another woman for implantation after the research. [15]However, this right is one of joint ownership, i.e. any disposal or use of the embryos must be with the consent of both donors.While this rarely poses significant problems in an intact marriage, recent case law has proven it to be a concern in divorce proceeds or death.For this reason, both the American Medical Association and the American Fertility Association encourage donors to draft a written statement outlining what should be done with the embryos in the event of death, divorce, separation, failure to pay service changers, inability to agree on disposition in the future, or lack of contact with the program.[16]These types of agreements force couples to discuss their beliefs and expectations regarding the fate of the frozen embryos.However, the legal validity of such agreements has been questioned and recently held unenforceable as a violation against public policy.[17]

Legal Classification of Genetic Material

The issue of the legal classification of genetic material adds further dimension to the hotly debated issue of when life actually begins.While this paper focuses on the valuation of frozen embryos as property, since few courts have ever offered any guidance as type of classification they should receive, it helps to consider the arguments for other possible legal classifications as well as the legal reasoning and precedent behind those arguments.Medical scholars have advocated three positions regarding the legal status of frozen embryos.The first, believes that human life begin at conception, and therefore grants frozen embryos the status a human beings, who must be implanted as a constitutional right.[18]Others classify embryos as property, and feel that in a divorce, they must be distributed through the equitable distribution of marital property.Still others have created a separate class for embryos, apart from the usual human life or property classification. 

Embryos as Human Beings

Much of the focus on the position that embryos are human beings who deserve a constitutional right to be born lies in the belief that life begins at the moment of conception.[19]While no court has yet adopted this view, it has been adopted by a few legislatures.Louisiana’s state legislature has determined that embryos are juridical persons that cannot be destroyed or owned.Similarly a Missouri statute codified the belief that “[t]he life of each human being begins at conception,”[20] and “[u]n-born children have protectable interest in life, health and well-being”[21].Since this position believes that the embryos are human beings, it demands that in a divorce proceeding the court must make a decision regarding which donor provided the situation which would be in the potential child’s best interest.The proponents of this position feel that the donor’s constitutional right to privacy in deciding to procreate has not been violated since the donor’s initial choice to engage in the in vitro fertilization procedure reflects a conscious and deliberate decision to procreate.[22]

Embryos as Property

In contrast lies the position that frozen embryos are the property of the donors, who have an exclusive right to decide how to dispose of the material.[23]This view holds that an embryo only has the potential for human life, and since that potential is dependant on the donor’s decision to subject them to the process of in vitro fertilization, these donors have an ownership interest in them.[24]The advocates of the property theory assert that property law is the only means to uphold the donors’ rights to ownership and use of the property.[25]They further argue that since the donors’ ownership interests were acquired during marriage, they would be marital property subject to equitable distribution.[26]

This position that the embryos have the legal status of property has found some support in the legal system, albeit no strong support in the family law courts.The 1989 case of York v. Jones[27] involved an action for breach of contract and detinue after an infertility clinic refused to return six frozen embryos to a married couple.The couple had entered the IVF program in Virginia, and then later moved to California.[28]They required that the remaining frozen embryos be transferred to California, but the clinic refused the transfer.[29]The Federal district court of Virginia held the frozen embryo were personal property of the Yorks. [30]The basis of the court’s classification of the embryos as property lay in the fact that the embryos could be disposed of, would not be released without their consent, and in the event of divorce, legal ownership of the embryo would be determined by property settlement.[31]

While the York case may lead one to assume that a family law court would lean to classifying frozen embryos as property, the case has been distinguished as outlining donors’ property rights regarding a contractual agreement with third parties, rather than a dispute between the donors themselves.[32]While academic scholars have argued that the embryos should be classified as property in family law courts[33], no court has classified them as such to the point of actually valuing the property for equitable distribution. 

