CSSB 65(L&C): "An Act relating to property exemptions for retirement plans, individual retirement accounts, and Roth IRAs; relating to transfers of individual retirement plans; relating to the rights of judgment creditors of members of limited liability companies and partners of limited liability partnerships; relating to the Uniform Probate Code, including pleadings, orders, liability, and notices under the Uniform Probate Code and the Alaska Principal and Income Act, the appointment of trust property, the Alaska Uniform Prudent Investor Act, co-trustees, trust protectors, and trust advisors; 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 the tax on insurers for life insurance policies; relating to insurable interests for certain insurance policies; relating to restrictions on transfers of trust interests; relating to discretionary interests in irrevocable trusts; relating to the community property of married persons; and amending Rule 64, Alaska Rules of Civil Procedure, and Rule 301(a), Alaska Rules of Evidence."
00 CS FOR SENATE BILL NO. 65(L&C) 01 "An Act relating to property exemptions for retirement plans, individual retirement 02 accounts, and Roth IRAs; relating to transfers of individual retirement plans; relating to 03 the rights of judgment creditors of members of limited liability companies and partners 04 of limited liability partnerships; relating to the Uniform Probate Code, including 05 pleadings, orders, liability, and notices under the Uniform Probate Code and the Alaska 06 Principal and Income Act, the appointment of trust property, the Alaska Uniform 07 Prudent Investor Act, co-trustees, trust protectors, and trust advisors; relating to the 08 Alaska Principal and Income Act; relating to the Alaska Uniform Transfers to Minors 09 Act; relating to the disposition of human remains; relating to the tax on insurers for life 10 insurance policies; relating to insurable interests for certain insurance policies; relating 11 to restrictions on transfers of trust interests; relating to discretionary interests in 12 irrevocable trusts; relating to the community property of married persons; and
01 amending Rule 64, Alaska Rules of Civil Procedure, and Rule 301(a), Alaska Rules of 02 Evidence." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 09.38.017(a) is amended to read: 05 (a) In addition to the exemption under AS 09.38.015(b), the following are 06 exempt from a claim of an individual's or beneficiary's creditor: 07 (1) the interest of the individual or beneficiary in a retirement plan; 08 [AND] 09 (2) the money or other assets payable to the individual from a 10 retirement plan; 11 (3) the interest of a beneficiary in 12 (A) a retirement plan if the beneficiary acquired the 13 interest as a result of the death of an individual; the beneficiary's interest 14 is exempt to the same extent that the individual's interest was exempt 15 immediately before the individual died; 16 (B) an individual retirement account that has been 17 transferred by the individual to the beneficiary during the individual's 18 lifetime; the beneficiary's interest is exempt to the same extent that the 19 individual's interest was exempt immediately before the transfer to the 20 beneficiary; 21 (4) the money or other assets payable to a beneficiary from 22 (A) a retirement plan if the beneficiary acquired the money 23 or other assets as a result of the death of an individual who would have 24 had, during the individual's life, an exemption in the money or other 25 assets; 26 (B) an individual retirement account if the beneficiary 27 acquired the money or other assets as a result of the transfer of the money 28 or other assets by an individual who would have had, at the time of the 29 transfer, an exemption in the money or other assets. 30 * Sec. 2. AS 09.38.017(d) is amended to read:
