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CSSB 165(JUD): "An Act relating to property exemptions for retirement plans, individual retirement accounts, and Roth IRAs; relating to pleadings, orders, liability, and notices under the Uniform Probate Code; relating to the appointment of trust property; relating to the Alaska Principal and Income Act; relating to the Alaska Uniform Transfers to Minors Act; relating to the disposition of human remains; relating to insurable interests for life insurance policies; relating to transfers of individual retirement plans; relating to the community property of married persons; and amending Rule 301(a), Alaska Rules of Evidence."

00                       CS FOR SENATE BILL NO. 165(JUD)                                                                   
01 "An Act relating to property exemptions for retirement plans, individual retirement                                     
02 accounts, and Roth IRAs; relating to pleadings, orders, liability, and notices under the                                
03 Uniform Probate Code; relating to the appointment of trust property; relating to the                                    
04 Alaska Principal and Income Act; relating to the Alaska Uniform Transfers to Minors                                     
05 Act; relating to the disposition of human remains; relating to insurable interests for life                             
06 insurance policies; relating to transfers of individual retirement plans; relating to the                               
07 community property of married persons; and amending Rule 301(a), Alaska Rules of                                        
08 Evidence."                                                                                                              
09 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
10    * Section 1. AS 09.38.017(a) is amended to read:                                                                   
11            (a)  In addition to the exemption under AS 09.38.015(b), the following are                                   
12       exempt from a claim of an individual's or beneficiary's creditor:                                             
01                 (1)  the interest of the individual or beneficiary in a retirement plan;                            
02       [AND]                                                                                                             
03                 (2)  the money or other assets payable to the individual from a                                         
04       retirement plan;                                                                                              
05                 (3)  the interest of a beneficiary in                                                               
06                      (A)  a retirement plan if the beneficiary acquired the                                         
07            interest as a result of the death of an individual; the beneficiary's interest                           
08            is exempt to the same extent that the individual's interest was exempt                                   
09            immediately before the individual died;                                                                  
10                      (B)  an individual retirement account that has been                                            
11            transferred by the individual to the beneficiary during the individual's                                 
12            lifetime; the beneficiary's interest is exempt to the same extent that the                               
13            individual's interest was exempt immediately before the transfer to the                                  
14            beneficiary;                                                                                             
15                 (4)  the money or other assets payable to a beneficiary from                                        
16                      (A)  a retirement plan if the beneficiary acquired the money                                   
17            or other assets as a result of the death of an individual who would have                                 
18            had, during the individual's life, an exemption in the money or other                                    
19            assets;                                                                                                  
20                      (B)  an individual retirement account if the beneficiary                                       
21            acquired the money or other assets as a result of the transfer of the money                              
22            or other assets by an individual who would have had, at the time of the                                  
23            transfer, an exemption in the money or other assets.                                                     
24    * Sec. 2. AS 09.38.017(d) is amended to read:                                                                      
25            (d)  A retirement plan exempt from claims under (a) of this section is                                       
26       conclusively presumed to be a spendthrift trust under this section, except for                                
27       transfers or assignments under AS 34.40.113.                                                                  
28    * Sec. 3. AS 09.38.017(e) is amended to read:                                                                      
29            (e)  In this section,                                                                                        
30                 (1)  "alternate payee" has the meaning given in 26 U.S.C. 414(p)(8);                                    
31                 (2)  "beneficiary" includes a person, trust, or trustee who has,                                    
01       before or after the death of an individual, a direct or indirect beneficial interest                          
02       in a retirement plan; in this paragraph, "beneficial interest" includes an interest                           
03       that is acquired                                                                                              
04                      (A)  as a designated beneficiary, survivor, co-annuitant,                                      
05            heir, or legatee; or                                                                                     
06                      (B)  if excludible from gross income under 26 U.S.C.                                           
07            (Internal Revenue Code), as a                                                                            
08                           (i)  rollover under 26 U.S.C. 408 or 26 U.S.C. 408A;                                      
09                           (ii)  a distribution from one retirement plan to                                          
10                 another retirement plan; or                                                                         
11                           (iii)  a distribution that is similar to (i) or (ii) of this                              
12                 subparagraph;                                                                                       
13                 (3)  "individual" means [AN INDIVIDUAL WHO IS] a participant in,                                    
14       an owner [A BENEFICIARY] of, or an alternate payee of a retirement plan;                                      
15                 (4)  "individual retirement account" means an individual                                            
16       retirement account established under 26 U.S.C. 408 or a Roth IRA established                                  
17       under 26 U.S.C. 408A;                                                                                         
18                 (5) [(3)]  "retirement plan" means                                                                  
19                      (A)  a retirement plan that is qualified under 26 U.S.C. 401(a),                               
20            26 U.S.C. 403(a), 26 U.S.C. 403(b), [26 U.S.C. 408, 26 U.S.C. 408A, OR] 26                                   
21            U.S.C. 409, 26 U.S.C. 414(d), 26 U.S.C. 414(e), or 26 U.S.C. 457 (Internal                               
22            Revenue Code);                                                                                           
23                      (B)  an individual retirement account; and                                                     
24                      (C) the teachers' retirement system under AS 14.25, the                                        
25            judicial retirement system under AS 22.25, the public employees'                                         
26            retirement system under AS 39.25, and the elected public officers'                                       
27            retirement system under former AS 39.37.                                                                 
28    * Sec. 4. AS 13.06.120 is amended to read:                                                                         
29            Sec. 13.06.120. Pleadings; when parties bound by orders; notice. In any                                    
30       proceedings involving trusts, nonprobate assets, or estates of decedents, minors,                                 
31       protected persons, or incapacitated persons brought under AS 13.06 - AS 13.36 or                                  
01       AS 13.38, [INCLUDING ANY JUDICIALLY SUPERVISED SETTLEMENTS AND                                                    
02       ANY NONJUDICIAL PROCEEDINGS AND SETTLEMENTS,] the following                                                       
03       apply:                                                                                                            
04                 (1)  interests to be affected shall be described in pleadings that give                                 
05       reasonable information to owners by name or class, by reference to the instrument                                 
06       creating the interests, or in other appropriate manner;                                                           
07                 (2)  persons are bound by orders binding others in the following cases:                                 
08                      (A)  orders binding the sole holder or all co-holders of a power                                   
09            of revocation or a general or nongeneral power of appointment, including one                                 
10            in the form of a power of amendment, bind other persons to the extent their                                  
11            interests, as objects, takers in default, or otherwise, are subject to the power;                            
12                      (B)  to the extent there is no conflict of interest between them or                                
13            among persons represented, orders binding a conservator bind the person                                      
14            whose estate the conservator controls; orders binding a guardian bind the ward                               
15            if no conservator of the estate has been appointed; orders binding a trustee bind                            
16            beneficiaries of the trust in proceedings to probate a will establishing or adding                           
17            to a trust, to review the acts or accounts of a prior fiduciary, and in proceedings                          
18            involving creditors or other third parties; orders binding a personal                                        
19            representative bind persons interested in the undistributed assets of a                                      
20            decedent's estate in actions or proceedings by or against the estate; and orders                             
21            binding an agent having authority to act with respect to the particular questions                            
22            or dispute bind the principal; if there is no conflict of interest and no                                    
23            conservator or guardian has been appointed, a parent may represent the minor                                 
24            child;                                                                                                       
25                      (C)  an unborn person, a minor, an incapacitated person, or a                                      
26            person whose identity or location is unknown or not reasonably ascertainable                                 
27            who is not otherwise represented is bound by an order to the extent the interest                             
28            is adequately represented by another party having a substantially identical                                  
29            interest in the proceeding;                                                                                  
30                      (D)  with regard to interests given upon the happening of a                                        
31            certain event to persons who comprise a certain class, orders binding the living                             
01            persons who would constitute the class, if the event had happened immediately                                
02            before the commencement of the proceeding, bind all members of the class;                                    
03                      (E)  with regard to an interest given to a living person when the                                  
04            same interest or a share of the interest is to pass to the surviving spouse or to                            
05            persons who are or might be the distributees, devisees, heirs, or issue of the                               
06            living person upon the happening of a future event, orders binding the living                                
07            person bind the surviving spouse, distributees, devisees, heirs, or issue of the                             
08            living person;                                                                                               
09                      (F)  with regard to interests given to a person or a class of                                      
10            persons, or to both, upon the happening of a future event, if the same interest                              
11            or a share of the interest is to pass to another person or class of persons, or to                           
12            both, upon the happening of an additional future event, orders binding the                                   
13            living person or class of persons who would take the interest upon the                                       
14            happening of the first event bind the persons and classes of persons who might                               
15            take on the happening of the additional future event;                                                        
16                      (G)  if a person is designated by a trust instrument to represent                                  
17            and bind a born or unborn beneficiary of the trust and receive a notice,                                     
18            information, accounting, or report for the beneficiary, then the beneficiary is                              
19            bound by an order binding the designated person; in this subparagraph,                                       
20                           (i)  the settlor may make the designation in the trust                                        
21                 instrument, in a separate document, or by a trust protector authorized in                               
22                 the trust instrument to make the designation;                                                           
23                           (ii)  except as otherwise provided in this subparagraph, a                                    
24                 person designated under (i) of this subparagraph may not represent and                                  
25                 bind a beneficiary while the designated person is serving as trustee;                                   
26                           (iii)  except as otherwise provided in this subparagraph,                                     
27                 a person designated under (i) of this subparagraph may not represent                                    
28                 and bind another beneficiary if the designated person also is a                                         
29                 beneficiary, unless the designated person was named by the settlor, is                                  
30                 the beneficiary's spouse, or is a grandparent or descendant of a                                        
31                 grandparent of the beneficiary or the beneficiary's spouse; in this sub-                                
01                 subparagraph, "spouse" means the individual to whom the beneficiary                                     
02                 is married and with whom the beneficiary is living, and a physical                                      
03                 separation primarily for education, business, health, and similar reasons                               
04                 does not prevent the individual from being considered to be living with                                 