Embryos as Interim between property and person

The third position regarding the status of frozen embryos outlines a hybrid between the person and property theories which recognizes a property-like interest in the embryos, but also asserts that they should be afforded special respect because of their potential for human life.[34]

The most recent case dealing with these special property-like rights in genetic material lies in the 1993 case of Hecht v. Superior Ct.[35]In Hecht,William Kane, in anticipation of his planned suicide deposited 15 vials of semen with a sperm bank for cryogenic preservation and executed a storage agreement authorizing the release of the seamen to his girlfriend, to her physician, or in the event of death, to his estate.[36]Kane then executed a will which devised his girlfriend Hecht all right, title and interest in the semen.[37]After Kane’s death, his adult children argued it would be in the best interest of the decedent’s family if the sperm were destroyed. [38]The Court classified the sperm as a unique type of property, where the decedent had an ownership interest which lie in his right to use the sperm for reproduction.[39]The court held that the sperm’s value lay in its potential to create a child once it was joined by the ova, fertilized, and implanted.[40]However, the court resisted expanding the classification of the sperm as property beyond the unique status in the probate setting. [41]

However, much of the reasoning in Hecht stemmed from the 1992 family law case of Davis v. Davis,[42] which involved a divorce action where the wife asked for control of “frozen embryos” with the intent to have them transferred to her own uterus.[43]The issue was a matter of first impression for the Tennessee court and set national precedent by attempting to classify the embryos in a divorce proceeding.[44]The court determined that the donors had an ownership interest in the embryos but not a strict property interest.The court based this distinction on the fact that while gamete providers have the primary decision making authority concerning the disposition of the embryos, the material’s potential for life grants it a special respect greater than is accorded other human tissue.[45]The court was reluctant to classify the embryos as human life because the Supreme Court in Webster v. Reproductive Health Services.[46] that viability of the human fetus is the critical point to determining life, and since the embryos were far from this point, they should not be classified as human beings possessing any constitutional protection.[47]Thus, while Davis felt the embryos should be given “respect”, this level of respect because of their classification as a type of quasi-property, does not grant them constitutional protections.The Davis court’s amorphous definition of the embryo’s legal status skirted the issue of valuation in an attempt to focus on the ownership interests of the donors. [48]

 

Valuation

Thus, it seems that future family courts will either afford frozen embryos the status of “property” or focus the classification away from the status of the embryos and toward the “ownership interests” of the donors.For the purposes of this paper, we will focus on the characteristics of the embryos as property including those characteristics which stem from the donor’s ownership interests and rights. 

Characteristics of the Property Interest

The American Medical Association has determined that both providers of gametes, ovum and sperm have an interest in the embryos.[49]This interest grants them the sole discretionary authority to choose to 1) implant the embryos in themselves, 2) donate the embryos for implantation in another infertile couple, 3) donate the embryos for permitted research purposes, or destroy the embryos.[50]Each of these choices has certain viable risks, which must be accounted for in valuation purposes.

The first choice to implant the embryos in themselves includes the most obvious risk that the implantation method will not be successful.As the aforementioned statistics show, the possibility of live births per egg retrieval is only 22.8%.This means that there is a 77.2% chance that the implantation will not be successful.The success rate is lower among older women.Assuming that the spouse who receives the embryos may wait until remarriage to make another attempt at implantation, either in themselves or their future spouse, the failure rate could therefore be even higher than the average.

Another concern regarding the first choice would be that if implantation procedure succeeds, the ex-spouse who underwent the procedure would be forcing the other donor in the position of biological parentage.[51]The Davis court felt that this danger should create a presumption of distribution in favor of the parent who did not intend to implant the embryos.[52]Concern for this forced biological parentage rests in the Constitutional right to make a decision whether or not to procreate.It also raises issues of whether such forced biological parentage could create a legal obligation to support the child.Failing the creation of such an obligation, there is always concern that the “biological parent” may feel as if they have a moral obligation to support the child, particularly if the ex-spouse has not remarried.

These concerns regarding legal or moral obligations to support a child would also be present if the individual who was awarded the gametes in equitable distribution decided to donate them to another couple.The donor who was not awarded the embryos would have to give up all rights to be involved with or reject the transaction.This could place that donor in a position where they were the biological parent of a child they did not know existed.While this would probably not raise issues of legal obligations, there is no doubt that it may raise the same issues of moral obligations present in the first choice.