01 (d) A retirement plan exempt from claims under (a) of this section is 02 conclusively presumed to be a spendthrift trust under this section, except for 03 transfers or assignments under AS 34.40.118. 04 * Sec. 3. AS 09.38.017(e) is amended to read: 05 (e) In this section, 06 (1) "alternate payee" has the meaning given in 26 U.S.C. 414(p)(8); 07 (2) "beneficiary" includes a person, trust, or trustee who has, 08 before or after the death of an individual, a direct or indirect beneficial interest 09 in a retirement plan; in this paragraph, "beneficial interest" includes an interest 10 that is acquired 11 (A) as a designated beneficiary, survivor, co-annuitant, 12 heir, or legatee; or 13 (B) if excludible from gross income under 26 U.S.C. 14 (Internal Revenue Code), as a 15 (i) rollover under 26 U.S.C. 408 or 26 U.S.C. 408A; 16 (ii) a distribution from one retirement plan to 17 another retirement plan; or 18 (iii) a distribution that is similar to (i) or (ii) of this 19 subparagraph; 20 (3) "individual" means [AN INDIVIDUAL WHO IS] a participant in, 21 an owner [A BENEFICIARY] of, or an alternate payee of a retirement plan; 22 (4) "individual retirement account" means an individual 23 retirement account established under 26 U.S.C. 408 or a Roth IRA established 24 under 26 U.S.C. 408A; 25 (5) [(3)] "retirement plan" means 26 (A) a retirement plan that is qualified under 26 U.S.C. 401(a), 27 26 U.S.C. 403(a), 26 U.S.C. 403(b), [26 U.S.C. 408, 26 U.S.C. 408A, OR] 26 28 U.S.C. 409, 26 U.S.C. 414(d), 26 U.S.C. 414(e), or 26 U.S.C. 457 (Internal 29 Revenue Code); 30 (B) an individual retirement account; and 31 (C) the teachers' retirement system under AS 14.25, the
01 judicial retirement system under AS 22.25, the public employees' 02 retirement system under AS 39.35, and the elected public officers' 03 retirement system under former AS 39.37. 04 * Sec. 4. AS 10.50.380(c) is amended to read: 05 (c) This section provides the exclusive remedy that a judgment creditor of a 06 member or a member's assignee may use to satisfy a judgment out of the judgment 07 debtor's interest in the limited liability company. Other legal or equitable remedies, 08 including foreclosure on the member's limited liability company interest and a court 09 order for directions, accounts, and inquiries that the debtor member might have made, 10 are not available to the judgment creditor attempting to satisfy a judgment out of the 11 judgment debtor's interest in the limited liability company and may not be ordered by 12 a court. 13 * Sec. 5. AS 10.50.380 is amended by adding a new subsection to read: 14 (e) This section applies to limited liability companies with only one member 15 as well as to limited liability companies with more than one member. 16 * Sec. 6. AS 13.06.120 is amended to read: 17 Sec. 13.06.120. Pleadings; when parties bound by orders; notice. In any 18 proceedings involving trusts, nonprobate assets, or estates of decedents, minors, 19 protected persons, or incapacitated persons brought under AS 13.06 - AS 13.36 or 20 AS 13.38, [INCLUDING ANY JUDICIALLY SUPERVISED SETTLEMENTS AND 21 ANY NONJUDICIAL PROCEEDINGS AND SETTLEMENTS,] the following 22 apply: 23 (1) interests to be affected shall be described in pleadings that give 24 reasonable information to owners by name or class, by reference to the instrument 25 creating the interests, or in other appropriate manner; 26 (2) persons are bound by orders binding others in the following cases: 27 (A) orders binding the sole holder or all co-holders of a power 28 of revocation or a general or nongeneral power of appointment, including one 29 in the form of a power of amendment, bind other persons to the extent their 30 interests, as objects, takers in default, or otherwise, are subject to the power; 31 (B) to the extent there is no conflict of interest between them or
01 among persons represented, orders binding a conservator bind the person 02 whose estate the conservator controls; orders binding a guardian bind the ward 03 if no conservator of the estate has been appointed; orders binding a trustee bind 04 beneficiaries of the trust in proceedings to probate a will establishing or adding 05 to a trust, to review the acts or accounts of a prior fiduciary, and in proceedings 06 involving creditors or other third parties; orders binding a personal 07 representative bind persons interested in the undistributed assets of a 08 decedent's estate in actions or proceedings by or against the estate; and orders 09 binding an agent having authority to act with respect to the particular questions 10 or dispute bind the principal; if there is no conflict of interest and no 11 conservator or guardian has been appointed, a parent may represent the minor 12 child; 13 (C) an unborn person, a minor, an incapacitated person, or a 14 person whose identity or location is unknown or not reasonably ascertainable 15 who is not otherwise represented