05                 the beneficiary;                                                                                        
06                 (3)  a person representing another person under (2)(A) - (F) of this                                    
07       section and a person designated under (2)(G)(i) of this section are not liable to the                             
08       beneficiary whose interests are represented, or to a person claiming through that                                 
09       beneficiary, for an action or omission to act made in good faith;                                                 
10                 (4)  notice is required as follows:                                                                     
11                      (A)  notice as prescribed by AS 13.06.110 shall be given to                                        
12            every interested person or to one person who can bind an interested person as                                
13            described in (2)(A), (B), or (D) - (G) of this section; notice may be given both                             
14            to a person and to another person who may bind the person;                                                   
15                      (B)  notice is given to unborn persons, a minor, an incapacitated                                  
16            person, or a person whose identity or location is unknown or not reasonably                                  
17            ascertainable, and persons who are not represented under (2)(A), (B), or (D) -                               
18            (G) of this section, by giving notice to all known persons whose interests in the                            
19            proceedings are substantially identical to those of the unborn persons, the                                  
20            minor, the incapacitated person, or the person whose identity or location is                                 
21            unknown or not reasonably ascertainable;                                                                     
22                 (5)  at any point in a proceeding, a court may appoint a guardian ad                                    
23       litem to represent the interest of an unborn person, a minor, an incapacitated person, or                         
24       a person whose identity or address is unknown or not reasonably ascertainable, if the                             
25       court determines that representation of the interest otherwise would be inadequate; if                            
26       not precluded by conflict of interests, a guardian ad litem may be appointed to                                   
27       represent several persons or interests; the court shall set out its reasons for appointing                        
28       a guardian ad litem as a part of the record of the proceeding.                                                    
29    * Sec. 5. AS 13.06.120 is amended by adding a new subsection to read:                                              
30            (b)  In this section,                                                                                        
31                 (1)  "order" means a judicial order, nonjudicial order, the result of the                               
01       settlement of an account of a fiduciary under a procedure authorized by AS 13.06 -                                
02       13.36 or AS 13.38, and a settlement agreement resulting from a proceeding;                                        
03                 (2)  "proceeding" means a judicial proceeding, nonjudicial proceeding,                                  
04       the settlement of an account of a fiduciary under a procedure authorized by AS 13.06 -                            
05       13.36 or AS 13.38, and a settlement negotiation, even if the settlement negotiation                               
06       does not involve a judicial or nonjudicial third party who decides or facilitates a                               
07       settlement.                                                                                                       
08    * Sec. 6. AS 13.36.157 is repealed and reenacted to read:                                                          
09            Sec. 13.36.157. Exercise of power of appointment. (a) An authorized trustee                                
10       with unlimited discretion to invade trust principal may appoint part or all of that                               
11       principal to a trustee of an appointed trust for, and only for the benefit of, a current                          
12       beneficiary of the invaded trust to the exclusion of other current beneficiaries. A                               
13       permissible appointee of a power of appointment held by a beneficiary of the                                      
14       appointed trust is not considered a beneficiary of the appointed trust. The successor                             
15       and remainder beneficiaries of the appointed trust may be one or more of the successor                            
16       and remainder beneficiaries of the invaded trust to the exclusion of other successor                              
17       and remainder beneficiaries.                                                                                      
18            (b)  An authorized trustee exercising the power under (a) of this section may                                
19       grant a discretionary power of appointment, including a presently exercisable power of                            
20       appointment, in the appointed trust to one or more of the current beneficiaries of the                            
21       invaded trust, to the extent that the beneficiary who is granted the power to appoint is                          
22       authorized to receive the principal outright under the terms of the invaded trust. A                              
23       permissible appointee is not limited to the beneficiaries of the invaded trust.                                   
24            (c)  Under (a) and (b) of this section, if the beneficiaries of the invaded trust                            
25       are described by a class, the beneficiaries of the appointed trust may include present or                         
26       future members of that class.                                                                                     
27            (d)  An authorized trustee with the power to invade trust principal but without                              
28       unlimited discretion may appoint part or all of the principal of the trust to a trustee of                        
29       an appointed trust if the current beneficiaries of the appointed trust are the same as the                        
30       current beneficiaries of the invaded trust and the successor and remainder beneficiaries                          
31       of the appointed trust are the same as the successor and remainder beneficiaries of the                           
01       invaded trust. The shares of the current beneficiaries of the appointed trust must be the                         
02       same as the shares of the current beneficiaries of the invaded trust, and the shares of                           
03       the successor and remainder beneficiaries of the appointed trust must be the same as                              
04       the shares of the successor and remainder beneficiaries of the invaded trust.                                     
05            (e)  If the authorized trustee exercises the power under (d) of this section, the                            
06       appointed trust must include the same standard authorizing the trustee to distribute the                          
07       income or invade the principal of the appointed trust as the standard in the invaded                              
08       trust. However, the standard authorizing the trustee to distribute the income or invade                           
09       the principal of the appointed trust may be changed if the trustee appoints to an                                 
10       appointed trust that is a special needs trust, a pooled trust, or a third-party trust.                            
11            (f)  If an authorized trustee exercises the power under (d) and (e) of this section                          
12       to extend the duration of the appointed trust beyond the duration of the invaded trust                            
13       for any period after the invaded trust would have otherwise terminated under the                                  
14       provisions of the invaded trust, the appointed trust, in addition to the language                                 
15       required to be included in the appointed trust under (e) of this section, may also                                
16       provide an additional trustee with unlimited discretion to invade the principal of the                            
17       appointed trust during the extended duration. The trustee with unlimited discretion                               
18       continues to be subject to the restrictions in (d) - (h) of this section.                                         
19            (g)  Under (d) - (f) of this section, if the beneficiaries of the invaded trust are                          
20       described by a class, the beneficiaries of the appointed trust include present or future                          
21       members of that class.                                                                                            
22            (h)  If the authorized trustee exercises the power under (d) - (g) of this section                           
23       and if the invaded trust grants a power of appointment to a beneficiary of the trust, the                         
24       appointed trust must grant this power of appointment in the appointed trust, and the                              
25       class of permissible appointees shall be the same as in the invaded trust.                                        
26    * Sec. 7. AS 13.36 is amended by adding new sections to read:                                                      
27            Sec. 13.36.158. Additional provisions relating to exercise of a power of                                   
28       appointment. (a) An exercise of the power to invade trust principal under                                       
29       AS 13.36.157 is the exercise of a special power of appointment.                                                   
30            (b)  The appointed trust to which an authorized trustee appoints the assets of                               
31       the invaded trust under AS 13.36.157 may have a duration that is longer than the                                  
01       duration set out in the invaded trust.                                                                            
02            (c)  If an authorized trustee has unlimited discretion to invade the principal of a                          
03       trust and if the same trustee or another trustee has a power, not dependent on unlimited                          
04       discretion, to invade principal under the trust instrument, the authorized trustee having                         
05       unlimited discretion may exercise the power of appointment under AS 13.36.157(a) -                                
06       (c).                                                                                                              
07            (d)  An authorized trustee may exercise the power to appoint in favor of an                                  
08       appointed trust under AS 13.36.157 whether or not there is a current need to invade                               
09       principal under the terms of the invaded trust.                                                                   
10            (e)  An authorized trustee exercising the power under AS 13.36.157 -                                         
11       13.36.159 has a fiduciary duty to exercise the power in the best interests of one or                              
12       more proper objects of the exercise of the power and as a prudent person would                                    
13       exercise the power under the prevailing circumstances. The authorized trustee may not                             
14       exercise the power under AS 13.36.157 - 13.36.159 if there is substantial evidence of a                           
15       contrary intent of the settlor and it cannot be established that the settlor would be                             
16       likely to have changed this intention under the circumstances existing at the time the                            
17       trustee exercises the power. The provisions of the invaded trust may not be viewed                                
18       alone as substantial evidence of a contrary intent of the settlor unless the invaded trust                        
19       expressly prohibits the exercise of the power in the manner intended by the authorized                            
20       trustee.                                                                                                          
21            (f)  The provisions of AS 13.36.157 - 13.36.159 may not be construed to                                      
22       abridge the right of a trustee to appoint property further in trust under the terms of the                        
23       governing instrument of a trust, another provision of law, or common law, or as                                   
24       directed by a court having jurisdiction over the trust.                                                           
25            (g)  Nothing in AS 13.36.157 - 13.36.159 creates or implies a duty to exercise                               
26       a power to invade principal. An inference of impropriety may not be made, and                                     
27       liability is not incurred, as a result of an authorized trustee not exercising the power                          
28       conferred under AS 13.36.157.                                                                                     
29            (h)  A power authorized by AS 13.36.157 may be exercised, subject to the                                     
30       provisions of AS 13.36.159(a), unless expressly prohibited by the terms of the                                    
31       governing instrument. A general prohibition against amending or revoking the invaded                              
01       trust and a provision that constitutes a spendthrift clause do not preclude the exercise                          
02       of a power under AS 13.36.157.                                                                                    
03            (i)  An authorized trustee may not exercise a power authorized by                                            
04       AS 13.36.157 to                                                                                                   
05                 (1)  reduce, limit, or modify a beneficiary's current right to a mandatory                              
06       distribution of income or principal, a mandatory annuity or unitrust interest, a right to                         
07       withdraw a percentage of the value of the trust, or a right to withdraw a specified                               
08       dollar amount, if the mandatory right has come into effect with respect to the                                    
09       beneficiary, but the mandatory right may be reduced, limited, or modified during any                              
10       extended duration of the trust; however, notwithstanding the other provisions in this                             
11       paragraph, but subject to the other limitations in AS 13.36.157 - 13.36.159, an                                   
12       authorized trustee may exercise a power authorized by AS 13.36.157 to appoint to an                               
13       appointed trust that is a special needs trust, a pooled trust, or a third-party trust;                            
14                 (2)  decrease or indemnify against a trustee's liability or exonerate a                                 
15       trustee from liability for failure to exercise reasonable care, diligence, and prudence                           
16       unless the court having jurisdiction over the trust specifies otherwise;                                          
17                 (3)  eliminate a provision granting another person the right to remove                                  
18       or replace the authorized trustee exercising the power under AS 13.36.157 unless a                                
19       court having jurisdiction over the trust specifies otherwise;                                                     
20                 (4)  fix as binding and conclusive the value of an asset for purposes of                                
21       distribution, allocation, or otherwise; or                                                                        
22                 (5)  jeopardize                                                                                         
23                      (A)  the deduction or exclusion originally claimed with respect                                    
24            to a contribution to the invaded trust that qualified for the annual exclusion                               
25            under 26 U.S.C. 2503(b), the marital deduction under 26 U.S.C. 2056(a) or 26                                 