The risks of the final two choices, of donating the embryos to research or disposing of them both involve issues of abridging on a parties Constitutional right to procreate.While the Davis court created a presumption in favor of those parties who were opposed to implantation, the inverse of the right not to create could also become an issue, particularly if the IVF method is one of the only methods available for an infertile donor.If the embryo were destroyed or donated for research that individual could very well lose their only opportunity to have a biological child.[53]Furthermore, the third choice to donate the embryos to research includes the additional danger of legal impediments to such a choice, in the form of regulations or laws against research on embryos.

Fair Market Value Approach

The North Carolina Equitable Distribution statutes require the court to divide the marital property according to its “net value”.[54]This term of dividing the assets based on their “net value” has been interpreted to mean the net fair market value of an asset, less the amount of any encumbrance serving to offset or reduce the market value.[55]The fair market value is defined as the “amount at which property would change hands between a willing buyer and a willing seller, neither being the compulsion to buy or sell and both having reasonable knowledge of the relevant factors”.[56]Thus, the fair market approach required looking at the market for the asset on the day of distribution, in order to determine the value that a hypothetical buyer would pay a hypothetical seller.

While the fair market value is the designated approach to value marital property and proves effective in most equitable distribution circumstances, this approach creates difficulties when valuing frozen embryos, first in the absence of any fair market for the embryos, and secondly in the failure of any market approach to adequately determine the value of the flexibility which frozen embryos offer the owners.

The most obvious of these difficulties lies in the fact that no legal market exists for the sale of frozen human embryos.[57]Because of the “special level of respect” which embryos demand due to their potential for human life, any attempts to sell this property in America would be a crime.Thus, since no legal market exists, theoretically there could be no hypothetical buyer who would pay a hypothetical seller for the asset, and the frozen embryos would have no value.However this proposition of a nominal or in some cases negative value attributed to such a precious “asset” seems inconceivable and offensive.Thus, we must consider other methods of valuation courts have used to value assets which do not seem to have any true legal market.

Valuation of Asset Compared to Valuing a Professional Degree

A spouses professional degree which they earned during the marriage, while unable tobe sold on the market are certainly a valuable asset of a marriage, but like the frozen embryos hasno legal market to base its value.While the majority of jurisdictions refuse to classify such degrees as property, even when one spouse has fully paid for and supported their partner in his or her pursuit to attain the degree, New York has classified such contributions to the marital estate as marital property.[58]The New York courts then value the professional degree by projecting the future earnings of the spouse with the degree, and reducing those combined earnings to their net present value.[59]In order to apply this method to the embryo approach, the court must project the future earnings of the embryos.This can be done by weighing the possible economic benefits and liabilities from each of the four alternatives a donor may choose for the use of the frozen embryos.Of course, this will cause concerns when dealing with the prospect of assigning economic benefits to the choice to implant the child in one’s own uterus, assuming that the implantation and pregnancy is successful and a child results.In this case, one can gain insight into the economic valuation of such an alternative through methods courts have used to value the benefits and liabilities in wrongful pregnancy cases.[60]

Valuation of Asset Compared to Valuing Illegal Goods

Stolen goods provide another example of assets that lack any value in a legal market.Such assets could not be sold legally, but could most likely find a hypothetical buyer and seller in the illegal market.While no cases exist for valuing assets in equitable distribution, the Internal Revenue Service has adopted an approach in its valuation methods for estate tax purposes.Like Equitable Distribution statutes, the Internal Revenue Code and Regulations requires valuation of property for estate tax purposes to be done through fair market methods.However, when valuing stolen or illegal assets for estate tax purposes, the IRS has turned to considering the fair market value of stolen assets in the illegal markets.[61]Considering the particular illicit market in which a property is sold, the IRS reasoned that the fair market value of illegal property is the price that a willing buyer would pay a willing seller in that illicit market.Applied to frozen embryos this approach would require the court to discover the illegal market value for frozen embryos.Since this black market for embryos is relatively new and covert, the illegal market approach may not be entirely accurate. 