is bound by an order to the extent the interest 16 is adequately represented by another party having a substantially identical 17 interest in the proceeding; 18 (D) with regard to interests given upon the happening of a 19 certain event to persons who comprise a certain class, orders binding the living 20 persons who would constitute the class, if the event had happened immediately 21 before the commencement of the proceeding, bind all members of the class; 22 (E) with regard to an interest given to a living person when the 23 same interest or a share of the interest is to pass to the surviving spouse or to 24 persons who are or might be the distributees, devisees, heirs, or issue of the 25 living person upon the happening of a future event, orders binding the living 26 person bind the surviving spouse, distributees, devisees, heirs, or issue of the 27 living person; 28 (F) with regard to interests given to a person or a class of 29 persons, or to both, upon the happening of a future event, if the same interest 30 or a share of the interest is to pass to another person or class of persons, or to 31 both, upon the happening of an additional future event, orders binding the
01 living person or class of persons who would take the interest upon the 02 happening of the first event bind the persons and classes of persons who might 03 take on the happening of the additional future event; 04 (G) if a person is designated by a trust instrument to represent 05 and bind a born or unborn beneficiary of the trust and receive a notice, 06 information, accounting, or report for the beneficiary, then the beneficiary is 07 bound by an order binding the designated person; in this subparagraph, 08 (i) the settlor may make the designation in the trust 09 instrument, in a separate document, or by a trust protector authorized in 10 the trust instrument to make the designation; 11 (ii) except as otherwise provided in this subparagraph, a 12 person designated under (i) of this subparagraph may not represent and 13 bind a beneficiary while the designated person is serving as trustee; 14 (iii) except as otherwise provided in this subparagraph, 15 a person designated under (i) of this subparagraph may not represent 16 and bind another beneficiary if the designated person also is a 17 beneficiary, unless the designated person was named by the settlor, is 18 the beneficiary's spouse, or is a grandparent or descendant of a 19 grandparent of the beneficiary or the beneficiary's spouse; in this sub- 20 subparagraph, "spouse" means the individual to whom the beneficiary 21 is married and with whom the beneficiary is living, and a physical 22 separation primarily for education, business, health, and similar reasons 23 does not prevent the individual from being considered to be living with 24 the beneficiary; 25 (3) a person representing another person under (2)(A) - (F) of this 26 section and a person designated under (2)(G)(i) of this section are not liable to the 27 beneficiary whose interests are represented, or to a person claiming through that 28 beneficiary, for an action or omission to act made in good faith; 29 (4) notice is required as follows: 30 (A) notice as prescribed by AS 13.06.110 shall be given to 31 every interested person or to one person who can bind an interested person as
01 described in (2)(A), (B), or (D) - (G) of this section; notice may be given both 02 to a person and to another person who may bind the person; 03 (B) notice is given to unborn persons, a minor, an incapacitated 04 person, or a person whose identity or location is unknown or not reasonably 05 ascertainable, and persons who are not represented under (2)(A), (B), or (D) - 06 (G) of this section, by giving notice to all known persons whose interests in the 07 proceedings are substantially identical to those of the unborn persons, the 08 minor, the incapacitated person, or the person whose identity or location is 09 unknown or not reasonably ascertainable; 10 (5) at any point in a proceeding, a court may appoint a guardian ad 11 litem to represent the interest of an unborn person, a minor, an incapacitated person, or 12 a person whose identity or address is unknown or not reasonably ascertainable, if the 13 court determines that representation of the interest otherwise would be inadequate; if 14 not precluded by conflict of interests, a guardian ad litem may be appointed to 15 represent several persons or interests; the court shall set out its reasons for appointing 16 a guardian ad litem as a part of the record of the proceeding. 