26            U.S.C. 2523(a), or the charitable deduction under 26 U.S.C. 170(a), 26 U.S.C.                                
27            642(c), 26 U.S.C. 2055(a), or 26 U.S.C. 2522(a) (Internal Revenue Code);                                     
28                      (B)  the qualification of a transfer as a direct skip under 26                                     
29            U.S.C. 2642(c) (Internal Revenue Code);                                                                      
30                      (C)  the election to treat a corporation as a subchapter S                                         
31            corporation under 26 U.S.C. 1362 (Internal Revenue Code); or                                                 
01                      (D)  another specific tax benefit for which a contribution                                         
02            originally qualified for income, gift, estate, or generation-skipping transfer tax                           
03            purposes under 26 U.S.C. (Internal Revenue Code).                                                            
04            (j)  Before exercising the power under AS 13.36.157, an authorized trustee                                   
05       shall consider the tax implications of the exercise of the power.                                                 
06            (k)  An authorized trustee may not exercise a power described in AS 13.36.157                                
07       - 13.36.159 in violation of the limitations on validity in AS 34.27.051 or 34.27.100, or                          
08       the restrictions on exercising certain powers in AS 13.36.153 by trustees who are not                             
09       independent. A violation voids the entire exercise of the power unless the exercise is                            
10       modified to correct the violation.                                                                                
11            (l)  Unless a court having jurisdiction over the trust directs otherwise, an                                 
12       authorized trustee may not exercise a power authorized by AS 13.36.157 to change the                              
13       provisions regarding the determination of the compensation of a trustee. The                                      
14       commissions or other compensation payable to the trustees of the invaded trust may                                
15       continue to be paid to the trustees of the appointed trust during the term of the                                 
16       appointed trust and shall be determined in the same manner as for the invaded trust.                              
17            (m)  A trustee may not receive a payment, a commission, or other                                             
18       compensation for appointing property from the invaded trust to an appointed trust                                 
19       under AS 13.36.157. However, a trustee may be compensated at an hourly rate for the                               
20       time spent considering and implementing the exercise of a power to appoint.                                       
21            (n)  Unless the invaded trust expressly provides otherwise, the provisions in                                
22       AS 13.36.157 - 13.36.159 apply to                                                                                 
23                 (1)  a trust, whether testamentary or inter vivos, governed by the laws                                 
24       of this state, including a trust whose governing law has been changed to the laws of                              
25       this state; and                                                                                                   
26                 (2)  a trust that has a trustee who is an individual domiciled in this state,                           
27       or a trustee that is an entity having an office in this state, if a majority of the trustees                      
28       select this state as the location for the primary administration of the trust and the                             
29       selection is made by an instrument in writing that is signed and acknowledged by a                                
30       majority of the trustees; the instrument exercising this selection shall be kept with the                         
31       records of the invaded trust.                                                                                   
01            (o)  A power to pay principal that includes words such as "best interests,"                                  
02       "welfare," "comfort," or "happiness" is not considered a limitation or modification of                            
03       the right to distribute principal.                                                                                
04            (p)  In this section, "internal revenue code" means the Internal Revenue Code                                
05       of the United States (26 U.S.C.) as it exists on the effective date of this Act and as it is                      
06       amended from time to time.                                                                                      
07            Sec. 13.36.159. Implementation of power of appointment. (a) Unless the                                     
08       authorized trustee provides otherwise, the appointment of                                                         
09                 (1)  all of the assets comprising the principal of the invaded trust to an                              
10       appointed trust includes subsequently discovered assets of the invaded trust and                                  
11       undistributed principal of the invaded trust acquired after the appointment to the                                
12       appointed trust;                                                                                                  
13                 (2)  a part but not all of the assets comprising the principal of the                                   
14       invaded trust to an appointed trust may not include subsequently discovered assets                                
15       belonging to the invaded trust or principal paid to or acquired by the invaded trust                              
16       after the appointment to the appointed trust; those subsequently discovered assets                                
17       remain the assets of the invaded trust.                                                                           
18            (b)  The exercise of the power to appoint to an appointed trust under                                        
19       AS 13.36.157 shall be evidenced by an instrument in writing that is signed, dated, and                            
20       acknowledged by the authorized trustee. The exercise of the power is effective 30 days                            
21       after the date of service of the instrument as specified in (d) of this section, unless the                       
22       persons entitled to notice consent in writing to a sooner effective date.                                         
23            (c)  An authorized trustee may exercise the power authorized by AS 13.36.157                                 
24       without the consent of the settlor or a person interested in the invaded trust and                                
25       without court approval. However, an authorized trustee may seek court approval for                                
26       the exercise. When seeking court approval, notice shall be sent to all qualified                                  
27       beneficiaries.                                                                                                    
28            (d)  A copy of the invaded trust, the appointed trust, and the instrument                                    
29       exercising the power shall be delivered to                                                                        
30                 (1)  the settlor, if living, of the invaded trust;                                                      
31                 (2)  a person having the right, under the terms of the invaded trust, to                                
01       remove or replace the authorized trustee exercising the power under AS 13.36.157;                                 
02       and                                                                                                               
03                 (3)  a qualified beneficiary or a person who may represent and bind the                                 
04       qualified beneficiary under AS 13.06.120.                                                                         
05            (e)  Notice under (d) of this section to a qualified beneficiary is not required if                          
06       the settlor has exempted the authorized trustee from providing notification or                                    
07       information to beneficiaries under AS 13.36.080(b). Notice under (d) of this section                              
08       shall be provided under AS 13.06.110.                                                                             
09            (f)  The instrument exercising the power must state whether the appointment is                               
10       of all or part of the assets comprising the principal of the invaded trust and, if a part,                        
11       the approximate percentage of the value of the principal of the invaded trust that is the                         
12       subject of the appointment.                                                                                       
13            (g)  A person entitled to notice under (d) of this section may object to the                                 
14       trustee's exercise of the power under AS 13.36.157 - 13.36.159 by serving a written                               
15       notice of objection on the trustee before the effective date of the exercise of the power.                        