Valuing Asset Compared to Valuing its Components

One may also attain a vague value of the fair market value for embryos by determining the fair market value of the components of the frozen embryo, i.e. the sperm and the ovum.One of the most profitable, and excepted markets for genetic material lies in the business of sperm donation.What was once a small, marginal aspect of reproductive technology has now become an industry of itself.Potential sperm donors can now find the names of sperm banks in their local yellow pages, or on the internet for potential sperm donors and clinics. [62]

In addition to the fair market value of donated sperm, it would also be helpful to determine the fair market value of donated ovum.The growing “egg brokerage” industry demands higher prices than sperm donation largely because the process to harvest ova is far more intricate.[63]Because of the complexity and increasing demand, “egg brokerage” houses have sprung up to recruit young healthy fertile women who would be willing to donate their ovum.[64]Some couples attempt to take the process into their own hands by recruiting young women from college campus, or hand picking their donor.[65]

While this data could further assist the court in its valuation, it has its limitations.Very often frozen embryos contain the sperm and ova of an infertile couple, rather than material from outside donors.In addition, even if the procedure involved genetic material from an outside donor, a fertilized embryo contains more than just sperm and an ovum.Rather, through the fertilization procedure, which involves specific conditions to harbor fertilization, a new organism has been formed, whose value stems from the synergy from the union of the two components.Using the component approach exclusively does not capture the unique value of this synergy, and it therefore an inadequate valuation. 

Valuing the Asset Compared to the Cost of the Procedure

Another attempt at valuing the frozen embryos could come from determining the residual value of the procedure.This method involves determining the cost of the in vitro fertilization procedure as of the date of separation, including any expenses for cryogenic preservation.[66]While some states mandate that insurance carries offer or cover IVF procedures, most leave the decision up to the carrier.[67]This autonomy means that very often the couple is forced to pay forIVF without assistance from their insurance carrier.In an equitable distribution setting, the present value of these costs should be determined, and the value of the procedure would be a marital asset.However, this approach fails to account for any future benefits or liability of the asset.

Valuing the Flexibility of Frozen Embryos

While the frozen embryo itself has value in its role as an underlying asset, much of the value from the embryo can be derived from the flexibility and options which the embryo offers.While the valuation methods outlined above help determine the net present value of the embryo, they very often do not give full value to this flexibility offered by the asset.However, two alternative methods of valuation may provide the most effective measure of the embryos value, weighted average cost in capital analysis and option pricing methods.

Weighted Average Cost in Capital

The first method of valuing the flexibility of the frozen embryos involves determining the four different alternatives which are available to the “owners” of the frozen embryo, i.e. implantation, donation to an infertile couple, donation to research, and destroying the embryos.We would then weigh the probability that a particular couple would choose each option.These weighs would be influenced by a variety of factors, including whether the nature of the infertility problem, the age of the individuals, the presence of other children in the family, financial history, and whether a contract existed.The benefits and costs of each option would then have to be determined.For example for the implantation option, one would first determine the probability that an individual would choose that option, and then determine the price of each option, including the monetary costs, as well as the probability that the implantation would be successful, and the cost and benefits of the eventual pregnancy if the implantation came to term.Similarly, the probability that the couple would choose to dispose of the embryos would also be determined.The cost and benefits of this option would most likely be minimal since the only costs would be the original cost of the procedure, and any laboratory cost to freeze the eggs until they were thawed.This weighted cost of capital analysis would be different in each case, depending on the individual’s preferences and circumstances, but may be an effective means to base valuation on the different alternatives available to the divorcing couple.

Option Pricing Model

Another means to value the embryos that factors in the flexibility of the asset lies in the option pricing model.Option pricing methods have gained support among analysts as superior to traditional discounted cash flow techniques because they explicitly capture the value of flexibility.[68]An option gives the owner the right, but not the obligation to buy or sell an asset at a preset “exercise price”, for a predetermined period of time.[69]Call options give individuals the right to buy an asset, and put options give parties the right to sell.[70]A frozen embryo can be analogized to a call option, because its giving the individual the right to exercise the option to have the child. 