17 * Sec. 7. AS 13.06.120 is amended by adding a new subsection to read: 18 (b) In this section, 19 (1) "order" means a judicial order, nonjudicial order, the result of the 20 settlement of an account of a fiduciary under a procedure authorized by AS 13.06 - 21 13.36 or AS 13.38, and a settlement agreement resulting from a proceeding; 22 (2) "proceeding" means a judicial proceeding, nonjudicial proceeding, 23 the settlement of an account of a fiduciary under a procedure authorized by AS 13.06 - 24 13.36 or AS 13.38, and a settlement negotiation, even if the settlement negotiation 25 does not involve a judicial or nonjudicial third party who decides or facilitates a 26 settlement. 27 * Sec. 8. AS 13.36.072 is amended by adding a new subsection to read: 28 (c) Notwithstanding the other provisions of this section, if the terms of a trust 29 instrument provide for the appointment of more than one trustee but confer on one or 30 more of the trustees, to the exclusion of other trustees, the power to direct or prevent 31 specified actions of other trustees, the excluded trustees shall act in accordance with
01 the exercise of the power. An excluded trustee under this subsection is not liable, 02 individually or as a fiduciary, for a consequence that results from complying with the 03 exercise of the power, regardless of the information available to the excluded trustee. 04 An excluded trustee does not have an obligation to review, inquire, investigate, or 05 make recommendations or evaluations with respect to the exercise of the power. A 06 trustee having the power is liable to the beneficiaries as a fiduciary with respect to the 07 exercise of the power as if the excluded trustees were not in office and has the 08 exclusive obligation to account to and to defend an action brought by the beneficiaries 09 with respect to the exercise of the power. In this subsection, "power" means the power 10 to direct or prevent specified actions by other trustees. 11 * Sec. 9. AS 13.36.157 is repealed and reenacted to read: 12 Sec. 13.36.157. Exercise of power of appointment. (a) An authorized trustee 13 with unlimited discretion to invade trust principal may appoint part or all of that 14 principal to a trustee of an appointed trust for, and only for the benefit of, one or more 15 current beneficiaries of the invaded trust to the exclusion of other current 16 beneficiaries. A permissible appointee of a power of appointment held by a 17 beneficiary of the appointed trust is not considered a beneficiary of the appointed trust, 18 regardless of whether the permissible appointee is a current beneficiary or a successor 19 and remainder beneficiary. 20 (b) An authorized trustee exercising the power under (a) of this section may 21 grant a discretionary power of appointment, including a presently exercisable power of 22 appointment, in the appointed trust to one or more of the current beneficiaries of the 23 invaded trust, to the extent that the beneficiary who is granted the power to appoint is 24 authorized to receive the principal outright under the terms of the invaded trust. A 25 permissible appointee is not limited to the beneficiaries of the invaded trust. 26 (c) Under (a) and (b) of this section, if the beneficiaries of the invaded trust 27 are described by a class, the beneficiaries of the appointed trust may include present or 28 future members of that class. 29 (d) An authorized trustee with the power to invade trust principal but without 30 unlimited discretion may appoint part or all of the principal of the trust to a trustee of 31 an appointed trust if the current beneficiaries of the appointed trust are the same as the