16       The failure to object does not constitute consent.                                                                
17            (h)  The receipt of a copy of the instrument exercising the power does not,                                  
18       before the expiration of the limitation period in AS 13.36.100 with respect to a report                           
19       disclosing the exercise, affect the right of a qualified beneficiary to object to the                             
20       exercise of the power under AS 13.36.157 and to request the court to modify or to                                 
21       reverse the exercise.                                                                                             
22            (i)  A copy of the instrument exercising the power shall be kept with the                                    
23       records of the invaded trust.                                                                                     
24    * Sec. 8. AS 13.36.215 is amended by adding a new subsection to read:                                              
25            (b)  In AS 13.36.157 - 13.36.159,                                                                            
26                 (1)  "appointed trust" means an irrevocable trust that receives principal                               
27       from an invaded trust under AS 13.36.157, including a new trust created by the settlor                            
28       of the invaded trust or by the trustees, acting in that capacity, of the invaded trust;                           
29                 (2)  "authorized trustee" means, with regard to an invaded trust, a                                     
30       trustee with the authority to pay trust principal to or for a current beneficiary; in this                        
31       paragraph, "trustee" does not include a settlor or a beneficiary to whom income or                                
01       principal must be paid, currently or in the future, or who is or will become eligible to                          
02       receive a distribution of income or principal in the discretion of the trustee other than                         
03       by the exercise of a power of appointment held in a nonfiduciary capacity;                                        
04                 (3)  "current beneficiary" means a person or, with regard to a class of                                 
05       persons, a person who is or will become a member of the class, to whom a trustee may                              
06       distribute principal when exercising a power under AS 13.36.157;                                                  
07                 (4)  "invade" means pay directly to the beneficiary of a trust or apply to                              
08       the benefit of a beneficiary;                                                                                     
09                 (5)  "invaded trust" means an irrevocable inter vivos or testamentary                                   
10       trust the principal of which is appointed under AS 13.36.157;                                                     
11                 (6)  "pooled trust" means a trust described in 42 U.S.C. 1396p(d)(4)(C)                                 
12       that meets the requirements for a pooled trust under the regulations of this state                                
13       relating to the Medicaid treatment of trusts;                                                                     
14                 (7)  "principal" means the assets of a trust, including accrued and                                     
15       accumulated income, but excluding income that is currently required to be distributed;                            
16                 (8)  "special needs trust" means a trust under 42 U.S.C. 1396p(d)(4)(A)                                 
17       that meets the requirements for a special needs trust under the regulations of this state                         
18       relating to the Medicaid treatment of trusts;                                                                     
19                 (9)  "third-party trust" means a trust that is                                                          
20                      (A)  established by a third party with the assets of the third party                               
21            to provide for supplemental needs for a person eligible when the trust is                                    
22            created or at a future time for needs-based public assistance; and                                           
23                      (B)  exempt from the provisions of the regulations of this state                                   
24            relating to the Medicaid treatment of trusts;                                                                
25                 (10)  "unlimited discretion" means the unlimited right to distribute                                    
26       principal that is not modified in any manner.                                                                   
27    * Sec. 9. AS 13.38.200(b) is amended to read:                                                                      
28            (b)  In exercising a discretionary power of administration regarding a matter                                
29       within the scope of this chapter, whether granted by the governing instrument or this                             
30       chapter, including AS 13.38.210 and 13.38.300 - 13.38.490 [13.38.300 - 13.38.410], a                          
31       fiduciary shall administer a trust or estate impartially based on what is fair and                                
01       reasonable to all of the beneficiaries, except to the extent that the governing                                   
02       instrument clearly manifests an intention that the fiduciary shall or may favor one or                            
03       more of the beneficiaries. A determination in accordance with this chapter is presumed                            
04       to be fair and reasonable to all of the beneficiaries.                                                            
05    * Sec. 10. AS 13.38.210(c) is amended to read:                                                                     
06            (c)  A trustee may not make an adjustment under this section if                                              
07                 (1)  the adjustment would diminish the income interest in a trust that                                  
08       requires all of the income to be paid at least annually to a spouse and for which a                               
09       federal estate tax or gift tax marital deduction would be allowed, in whole or in part, if                        
10       the trustee did not have the power to make the adjustment; the prohibition in this                                
11       paragraph does not apply to a trust after the trustee determines that the marital                                 
12       deduction has not been claimed or has not been allowed;                                                           
13                 (2)  the adjustment would reduce the actuarial value of the income                                      
14       interest in a trust to which a person transfers property with the intent to qualify for a                         
15       federal gift tax exclusion;                                                                                       
16                 (3)  the adjustment would change the amount payable to a beneficiary                                    
17       as a fixed annuity or a fixed fraction of the value of the trust assets;                                          
18                 (4)  the adjustment is from any amount that is permanently set aside for                                
19       charitable purposes under the governing instrument and for which a federal estate or                              
20       gift tax charitable deduction has been taken, unless both income and principal are                                
21       permanently set aside for charitable purposes under the governing instrument;                                     
22                 (5)  possessing or exercising the power to make an adjustment would                                     
23       cause an individual to be treated as the owner of all or part of the trust for federal                            
24       income tax purposes, and the individual would not be treated as the owner if the                                  
25       trustee did not possess the power to make an adjustment;                                                          
26                 (6)  possessing or exercising the power to make an adjustment would                                     
27       cause all or part of the trust assets to be subject to federal estate or gift tax with respect                    
28       to an individual, and the assets would not be subject to federal estate or gift tax with                          
29       respect to the individual if the trustee did not possess the power to make an                                     
30       adjustment;                                                                                                       
31                 (7)  the trustee is a beneficiary of the trust; or                                                      
01                 (8)  the trust has been converted to a unitrust under AS 13.38.300 -                                
02       13.38.435 [AS 13.38.300 - 13.38.410].                                                                         
03    * Sec. 11. AS 13.38.300 is amended to read:                                                                        
04            Sec. 13.38.300. Power to convert to unitrust. Unless expressly prohibited by                               
05       the governing instrument, a trustee may release the power to adjust under                                         
06       AS 13.38.210 and may convert a trust into a unitrust as described in AS 13.38.300 -                           
07       13.38.435 [AS 13.38.300 - 13.38.410] if                                                                       
08                 (1)  the trustee determines that the conversion will enable the trustee to                              
09       better carry out the intent of the settlor or testator and the purposes of the trust;                             
10                 (2)  the trustee gives written notice of the trustee's intention to release                             
11       the power to adjust, of the trustee's intention to convert the trust into a unitrust, of the                  
12       unitrust percentage selected, of the smoothing period selected, and of how the                                
13       unitrust will operate, including what initial decisions the trustee intends to [WILL]                         
14       make under AS 13.38.340 [THIS SECTION], to all the sui juris beneficiaries who                                
15                      (A)  are currently eligible to receive income from the trust;                                      
16                      (B)  would be eligible, if a power of appointment were not                                         
17            exercised, to receive income from the trust if the interest of all of the                                    
18            beneficiaries eligible to receive income under (A) of this paragraph were to                                 
19            terminate immediately before the giving of the notice; and                                                   
20                      (C)  would, if a power of appointment were not exercised,                                          
21            receive a distribution of principal if the trust were to terminate immediately                               
22            before the giving of the notice;                                                                             
23                 (3)  there are at least one sui juris beneficiary under (2)(A) of this                                  
24       section and at least one sui juris beneficiary under (2)(B) or (C) of this section; and                           
25                 (4)  a sui juris beneficiary does not object to the conversion to a unitrust                            
26       in a writing delivered to the trustee within 60 days after the mailing of the notice under                        
27       (2) of this section.                                                                                              
28    * Sec. 12. AS 13.38.310(a) is amended to read:                                                                     
29            (a)  A trustee may petition the court to approve the conversion to a unitrust if                             
30                 (1)  a beneficiary timely objects to the conversion to a unitrust; [OR]                                 
31                 (2)  there is not a sui juris beneficiary who is eligible under                                         
01       AS 13.38.300(2); or                                                                                           
02                 (3)  the trustee is a beneficiary [AS 13.38.300(2)(A), AND THERE                                    
03       IS NOT A SUI JURIS BENEFICIARY WHO IS ELIGIBLE UNDER                                                              
04       AS 13.38.300(2)(B) OR (C)].                                                                                       
05    * Sec. 13. AS 13.38.330(b) is amended to read:                                                                     
06            (b)  After a trust has been converted to a unitrust, "income" in the governing                               
07       instrument means an annual distribution equal to the amount produced by the                                   
08       application of a fixed unitrust percentage established under (d) of this section to                           
09       [FOUR PERCENT OF] the net fair market value, as determined annually, of the trust's                               
10       assets, whether the assets would be considered income or principal under other                                    
11       provisions of this chapter, averaged over the lesser of                                                       
12                 (1)  the preceding years in the smoothing period selected by the                                    
13       trustee; or                                                                                                   
14                 (2)  the period during which the trust has been in existence.                                       
15    * Sec. 14. AS 13.38.330 is amended by adding a new subsection to read:                                             
16            (d)  The unitrust percentage to be used in determining the unitrust amount must                              
17       be a reasonable current return from the unitrust of at least three percent and not more                           
18       than five percent, taking into account the intentions of the trustor of the unitrust as                           
19       expressed in the governing instrument, the needs of the beneficiaries, general                                    
20       economic conditions, projected current earnings for the unitrust, projected                                       
21       appreciation for the unitrust, and the effect of projected inflation on the unitrust.                             
22    * Sec. 15. AS 13.38.340 is amended to read:                                                                        
23            Sec. 13.38.340. Trustee's discretionary powers regarding unitrust. The                                     
24       trustee may, in the trustee's discretion, from time to time, determine                                            
25                 (1)  the effective date of a conversion to a unitrust;                                                  
26                 (2)  the provisions for prorating a unitrust distribution for a short year                              
27       in which a beneficiary's right to payments commences or ceases;                                                   
28                 (3)  the frequency of unitrust distributions during the year;                                           
29                 (4)  the effect of other payments from or contributions to the trust on                                 
30       the trust's valuation;                                                                                            
31                 (5)  whether to value the trust's assets annually or more frequently;                                   
01                 (6)  whether to use a smoothing period of three, four, or five years;                               
02                 (7)  what valuation dates to use;                                                                   
03                 (8) [(7)]  how frequently to value nonliquid assets and whether to                                  
04       estimate their value;                                                                                             
05                 (9) [(8)]  whether to omit trust property occupied or possessed by a                                
06       beneficiary from the calculations; and                                                                            
07                 (10) [(9)]  other matters necessary for the proper functioning of the                               
08       unitrust.                                                                                                         
09    * Sec. 16. AS 13.38.350(b) is amended to read:                                                                     
10            (b)  Unless otherwise provided by the governing instrument, a unitrust                                       
11       distribution shall be considered to have been paid from net income as net income                                  
12       would be determined if the trust were not a unitrust. To the extent net income is                                 
13       insufficient, the unitrust distribution shall be considered to have been paid from                                
14       ordinary income that is allocable under federal income tax rules to net income as                             
15       determined for a unitrust. To the extent that the ordinary income is insufficient,                            
16       the unitrust distribution is considered to have been paid from net realized short-                            
17       term capital gains. To the extent net income, ordinary income, and net realized short-                    
18       term capital gains are insufficient, the unitrust distribution shall be considered to have                        
19       been paid from net realized long-term capital gains. To the extent net income,                            
20       ordinary income, and net realized short-term and long-term capital gains are                                  
21       insufficient, the unitrust distribution shall be paid from the principal of the trust.                            