The option pricing model for real options involves determining the value of five variables.[71]A real option is one where management can affect the value of the underlying asset[72], as in a frozen embryo, where the treatment of the embryo while frozen can influence its value when “exercised”.The five variables are the market value of the underlying asset, the exercise price, the time remaining, the volatility of the asset and the risk free interest rate.[73]These five variables are then inserted into a complex formula called the Black Scholes model, which determines the value of the call option.[74]

One type of option that parallels the flexibility of the frozen embryos is called a rainbow option.These “rainbow options” involve multiple sources of uncertainty, and are most often used for research and development programs which have both a technological and a product-market uncertainty.[75]The technological uncertainty decreases as we begin to learn through research the capabilities and the characteristics of the product over time.[76]In contrast, product-market uncertainty represents the evolution of the uncertain price of the product from a value known today to one that may change over time as the market changes.[77]The rainbow option involves a balancing of these two types of uncertainties.The uncertainties of the frozen embryo also involve technological and product market uncertainties.The technological uncertainties consist of the technological limitations and developments in the IVF and cryogenic procedures.The product market uncertainties involve both the popularity and acceptance of these procedures, as well as the legal frameworks of divorce, and infertility and embryonic research.

Another type of asset that has been valued by option pricing models is a product patent, whose value stems from the product’s potential to produce value for its firm.[78]If the present value of the expected cash flows from the product sales exceeds the cost of development, the patent will be valuable.If the value does not exceed cash flows, the product will be worthless or perhaps a liability.[79]The uncertainty of the patent, combined with its value in the potential for value provides a close parallel to the frozen embryo.An “exercised” frozen embryo, if unsuccessful (i.e. if implantation is unsuccessful, or the embryo is disposed of or donated) will produce a liability from the cost of the initial procedure and maintenance costs.However, if the implantation of the embryo is successful, the owner will benefit from the realization of the potential for human life.Thus, like the patent the true value of the frozen embryos stems from its potential to produce value for the individual, in the form of a new human life. 

In determining the value of the frozen embryo, the five variables used to value the real option must be determined.The market value of the underlying asset can be determined by the illegal market, projected income, or component methods outlined above.The exercise price would be the cost of each individual procedure, i.e. the cost of implantation, donation for research or implantation, and disposal.The time remaining would be determined by the length of time the embryos could be frozen and still be viable.The volatility of the asset would be the chances that the particular couple would choose each option and the success of each option, including impediments from technological or legal developments.Finally, the risk fee interest rate would be a benchmark to compare the risk of using of the frozen embryos, versus the risks a fertile, healthy, couple would undergo in a natural pregnancy.In order to determine the value of an option, analysts insert these values into a computer program called the Black Scholes model.This method provides a value that accounts for the value of the underlying asset as well as the value of its potential for human life.

Conclusion

Equitable Distribution, the most popular means of property division in divorce proceedings purports to equally divide the assets of a marriage in order to economically sever the marital relationship.However, when couples have undergone in vitro fertilization procedures, and still hold frozen embryos as “products of a marriage” the issue arises as to how to accurately classify and value these assets.This paper has outlined the alternative views for classification, and attempts to discuss possible methods of valuing these assets for the purposes of equitable distribution.Regardless of which method future courts or academics may support, the unique characteristics that frustrate the classification issue, also seem to frustrate issues of valuation.However, by comparing the frozen embryos to assets with like characteristics and uncertainties, future courts can fashion valuation methods which will both preserve the distinctive uncertainties inherent in the material while paying respect for the unique value it offers to the individual claiming its ownership.



[1] American Society of Reproductive Medicine Webpage-http://www.asrm.com/Patients?FactSheets/invitro.html
[2] Harris & Teitelbaum, Family Law 2nd Edition 443-54 (Aspen Publishers ed.) (1999).See also NCGS § 50-20(a).
[3] NCGS § 50-20(b)(1)
[4] O’Brien v. O’Brien, 489 N.E.2d 712, 716 (N.Y. 1985).
[5] NCGS §50-20(b)(2). 
[6] See id. S 50-20(b).
[7] The Webster’s dictionary includes a wide range of definitions, from “1) that which a person owns; the possessions of a particular owner”:to “10)a person, esp. one under contract in entertainment or sports.”Webster’s Encyclopedia Unabridged Dictionary of the English Language1550(Random House Value Publishing)1996.
[8] Black Laws Dictionary defines property as “The right to possess, use, or enjoy a certain thing, or any external thing over which the rights of possession, use, and enjoyment are exercised”.Black Laws Dictionary,(6th ed. 1990).
[9]Genetics and IVF Institute,In Vitro Fertilization Program,<http://www.givf.com/ivf_v.html>
[10] Louise Brown, born in 1978, was the first child conceived through extracorporeal fertilization of a human egg.See Robertson, Embryos, Families, and Procreative Liberty: the Legal Structure of The New Reproduction,59 S. Cal. L. Rev. 939, 942 (1986).
[11] American Society of Reproductive Medicine,<http://www.asrm.com/Patients?FactSheets/invitro.html>