01 current beneficiaries of the invaded trust and the successor and remainder beneficiaries 02 of the appointed trust are the same as the successor and remainder beneficiaries of the 03 invaded trust. The shares of the current beneficiaries of the appointed trust must be the 04 same as the shares of the current beneficiaries of the invaded trust, and the shares of 05 the successor and remainder beneficiaries of the appointed trust must be the same as 06 the shares of the successor and remainder beneficiaries of the invaded trust. 07 (e) If the authorized trustee exercises the power under (d) of this section, the 08 appointed trust must include the same standard authorizing the trustee to distribute the 09 income or invade the principal of the appointed trust as the standard in the invaded 10 trust. However, the standard authorizing the trustee to distribute the income or invade 11 the principal of the appointed trust may be changed if the trustee appoints to an 12 appointed trust that is a special needs trust, a pooled trust, or a third-party trust. 13 (f) If an authorized trustee exercises the power under (d) and (e) of this section 14 to extend the duration of the appointed trust beyond the duration of the invaded trust 15 for any period after the invaded trust would have otherwise terminated under the 16 provisions of the invaded trust, the appointed trust, in addition to the language 17 required to be included in the appointed trust under (e) of this section, may also 18 provide an additional trustee with unlimited discretion to invade the principal of the 19 appointed trust during the extended duration. The trustee with unlimited discretion 20 continues to be subject to the restrictions in (d) - (h) of this section. 21 (g) Under (d) - (f) of this section, if the beneficiaries of the invaded trust are 22 described by a class, the beneficiaries of the appointed trust include present or future 23 members of that class. 24 (h) If the authorized trustee exercises the power under (d) - (g) of this section 25 and if the invaded trust grants a power of appointment to a beneficiary of the trust, the 26 appointed trust must grant this power of appointment in the appointed trust, and the 27 class of permissible appointees shall be the same as in the invaded trust. 28 * Sec. 10. AS 13.36 is amended by adding new sections to read: 29 Sec. 13.36.158. Additional provisions relating to exercise of a power of 30 appointment. (a) An exercise of the power to invade trust principal under 31 AS 13.36.157 is the exercise of a special power of appointment.
01 (b) The appointed trust to which an authorized trustee appoints the assets of 02 the invaded trust under AS 13.36.157 may have a duration that is longer than the 03 duration set out in the invaded trust. 04 (c) If an authorized trustee has unlimited discretion to invade the principal of a 05 trust and if the same trustee or another trustee has a power, not dependent on unlimited 06 discretion, to invade principal under the trust instrument, the authorized trustee having 07 unlimited discretion may exercise the power of appointment under AS 13.36.157(a) - 08 (c). 09 (d) An authorized trustee may exercise the power to appoint in favor of an 10 appointed trust under AS 13.36.157 whether or not there is a current need to invade 11 principal under the terms of the invaded trust. 12 (e) An authorized trustee exercising the power under AS 13.36.157 - 13 13.36.159 has a fiduciary duty to exercise the power in the best interests of one or 14 more proper objects of the exercise of the power and as a prudent person would 15 exercise the power under the prevailing circumstances. The authorized trustee may not 16 exercise the power under AS 13.36.157 - 13.36.159 if there is substantial evidence of a 17 contrary intent of the settlor and it cannot be established that the settlor would be 18 likely to have changed this intention under the circumstances existing at the time the 19 trustee exercises the power. The provisions of the invaded trust may not be viewed 20 alone as substantial evidence of a contrary intent of the settlor unless the invaded trust 21 expressly prohibits the exercise of the power in the manner intended by the authorized 22 trustee. 23 (f) The provisions of AS 13.36.157 - 13.36.159 may not be construed to 24 abridge the right of a trustee to appoint property further in trust under the terms of the 25 governing instrument of a trust, another provision of law, or common law, or as 26 directed by a court having jurisdiction over the trust. 27 (g) Nothing in AS 13.36.157 - 13.36.159 creates or implies a duty to exercise 28 a power to invade principal. An inference of impropriety may not be made, and 29 liability is not incurred, as a result of an authorized trustee not exercising the power 30 conferred under AS 13.36.157. 31 (h) A power authorized by AS 13.36.157 may be exercised, subject to the