22    * Sec. 17. AS 13.38.360 is amended to read:                                                                        
23            Sec. 13.38.360. Court orders regarding unitrust. The trustee or, if the trustee                            
24       declines to petition the court, a beneficiary may petition the court to                                           
25                 [(1)  SELECT A PAYOUT PERCENTAGE DIFFERENT THAN                                                         
26       FOUR PERCENT;                                                                                                     
27                 (2)]  provide for a distribution of net income, as would be determined if                               
28       the unitrust [TRUST] were not a unitrust, in excess of the unitrust distribution if the                       
29       distribution is necessary to preserve a tax benefit [;                                                            
30                 (3)  AVERAGE THE VALUATION OF THE TRUST'S NET ASSETS                                                    
31       OVER A PERIOD OTHER THAN THREE YEARS].                                                                            
01    * Sec. 18. AS 13.38.390(b) is amended to read:                                                                     
02            (b)  If AS 13.38.380(a)(3), (4), or (6) applies to all the trustees, the trustees                            
03       may petition the court to direct a conversion. In the alternative, the trustees may                           
04       appoint an independent person who shall be granted the authority, while acting                                
05       in a fiduciary capacity, to make decisions in place of the trustees relating to a                             
06       conversion, reconversion, and the exercise of discretionary powers under                                      
07       AS 13.38.340.                                                                                                 
08    * Sec. 19. AS 13.38.400 is amended to read:                                                                        
09            Sec. 13.38.400. Reconversion from a unitrust. A trustee may reconvert a                                    
10       trust that has been converted into a unitrust under AS 13.38.300 by following the same                            
11       procedures provided in AS 13.38.300 - 13.38.435 [AS 13.38.300 - 13.38.410] for                                
12       converting a trust into a unitrust. If a unitrust is reconverted under this section, the                          
13       trustee's power to adjust under AS 13.38.210 applies to the trustee after the                                     
14       reconversion.                                                                                                     
15    * Sec. 20. AS 13.38 is amended by adding new sections to article 2 to read:                                        
16            Sec. 13.38.420. Additional unitrust provisions. (a) The unitrust amount may                                
17       be determined by reference to the net fair market value of the unitrust's assets in one or                        
18       more years.                                                                                                       
19            (b)  Distribution of a unitrust amount is considered a distribution of all of the                            
20       income of a unitrust and is considered to be an income interest.                                                  
21            (c)  Distribution of a unitrust amount is considered to be a reasonable                                      
22       apportionment of the total return of a unitrust.                                                                  
23            (d)  A unitrust that provides for a distribution based on a unitrust percentage in                           
24       excess of five percent of the net fair market value of the unitrust assets a year is                              
25       considered to have paid out all of the income of the unitrust and to have paid out                                
26       principal of the unitrust to the extent that the distribution exceeds five percent a year.                        
27            (e)  The governing instrument of a unitrust may grant discretion to the trustee                              
28       to adopt a consistent practice of treating capital gains as part of the unitrust amount to                        
29       the extent that the unitrust amount exceeds the income determined as if the trust were                            
30       not a unitrust, or the governing instrument may specify the ordering of classes of                                
31       income.                                                                                                           
01            (f)  Unless the terms of the unitrust specifically provide otherwise, a unitrust                             
02       amount is considered to have been made from the following sources, which are listed                               
03       in order of priority:                                                                                             
04                 (1)  net income determined as if the trust were not a unitrust;                                         
05                 (2)  ordinary income not allocable to net income;                                                       
06                 (3)  net realized short-term capital gains;                                                             
07                 (4)  net realized long-term capital gains; and                                                          
08                 (5)  the principal of the trust estate.                                                                 
09            (g)  The unitrust governing instrument may provide that the trustee may                                      
10       exclude assets used by the unitrust beneficiary, such as a residence property or                                  
11       tangible personal property, from the net fair market value of the unitrust assets for the                         
12       purposes of computing the unitrust amount. These assets may be considered                                         
13       equivalent to income or to the unitrust amount.                                                                   
14            Sec. 13.38.430. Power to treat gains as part of distribution of principal.                                 
15       Unless prohibited by the unitrust's governing instrument or specifically addressed by                             
16       AS 13.38.350 or 13.38.420, the trustee of a unitrust may treat gains from the sale of                             
17       capital assets of the unitrust to be part of a distribution of principal to a beneficiary,                        
18       and, if the trustee treats these gains as part of a distribution of principal to a                                
19       beneficiary, the trustee shall treat these gains consistently on the unitrust's books,                            
20       records, and tax returns as part of a distribution to a beneficiary.                                              
21            Sec. 13.38.435. Definitions. In AS 13.38.300 - 13.38.435,                                                  
22                 (1)  "smoothing period" means the period of years over which the fair                                   
23       market value of the assets of a unitrust are averaged;                                                            
24                 (2)  "unitrust amount" means the amount that is distributed from a                                      
25       unitrust to a beneficiary;                                                                                        
26                 (3)  "unitrust percentage" means the unitrust percentage established                                    
27       under AS 13.38.330(d).                                                                                            
28    * Sec. 21. AS 13.38.690(a) is repealed and reenacted to read:                                                      
29            (a)  A trustee shall allocate                                                                                
30                 (1)  to income that portion of a payment that equals the greater of the                                 
31       following:                                                                                                        
01                      (A)  the portion that the payor characterizes as interest, a                                       
02            dividend, a remittance in place of interest, or a remittance in place of a                                   
03            dividend; or                                                                                                 
04                      (B)  the portion that is characterized as imputed interest for                                     
05            federal income purposes;                                                                                     
06                 (2)  to principal that portion of a payment that remains after the                                      
07       allocation is made under (1) of this subsection.                                                                  
08    * Sec. 22. AS 13.38.690(b) is amended to read:                                                                     
09            (b)  If no [A] part of a payment under a contract calling for equal installments                         
10       over a fixed period of time is [NOT] allocable to income under the provisions of (a) of                           
11       this section, the difference between the trust's acquisition value of the contract and the                        
12       total expected return is [SHALL BE] considered to be interest. The trustee shall                              
13       allocate to income the portion of each payment equivalent to interest on the then                                 
14       unpaid principal balance at the rate specified in the contract or at a rate necessary to                          
15       amortize the difference between the expected return and the acquisition value, where                              
16       that rate is readily ascertainable by the trustee.                                                                
17    * Sec. 23. AS 13.38.690(c) is amended to read:                                                                     
18            (c)  If no [THERE IS NOT A] portion of a payment from a separate fund held                               
19       exclusively for the benefit of the trust [THAT] is allocable to income under (a) or (b)                           
20       of this section, but the internal net income of the fund determined as if the fund were a                         
21       separate trust subject to AS 13.38.200 - 13.38.410, 13.38.500 - 13.38.690, or                                 
22       13.38.710 - 13.38.860 [AS 13.38.500 - 13.38.860] is readily ascertainable by the                              
23       trustee, the internal net income of the fund is considered to be the income earned                            
24       by the fund, and the portion of the payment equal to the then undistributed net                               
25       income of the fund realized since the trust acquired its interest in the fund is                                  
26       considered to be a distribution of that internal net income of the fund and shall be                      
27       allocated to the trust income account. The balance of the payment described in this                               
28       subsection shall be allocated to principal. The power to adjust under AS 13.38.210,                           
29       the power to convert to a unitrust under AS 13.38.300, and the provisions of                                  
30       AS 13.38.420 apply to retirement benefits covered by this subsection that are                                 
31       payable to a trust. These powers and provisions may be exercised by the payee                                 
01       trustee or in the governing instrument for the retirement benefits separately and                             
02       independently from the exercise by the payee trustee or in the governing                                      
03       instrument of these powers and provisions for the trust, as if the retirement                                 
04       benefits and the trust were separate trusts subject to this chapter.                                          
05    * Sec. 24. AS 13.38.690(d) is amended to read:                                                                     
06            (d)  A trustee shall allocate 10 percent of the part of the payment that is                                  
07       required to be made during the accounting period to income and the balance to                                     
08       principal if there is no [NOT A] part of the payment that is allocable to income under                        
09       (a) - (c) of this section and all or part of the payment is required to be made. The                              
10       trustee shall allocate the entire payment to principal if no [A] part of a payment is                         
11       [NOT] required to be made or the payment received is the entire amount to which the                               
12       trustee is entitled. In this subsection, a payment is not "required to be made" to the                            
13       extent that it is made because the trustee exercises a right of withdrawal.                                       
14    * Sec. 25. AS 13.38.690(e) is amended to read:                                                                     
15            (e)  If, to obtain a federal estate or gift tax marital deduction for a trust, the                           
16       trustee must allocate more of a payment to income than provided for by this section,                              
17       the trustee shall allocate to income the additional amount necessary to obtain the                            
18       marital deduction [TO INCOME].                                                                                    
19    * Sec. 26. AS 13.46.190 is amended to read:                                                                        
20            Sec. 13.46.190. Termination of custodianship. The custodian shall transfer in                              
21       an appropriate manner the custodial property to the minor or to the minor's estate upon                           
22       the earlier of the                                                                                                
23                 (1)  minor's attainment of 21 years of age with respect to property                                     
24       transferred under AS 13.46.030 or 13.46.040 unless the time of transfer of the                                    
25       custodial property to the minor is changed under AS 13.46.195 or 13.46.197;                                   
26                 (2)  minor's attainment of 18 years of age with respect to property                                     
27       transferred under AS 13.46.050 or 13.46.060, unless the time of transfer of the                               
28       custodial property to the minor is changed under AS 13.46.197;                                                
29                 (3)  time specified in the transfer under AS 13.46.080 if the time of                                   
30       transfer of the custodial property to the minor is changed under AS 13.46.195 or                              
31       13.46.197; or                                                                                                 
01                 (4)  minor's death.                                                                                     
02    * Sec. 27. AS 13.46 is amended by adding a new section to read:                                                    
03            Sec. 13.46.197. Extension of custodial term by custodian. (a) A custodian                                  
04       may extend the custodial term under this section to an age older than the age that is                             
05       specified by this chapter or a transferring document made under AS 13.46.080, subject                             
06       to the right of the minor to compel immediate distribution under (c) of this section.                             