[13] Id. 
[14] Council on Ethical and Judicial Affairs, Opinion 2.141,Frozen Pre-embryos, in Code of Medical Ethics, American Medical Association, 1999-2000.
[15] Id.
[16] Id.
[17] JB v. MB, 331 N.J. Super. 223, 226-31. (2000).Plaintiff sought to have the embryos destroyed, but the defendant ex-husband wanted to preserve them later or donate them to an infertile couple.The parties had signed an agreement providing that upon dissolution of the marriage, control of the embryos should be relinquished to the IVF program.The court held that such contracts to procreate was contrary to public policy, and unenforceable. Ct found use of the embryos would impair the plaintiff’s constitutional right not to procreate. Id. at 234. Since the husband was fertile the destruction of the embryos wouldn’t effect his reproductive rights.Id. at 232.
[18] Andrews, The Legal Status of the Embryo, 32 LOY. L. REV. 357, 366 n. 47. 
[19] Joan Robertson, Embryos, Family, and Procreative Liberty: The Legal Structure of the New Reproduction,59 S. Cal. L. Rev 942 (1986).(outlining the different legal status’ which can be attributed to the human embryo). 
[20] MO. Rev. Stat. § 1.205.1(1) (1986).
[21] MO. Rev. Stat. § 1.205.1(2) (1986).The Supreme Ct upheld the language of the MO statute on a constitutional challenge in Webster v. Reproductive Health Services, 109 S. Ct. 3040 (1989), finding that the language did not regulate abortions.
[22] Brian M. Ocepak, Comment: Heating up The Debate Over Frozen Embryos4 J. Pharmacy & Law 199, 218 (1995)
[23] See American Fertility Society, Ethical Statement on In Vitro Fertilization, in 41 Fertility & Sterility 12 (1984).
[24] Ocepak, 4 J. Pharmacy & Law at 206. 
[25] Id. 
[26] Id. 
[27] York v. Jones, 717 F. Supp. 421 (1989).
[28] Id. at 423-24.
[29] Id.
[30] Id. at 426-27.
[31] Id. 
[32] See Davis v. Davis, 842 S.W.2d 588, 595(1992).
[33] Ocepak, 4 J. Pharmacy & Law at 215-216 (asserting that a frozen embryo is a potential for life, whose fate is beyond its control ).Ocepak also asserts that the legal analysis commonly used to determine whether something constitutes property is broad enough and flexible enough to include frozen embryo.
[34] See Davis, 842 S.W.2d at 595. 
[35] 16 Cal.App.4th 836 (1993)
[36] Id. at 840. 
[37] Id. 
[38] Id. at 846. 
[39] Id. at 850.
[40] Id 
[41] Id.
[42] Davis v. Davis, 842 S.W. 2d 588 (Tenn. 1992)
[43] Id. at 589.
[44] Id. at 594.
[45] Id. at 596-97.
[46] 492 U.S. 490 (1989)
[47] Davis, 842 S.W.2d at 595.
[48] Id. at 604. 
[49] Council on Ethical and Judicial Affairs, Opinion 2.141,Frozen Pre-embryos, in Code of Medical Ethics, American Medical Association, (2000).
[50] Embryos can be used in research, with the informed consent of the donors.ASRM Ethics Committee Fertile Sterility, American Society of Reproductive Medicine:Informed Consent and the use of Gametes and Embryos for Research68:780-1.<http://www.asrm.com/Media/Ethics/informedc.html>(1997)