07            (b)  To extend the custodial term under (a) of this section, the custodian shall                             
08       give the minor written notice of the custodian's intent to extend the custodial term. The                         
09       notice must specify the duration of the extension by indicating the new custodial term                            
10       and must inform the minor of the minor's right to compel immediate distribution under                             
11       (c) of this section. The custodian shall give the notice during the later of the following                        
12       periods:                                                                                                          
13                 (1)  the six-month period that precedes the last day of the custodial                                   
14       term; or                                                                                                          
15                 (2)  the six-month period that begins on the minor's 18th birthday.                                     
16            (c)  Rather than permit the extension of the custodial term, the minor may                                   
17       compel immediate distribution of all or part of the custodial property by giving written                          
18       notice to the custodian                                                                                           
19                 (1)  during the six-month period that begins on the day that is the last                                
20       day of the current custodial term; or                                                                             
21                 (2)  within 90 days after receiving the custodian's notice under (b) of                                 
22       this section.                                                                                                     
23            (d)  If a minor does not exercise the minor's right to compel distribution under                             
24       (c) of this section, the custodial term shall be extended as indicated in the custodian's                         
25       notice given under (b) of this section, and the minor may not compel the immediate                                
26       distribution of custodial property before the end of the custodial term, as extended.                             
27            (e)  A custodian may extend the custodial term more than once under this                                     
28       section.                                                                                                          
29            (f)  In this section, "custodial term" means the period of time provided in or                               
30       allowed by this chapter during which the custodian is directed to hold custodial                                  
31       property until the property is transferred to the minor.                                                          
01    * Sec. 28. AS 13.46.990(11) is amended to read:                                                                    
02                 (11)  "minor" means an individual who has not attained the age of 18                                    
03       years, except that when used in reference to the beneficiary for whose benefit                                    
04       custodial property is held or to be held, "minor" means an individual who has not                                 
05       attained the age at which the custodian is required under AS 13.46.190, [AND]                                 
06       13.46.195, and 13.46.197 to transfer the custodial property to the beneficiary;                               
07    * Sec. 29. AS 13 is amended by adding a new chapter to read:                                                       
08                  Chapter 75. Disposition of Human Remains.                                                            
09            Sec. 13.75.010. Directions by decedent. (a) A person may provide directions                                
10       for the disposition of the person's remains by placing the directions in a disposition                            
11       document. The directions may include or be limited to designating an agent to control                             
12       the disposition of the person's remains.                                                                          
13            (b)  A disposition document must be signed by the person and acknowledged                                    
14       before a notary public, and contain the form and contents required by AS 13.75.030. A                             
15       disposition document may be a separate document or it may be contained in another                                 
16       document, including a will or prepaid funeral or burial contract. The disposition                                 
17       document may be modified or revoked only by a subsequent disposition document that                                
18       complies with this subsection.                                                                                    
19            Sec. 13.75.020. Persons authorized to control disposition. (a) The following                               
20       persons, in the priority listed, may control disposition of a decedent's remains:                                 
21                 (1)  a person designated in a disposition document as the disposition                                   
22       agent for the decedent;                                                                                           
23                 (2)  a person serving, or nominated by the decedent in the decedent's                                   
24       will to serve, as the personal representative of the decedent's estate, if the person is                          
25       acting according to the decedent's written instructions contained in the decedent's will;                         
26                 (3)  the individual who was the spouse of the decedent at the time of the                               
27       decedent's death;                                                                                                 
28                 (4)  the sole surviving competent adult child of the decedent, or, if there                             
29       is more than one surviving competent adult child of the decedent, the majority of the                             
30       surviving competent adult children; fewer than one-half of the surviving competent                                
31       adult children may exercise the rights and duties of this section if these surviving adult                        
01       children use reasonable efforts to notify all other surviving competent adult children                            
02       that they are exercising these rights and duties and are not aware of any opposition by                           
03       one-half or more of all of the surviving competent adult children;                                                
04                 (5)  the surviving competent parents of the decedent; if one of the                                     
05       surviving competent parents is absent, the remaining competent parent may exercise                                
06       the rights and duties of this section after reasonable efforts have been unsuccessful in                          
07       locating the absent surviving competent parent; in this paragraph, "absent" means a                               
08       person who is unable to communicate decisions or participate in making decisions                                  
09       regarding the disposition of a decedent's remains personally, telephonically, or through                          
10       electronic communication;                                                                                         
11                 (6)  the surviving competent adult person in the next degrees of                                        
12       kindred, the two surviving competent adult persons of the same degree of kindred if                               
13       there are two, or, if there are more than two surviving competent adult persons of the                            
14       same degree of kindred, the majority of those persons; fewer than the majority of                                 
15       surviving competent adult persons of the same degree of kindred may exercise the                                  
16       rights and duties of this section if those persons use reasonable efforts to notify all                           
17       other surviving competent adult persons of the same degree of kindred that they are                               
18       exercising these rights and duties and are not aware of any opposition by one-half or                             
19       more of all surviving competent adult persons of the same degree of kindred;                                      
20                 (7)  in the case of an indigent or another individual whose final                                       
21       disposition is the responsibility of the state or a municipality, a public administrator,                         
22       medical examiner, coroner, or another public official charged with arranging the final                            
23       disposition of the decedent; or                                                                                   
24                 (8)  another person who is willing to assume legal and financial                                        
25       responsibility.                                                                                                   
26            (b)  If a person takes control of the disposition under (a) of this section, the                             
27       person is liable for the reasonable costs of the disposition.                                                     
28            (c)  In this section,                                                                                        
29                 (1)  "adult" means a person who is 18 years of age or older;                                            
30                 (2)  "competent" means a person who does not suffer from disabilities                                   
31       that prevent the person from managing the person's property or affairs.                                           
01            Sec. 13.75.030. Form of disposition document. A disposition document must                                  
02       be in substantially the following form:                                                                           
03                             DISPOSITION DOCUMENT                                                                        
04                 You can select Part 1, Part 2, or both, by completing the part(s)                                       
05            you select, including providing any signatures indicated. Part 3 contains                                    
06            general statements and a place for your signature. You must sign in                                          
07            front of a notary.                                                                                           
08                 PART 1. APPOINTMENT OF AGENT TO CONTROL                                                                 
09            DISPOSITION OF REMAINS. If you appoint an agent, you and your                                                
10            agent must complete this part as indicated, and the agent must sign this                                     
11            part.                                                                                                        
12                 I, ______________, being of sound mind, wilfully and                                                    
13            voluntarily make known my desire that, on my death, the disposition of                                       
14            my remains shall be controlled by _____________ (name of agent first                                         
15            named below), and, with respect to that subject only, I appoint that                                         
16            person as my agent. All decisions made by my agent with respect to the                                       
17            disposition of my remains, including cremation, are binding.                                                 
18                     ACCEPTANCE BY AGENT OF APPOINTMENT.                                                                 
19                 THE AGENT, AND EACH SUCCESSOR AGENT, BY                                                                 
20            ACCEPTING THIS APPOINTMENT, AGREES TO AND ASSUMES                                                            
21            THE OBLIGATIONS PROVIDED IN THIS DOCUMENT. AN                                                                
22            AGENT MAY SIGN AT ANY TIME, BUT AN AGENT'S                                                                   
23            AUTHORITY TO ACT IS NOT EFFECTIVE UNTIL THE AGENT                                                            
24            SIGNS BELOW TO INDICATE THE ACCEPTANCE OF                                                                    
25            APPOINTMENT. ANY NUMBER OF AGENTS MAY SIGN, BUT                                                              
26            ONLY THE SIGNATURE OF THE AGENT ACTING AT ANY                                                                
27            TIME IS REQUIRED.                                                                                            
28            AGENT:                                                                                                       
29            Name: ___________________________________________________                                                    
30            Address: _________________________________________________                                                   
31            Telephone Number: _________________________________________                                                  
01            Signature Indicating Acceptance of Appointment:                                                              
02            _________________________________________________________                                                    
03            Date of Signature: __________________________________________                                                
04            SUCCESSORS:                                                                                                  
05                 If my agent dies, becomes legally disabled, resigns, or refuses to                                      
06            act, I appoint the following persons (each to act alone and successively,                                    
07            in the order named) to serve as my agent to control the disposition of                                       
08            my remains as authorized by this document:                                                                   
09            (1) First Successor                                                                                          
10            Name: ___________________________________________________                                                    
11            Address: _________________________________________________                                                   
12            Telephone Number: _________________________________________                                                  
13            Signature of First Successor Indicating Acceptance of Appointment:                                           
14            _________________________________________________________                                                    
15            Date of Signature: __________________________________________                                                
16            (2) Second Successor                                                                                         
17            Name: ___________________________________________________                                                    
18            Address: _________________________________________________                                                   
19            Telephone Number: _________________________________________                                                  
20            Signature of Second Successor Indicating Acceptance of Appointment:                                          
21            _________________________________________________________                                                    
22            Date of Signature: __________________________________________                                                
23            PART 2. DIRECTIONS FOR THE DISPOSITION OF MY                                                                 
24            REMAINS.                                                                                                     
25            Stated below are my directions for the disposition of my remains:                                            
26            _________________________________________________________                                                    
27            _________________________________________________________                                                    
28            _________________________________________________________                                                    
29            _________________________________________________________                                                    
30            If the disposition of my remains is by cremation, then (pick one):                                           
31                 ( ) I do not wish to allow any of my survivors the option of                                            
01            canceling my cremation and selecting alternative arrangements,                                               
02            regardless of whether my survivors consider a change to be appropriate.                                      
03                 ( ) I wish to allow only the survivors I have designated below to                                       
04            have the option of canceling my cremation and selecting alternative                                          
05            arrangements, if they consider that a change to be appropriate:                                              
06            _________________________________________________________                                                    
07            _________________________________________________________                                                    
08            _________________________________________________________                                                    
09            _________________________________________________________                                                    
10            PART 3. GENERAL PROVISIONS AND SIGNATURE.                                                                    
11                 WHEN DIRECTIONS BECOME EFFECTIVE. The directions,                                                       
12            including any appointment of an agent, in this disposition document                                          
13            become effective on my death.                                                                                
14                 REVOCATION OF PRIOR APPOINTMENTS. I revoke any                                                          
15            prior appointment of any person to control the disposition of my                                             
16            remains.                                                                                                     
17             SIGNATURE OF PERSON MAKING DISPOSITION DOCUMENT                                                             
18            Signature: ________________________________________________                                                  
19            Date of signature: __________________________________________                                                
20                       (Notary acknowledgment of signature)                                                              
21            Sec. 13.75.040. Agent's appointment. The person appointed as an agent in a                                 
22       disposition document may sign the disposition document at any time, but the agent's                               
23       authority to act is not effective until the agent signs the instrument.                                           
24            Sec. 13.75.050. Exercise of authority. If a person fails to exercise the person's                          
25       authority to control disposition under AS 13.75.020 within 48 hours after receiving                               
26       notification of the decedent's death or within 48 hours after the decedent's death,                               
27       whichever is earlier, the person may not control the disposition of the decedent's                                
28       remains, and the right to control the disposition of the decedent's remains passes to the                         
29       person who is next listed in priority under AS 13.75.020. If the person to whom the                               
30       right to control the disposition passes under this section fails to exercise the person's                         
31       authority to control the disposition within 48 hours after being notified that the                                
01       authority to control the disposition has passed to the person, the authority to control                           
02       the disposition passes to the person who is next listed in priority under AS 13.75.020.                           
03            Sec. 13.75.060. Certain persons prohibited from control. If a person is                                    
04       charged with a felonious killing in connection with a decedent's death and if the                                 
05       funeral director or the cemetery knows about the charge, then the person may not                                  
06       control disposition, and the right to control disposition passes to the person who is                             
07       next listed in priority under AS 13.75.020.                                                                       
08            Sec. 13.75.070. Prohibition of cremation; written instructions. A person                                   
09       may not authorize cremation for a decedent's remains if a decedent has left directions                            
10       in a disposition document that the decedent does not wish to be cremated.                                         
11            Sec. 13.75.080. Implementation of directions. (a) The person authorized to                                 
12       control the disposition shall carry out the directions of the decedent to the extent that                         
13       the decedent's estate or the person is financially able to carry out the directions.                              
14            (b) Notwithstanding any other provision in AS 13.06 - 13.36 (Uniform Probate                                 
15       Code), if a person provides directions in a disposition document that is contained in a                           
16       will, the directions shall be carried out immediately without the necessity of probate. If                        
17       the will is not probated or is declared invalid for testamentary purposes, the directions                         
18       are valid to the extent to which they have been acted on in good faith.                                           
19            Sec. 13.75.090. Misrepresentation; liability. If a person represents that the                              
20       person knows the identity of a decedent, and, with the intent to procure the disposition                          
21       of the decedent's remains, signs a statement, other than a death certificate, that                                
22       identifies the decedent, the person guarantees the identity of the decedent and is liable                         
23       for any damages that result, directly or indirectly, from that guarantee.                                         
24            Sec. 13.75.100. Liability. (a) A disposition organization is not liable for                                
25       carrying out the directions of a decedent if the disposition organization carries out the                         
26       directions of a decedent or a person who establishes that the person is entitled to                               
27       control the disposition.                                                                                          
28            (b) This section may not be construed to reduce or eliminate the liability of a                              
29       disposition organization for its negligence or reckless acts.                                                     
30            Sec. 13.75.110. Disputes. (a) A person listed in AS 13.75.020 who is involved                              
31       in a dispute with one or more persons listed in AS 13.75.020 about which of the                                   
01       persons has the authority to control disposition may bring an action in the superior                              
02       court to resolve the dispute.                                                                                     
03            (b)  If there is a dispute with one or more persons listed in AS 13.75.020 about                             
04       which person has the authority to control disposition, a cemetery organization or                                 
05       funeral establishment is not liable for refusing to accept, to inter, or otherwise to                             
06       dispose of the decedent's remains until the cemetery organization or funeral                                      
07       establishment receives a court order or another suitable confirmation that the dispute                            
08       has been resolved.                                                                                                
09            Sec. 13.75.120. Exemptions. The disposition of the remains of a member of                                  
10       the organized militia under AS 26.05.262, the disposition of the remains of a member                              
11       of the armed forces under AS 26.10.065(a), and the disposition of the remains of a                                
12       member of the United States Coast Guard under AS 26.10.065(b) are exempt from this                                
13       chapter.                                                                                                          
14            Sec. 13.75.190. Definitions. In this chapter,                                                              
15                 (1) "control" means the authority to control disposition;                                               
16                 (2) "directions" means                                                                                  
17                      (A) instructions for the disposition of a person's remains;                                        
18                      (B) the appointment of an agent to handle the disposition of a                                     
19            person's remains; or                                                                                         
20                      (C) both (A) and (B) of this paragraph;                                                            
21                 (3) "disposition" means disposition of a decedent's remains, including                                  
22       cremation, but does not include an anatomical gift; in this paragraph, "anatomical gift"                          
23       has the meaning given in AS 13.52.390;                                                                            
24                 (4) "disposition document" means a disposition document authorized                                      
25       by AS 13.75.010                                                                                                   
26                      (A)  in which a person provides directions regarding the                                           
27            disposition of the person's remains; and                                                                     
28                      (B)  that complies with AS 13.75.030;                                                              
29                 (5)  "disposition organization" means                                                                   
30                      (A)  a cemetery association formed under AS 10.30.010;                                             
31                      (B)  a nonprofit cemetery corporation authorized by                                                
01            AS 10.30.055;                                                                                                
02                      (C)  a person operating a crematory;                                                               
03                      (D)  a person operating a columbarium;                                                             
04                      (E)  a funeral home or other type of funeral establishment;                                        
05                      (F)  a funeral director or an embalmer.                                                            
06            Sec. 13.75.195. Short title. This chapter may be cited as the Disposition of                               
07       Human Remains Act.                                                                                                
08    * Sec. 30. AS 21.42.020 is amended by adding new subsections to read:                                              
09            (e)  Notwithstanding (a) of this section, a trustee, acting in a fiduciary capacity,                         
10       may procure or cause to be procured an insurance contract that is on the life or body of                          
11       an individual and under which the proceeds of the insurance contract are payable to                               
12       the trustee, acting in a fiduciary capacity, if                                                                   
13                 (1)  the trustee, acting in a fiduciary capacity, owns the insurance                                    
14       contract or the trust itself owns the insurance contract;                                                         
15                 (2)  on the date the contract is made, a settlor of the trust is the                                    
16       individual insured, has an insurable interest in the individual insured, or would have                            
17       had an insurable interest in the individual insured if the settlor were living at the time                        
18       the contract was made; in this paragraph, "settlor" means a person, including a person                            
19       for whom a fiduciary or agent is acting, who executes the trust instrument; and                                   
20                 (3)  the proceeds of the contract are primarily for the benefit of a trust                              
21       beneficiary who has an insurable interest in the individual insured, except that, if the                          
22       determination of the trust beneficiary's insurable interest is based on (d)(1) of this                            
23       section, the trust beneficiary's relation by blood or law must be within the third degree.                        
24            (f)  A person who has an insurable interest in the life or body of an individual                             
25       may form a business firm that is substantially or solely for the purpose of purchasing,                           
26       holding, or administering an insurance contract on the life or body of the individual. In                         
27       this subsection, "firm" has the meaning given in AS 21.97.900, but also includes a                                
28       business trust and a joint venture.                                                                               
29    * Sec. 31. AS 34.40 is amended by adding a new section to read:                                                    
30            Sec. 34.40.113. Transfers of individual retirement accounts. (a)                                           
31       Notwithstanding a provision in AS 09.38.017(d), AS 34.40.110, or another law to the                               
01       contrary, a person may voluntarily transfer or assign the person's interest in an                                 
02       individual retirement account if the person                                                                       
03                 (1)  is the owner of or a participant in the individual retirement account;                             
04       or                                                                                                                
05                 (2)  acquired the interest as a result of the death of another individual.                              