[51]SeeJB v. MB, 331 N.J. Super at 231. 
[52] Davis,842 S.W.2d at 595.
[53] JB v. MV, 331 N.J. Super. at 231-232 (addressing the issue of whether a husband who wanted the embryos for future implantation would be denied a Constitutional right to procreate if the embryos were given to his ex-wife).The court held that since the husband was a fertile male, his right to procreate would not be burdened by allowing his ex-wife to dispose of the embryo. 
[54] NCGS § 50-20(c). 
[55] Poore v. Poore, 75 N.C. App. 414 (1985). 
[56] See Black Law’s Dictionary, 597. (6th ed. 1990) 
[57] Both the American Medical Association and the American Society for Reproductive Medicine forbids the sale of frozen embryos for any purpose, including implantation or research.However, the American Society for Reproductive Medicine does allow the donor couple to receive financial compensation for expenses associated with the donation.See ASRM Ethics Committee Fertile Sterility, American Society for Reproductive Medicine:Informed Consent and the use of Gametes and Embryos for Research,68: 780-1,(1997). 
[58] O’Brien v. O’Brien, 489 N.E. 2d 712 (N.Y. 1985).
[59] See id. at 717.The degree’s “ value is the enhanced earning capacity it affords the holder and although the present value of that enhanced earning capacity may present problems, the problems are not insurmountable.Certainly they are no more difficult that computing tort damages for wrongful death or diminished earning capacity resulting from injury…”

[60] Bushman v. Burns Clinic Medical Center, 83 Mich. App. 453, 461 (1978) involved a failed vasectomy where the parents of the unplanned child sued for malpractice in an action for wrongful pregnancy.Due to the public policy reasons of valuing the life of a child as “damages” the court only permitted an award of damages for the pain and suffering of the mother as a result of the pregnancy, the cost of the vasectomy, the loss to the husband of the comfort, companionship, services, and consortium of his wife arising from the pregnancy and immediately after birth, and the medical expenses incurred as a result of the vasectomy.
[61] IRS TAM 91-52-005.
[62]Webcites allow individuals in search of sperm donors to set up online accounts and search through pages of donor profiles.A .5cc vial of frozen intrauterine-quality sperm typically costs $195. Amy Virshup, The Egg Brokers,Smart Money, November 4, 1999.
[63] The potential donor has to undergo much of the same procedures that the female donor has to undergo for in vitro fertilization.One brokerage company in CA receives $2,100 for finding the donor, and then the couple pays the donor $3,500 for her eggs.Prices for eggs range depending on the geographic region.In 1998, eggs donor fees reached a high of $5000.See id.
[64] See id.
[65] For about three months in 1998, an anonymous couple advertised in a Princeton University student newspaper for the ova of an “attractive, intelligent woman with proven fertility”.See Adrien Knox, What’s A Human Egg Worth: Debate IntensifiesStar- Ledgar, April 5, 1998.
[66] The San Francisco Fertility Centers quotes their price list for a single cycle plan as $8,175 for own eggs, not including pre-cycle evaluation and lab testing, medications for ovarial stimulation and preparation of the uterus for implantation, cryopreservation and storage of embryos, frozen embryo transfers.The Center also lists an Option 2 plan price list which includes 2 regular in-vitro fertilization and embryo transfer procedures over 12 months for a 1 time fee of$12,150.These plan include a refund option of a stated percentage of in-cycle expenses if a pregnancy sustained through the first trimester doesn’t result.See San Francisco Fertility Centers, Financial, Single Cycle Plan, http://www.sffertility.com/financial.html.
[67] Arkansas, Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Montana, Ohio, Rhode Island, and Texas have statutory mandates that require insurance carriers to cover or offer necessary in vitro fertilization procedures.See American Society of Reproductive Medicine,http://www.asrm.com/Patients/insur.html.

[68] Copeland, Koller, & Murrin, Valuation Measuring and Managing the Value of Companies 399 (McKinsley & Company, 1999).
[69] Id. at 400.
[70] Id. 
[71] Id. at 403.
[72] Id. 
[73] Id. 
[74] Id. 
[75] Id. at 406. 
[76] Id. 
[77] Id. 
[78] Damodaran, Aswath,Investment Valuation; Tools and Techniques for Determining the Value of Any Asset 390(Wiley & Sons, 1995). 
[79] Id. at 391.