06            (b)  In this section, "individual retirement account" means an individual                                    
07       retirement account established under 26 U.S.C. 408 or a Roth IRA established under                                
08       26 U.S.C. 408A.                                                                                                   
09    * Sec. 32. AS 34.77.030(g) is amended to read:                                                                     
10            (g)  Whether or not the community property agreement provides that all                                       
11       property acquired by either or both spouses during the marriage is community                                      
12       property, and except to the extent otherwise expressly provided by the spouses in the                         
13       community property agreement or by the settlors in a community property trust,                                
14       property acquired by a spouse during marriage and after the determination date is                                 
15       individual property if acquired                                                                                   
16                 (1)  by gift or a disposition at death made by a third person to the                                    
17       spouse and not to both spouses;                                                                                   
18                 (2)  in exchange for or with the proceeds of other individual property of                               
19       the spouse;                                                                                                       
20                 (3)  from appreciation or income of the spouse's individual property                                    
21       except to the extent that the income or appreciation is classified as community                                   
22       property under AS 34.77.130;                                                                                      
23                 (4)  by a decree, community property agreement, written consent, or                                     
24       reclassification under AS 34.77.060(b) designating it as the individual property of the                           
25       spouse;                                                                                                           
26                 (5)  as a recovery for damage to property under AS 34.77.140, except                                    
27       as specifically provided otherwise in a decree, community property agreement,                                     
28       community property trust, or written consent; [OR]                                                            
29                 (6)  as a recovery for personal injury, except for the amount of the                                    
30       recovery attributable to expenses paid or otherwise satisfied from community                                      
31       property; or                                                                                                  
01                 (7)  as a transfer to a community property trust and declared by                                    
02       the trust to be the individual property of the spouse.                                                        
03    * Sec. 33. AS 34.77.050(b) is amended to read:                                                                     
04            (b)  A gift of community property to a third person that is not allowed under                                
05       (a) of this section is subject to AS 34.77.140(e) - (h) [(d) OF THIS SECTION] unless                          
06       both spouses act together in making the gift or the other spouse ratifies the gift.                               
07    * Sec. 34. AS 34.77.110 is amended by adding new subsections to read:                                              
08            (f)  Property that spouses agree in a community property agreement is                                        
09       community property or property that is transferred to a community property trust and                              
10       expressly declared by the trust to be community property is owned as community                                    
11       property regardless of the form of title to the property, even if the title indicates that                        
12       the property is owned unequally by the spouses or is only in the name of one spouse.                              
13            (g)  If the title to community property is in a form that provides for ownership                             
14       by survivorship between the spouses, then ownership by survivorship is presumed to                                
15       have been made with the consent of both spouses.                                                                  
16            (h)  If a spouse with management and control of community property                                           
17       designates a beneficiary for the property on the death of one or both of the spouses,                             
18       and if the community property is held in a form of title that permits a beneficiary                               
19       designation, the beneficiary designation is effective only for the designating spouse's                           
20       one-half interest in the community property unless the other spouse consents in                                   
21       writing to the designation. A designation of the following as the beneficiary is                                  
22       presumed to have been made with the consent of the other spouse:                                                  
23                 (1)  the other spouse or an ancestor or descendant of either spouse;                                    
24                 (2)  a charity; or                                                                                      
25                 (3)  a trust, to the extent that the beneficiaries consist of persons or                                
26       entities identified in (1) or (2) of this subsection.                                                             
27            (i)  The testimony of one spouse is sufficient to rebut a presumption                                        
28       established under this section.                                                                                   
29            (j)  A disposition of community property contrary to (e) - (h) of this section is                            
30       voidable. An action in court to void the disposition must be commenced within the                                 
31       time specified by AS 34.77.140(e).                                                                                
01    * Sec. 35. AS 34.77.140(d) is amended to read:                                                                     
02            (d)  Except as provided otherwise in (e) - (h) of this section                                           
03       [AS 34.77.050(d)], a spouse must begin an action against the other spouse under (a) of                            
04       this section within three years after acquiring actual knowledge of the facts giving rise                         
05       to the claim.                                                                                                     
06    * Sec. 36. AS 34.77.140 is amended by adding new subsections to read:                                              
07            (e)  Except as provided by (f) - (h) of this section, if a gift of community                                 
08       property during marriage by a spouse does not comply with AS 34.77.050(a), the                                    
09       nondonor spouse may bring an action to recover the property or the amount of money                                
10       by which the gift exceeded the limit under AS 34.77.050(a). The nondonor spouse                                   
11       may bring the action against the donor spouse, the gift recipient, or both. The                                   
12       nondonor spouse must commence the action within the earliest of the following times:                              
13                 (1)  one year after the nondonor spouse receives notice of the gift;                                    
14                 (2)  one year after dissolution of the marriage; or                                                     
15                 (3)  on or before the deadline for filing a claim under AS 13.16.460                                    
16       after the death of the donor spouse.                                                                              
17            (f)  If a recovery under (e) of this section occurs during the marriage of the                               
18       donor spouse and the nondonor spouse, the property or money that is recovered is                                  
19       considered community property. If the recovery occurs after the dissolution of the                                
20       marriage of the donor and nondonor spouses or after the death of either the donor or                              
21       the nondonor spouse, the recovery is limited to 50 percent of the property or money                               
22       that would have been recovered if the recovery had occurred during the marriage.                                  
23            (g)  If a transfer of community property to a third person during marriage by a                              
24       spouse acting without the other spouse becomes a completed gift on the death of the                               
25       donor spouse, or if an arrangement involving community property during marriage by                                
26       a spouse acting without the other spouse is intended to be and becomes a gift to a third                          
27       person on the death of the donor spouse, the surviving spouse may bring an action in                              
28       court against the gift recipient to recover one-half of the gift. To bring an action under                        
29       this subsection, the surviving spouse must commence the action on or before the                                   
30       deadline for filing a claim under AS 13.16.460.                                                                   
31            (h)  If a spouse who would have been entitled to bring an action under (e) - (g)                             
01       of this section predeceases the donor spouse, the deceased spouse's successor in                                  
02       interest may bring an action for recovery under (e) - (g) of this section, but the action                         
03       must be commenced within one year after the deceased spouse's death. Recovery in an                               
04       action under this subsection is the same as if the donor spouse had predeceased the                               
05       spouse entitled to the recovery, but the amount of the recovery is calculated as of the                           
06       date of the death of the spouse entitled to the recovery.                                                         
07    * Sec. 37. AS 13.38.330(c); AS 34.77.050(d), and 34.77.110(d) are repealed.                                        
08    * Sec. 38. The uncodified law of the State of Alaska is amended by adding a new section to                         
09 read:                                                                                                                   
10       INDIRECT COURT RULE CHANGE. AS 34.77.110(i), enacted by sec. 34 of this                                           
11 Act, has the effect of amending Rule 301(a), Alaska Rules of Evidence, by specifying the                                
12 evidence that is sufficient to rebut a presumption under AS 34.77.110(i), enacted by sec. 34 of                         
13 this Act.                                                                                                               
14    * Sec. 39. The uncodified law of the State of Alaska is amended by adding a new section to                         
15 read:                                                                                                                   
16       APPLICABILITY. (a) AS 09.38.017(a), as amended by sec. 1 of this Act,                                             
17 AS 09.38.017(d), as amended by sec. 2 of this Act, and AS 09.38.017(e), as amended by sec.                              
18 3 of this Act, apply to a retirement plan that exists before, on, or after the effective date of this                   
19 Act. In this section, "retirement plan" has the meaning given in AS 09.38.017(e), as amended                            
20 by sec. 3 of this Act.                                                                                                  
21       (b)  AS 13.36.157, repealed and reenacted by sec. 6 of this Act, AS 13.36.158 and                                 
22 13.36.159, enacted by sec. 7 of this Act, and AS 13.36.215(b), enacted by sec. 8 of this Act,                           
23 apply to a trust that exists before, on, or after the effective date of this Act.                                       
24       (c)  AS 13.46.190, as amended by sec. 26 of this Act, AS 13.46.197, enacted by sec.                               
25 27 of this Act, and AS 13.46.990(11), as amended by sec. 28 of this Act, apply to a transfer                            
26 that is made before, on, or after the effective date of this Act. In this subsection, "transfer" has                    
27 the meaning given in AS 13.46.990.                                                                                      
28       (d)  AS 34.40.113, added by sec. 31 of this Act, applies to an individual retirement                              
29 account that exists before, on, or after the effective date of this Act. In this section, "individual                   
30 retirement account" means an individual retirement account established under 26 U.S.C. 408                              
31 or a Roth IRA established under 26 U.S.C. 408A.                                                                         
01    * Sec. 40. The uncodified law of the State of Alaska is amended by adding a new section to                         
02 read:                                                                                                                   
03       CONDITIONAL EFFECT. AS 34.77.110(i), enacted by sec. 34 of this Act, takes                                        
04 effect only if sec. 38 of this Act receives the two-thirds majority vote of each house required                         
05 by art. IV, sec. 15, Constitution of the State of Alaska.