01 provisions of AS 13.36.159(a), unless expressly prohibited by the terms of the 02 governing instrument. A general prohibition against amending or revoking the invaded 03 trust and a provision that constitutes a spendthrift clause do not preclude the exercise 04 of a power under AS 13.36.157. 05 (i) An authorized trustee may not exercise a power authorized by 06 AS 13.36.157 to 07 (1) reduce, limit, or modify a beneficiary's current right to a mandatory 08 distribution of income or principal, a mandatory annuity or unitrust interest, a right to 09 withdraw a percentage of the value of the trust, or a right to withdraw a specified 10 dollar amount, if the mandatory right has come into effect with respect to the 11 beneficiary, but the mandatory right may be reduced, limited, or modified during any 12 extended duration of the trust; however, notwithstanding the other provisions in this 13 paragraph, but subject to the other limitations in AS 13.36.157 - 13.36.159, an 14 authorized trustee may exercise a power authorized by AS 13.36.157 to appoint to an 15 appointed trust that is a special needs trust, a pooled trust, or a third-party trust; 16 (2) decrease or indemnify against a trustee's liability or exonerate a 17 trustee from liability for failure to exercise reasonable care, diligence, and prudence 18 unless the court having jurisdiction over the trust specifies otherwise; 19 (3) eliminate a provision granting another person the right to remove 20 or replace the authorized trustee exercising the power under AS 13.36.157 unless a 21 court having jurisdiction over the trust specifies otherwise; 22 (4) fix as binding and conclusive the value of an asset for purposes of 23 distribution, allocation, or otherwise; or 24 (5) jeopardize 25 (A) the deduction or exclusion originally claimed with respect 26 to a contribution to the invaded trust that qualified for the annual exclusion 27 under 26 U.S.C. 2503(b), the marital deduction under 26 U.S.C. 2056(a) or 26 28 U.S.C. 2523(a), or the charitable deduction under 26 U.S.C. 170(a), 26 U.S.C. 29 642(c), 26 U.S.C. 2055(a), or 26 U.S.C. 2522(a) (Internal Revenue Code); 30 (B) the qualification of a transfer as a direct skip under 26 31 U.S.C. 2642(c) (Internal Revenue Code);
01 (C) the election to treat a corporation as a subchapter S 02 corporation under 26 U.S.C. 1362 (Internal Revenue Code); or 03 (D) another specific tax benefit for which a contribution 04 originally qualified for income, gift, estate, or generation-skipping transfer tax 05 purposes under 26 U.S.C. (Internal Revenue Code). 06 (j) Before exercising the power under AS 13.36.157, an authorized trustee 07 shall consider the tax implications of the exercise of the power. 08 (k) An authorized trustee may not exercise a power described in AS 13.36.157 09 - 13.36.159 in violation of the limitations on validity in AS 34.27.051 or 34.27.100, or 10 the restrictions on exercising certain powers in AS 13.36.153 by trustees who are not 11 independent. A violation voids the entire exercise of the power unless the exercise is 12 modified to correct the violation. 13 (l) Unless a court having jurisdiction over the trust directs otherwise, an 14 authorized trustee may not exercise a power authorized by AS 13.36.157 to change the 15 provisions regarding the determination of the compensation of a trustee. The 16 commissions or other compensation payable to the trustees of the invaded trust may 17 continue to be paid to the trustees of the appointed trust during the term of the 18 appointed trust and shall be determined in the same manner as for the invaded trust. 19 (m) A trustee may not receive a payment, a commission, or other 20 compensation for appointing property from the invaded trust to an appointed trust 21 under AS 13.36.157. However, a trustee may be compensated at a reasonable rate for 22 the time spent considering and implementing the exercise of a power to appoint. 23 (n) Unless the invaded trust expressly provides otherwise, the provisions in 24 AS 13.36.157 - 13.36.159 apply to 25 (1) a trust, whether testamentary or inter vivos, governed by the laws 26 of this state, including a trust whose governing law has been changed to the laws of 27 this state; and 28 (2) a trust that has a trustee who is an individual domiciled in this state, 29 or a trustee that is an entity having an office in this state, if a majority of the trustees 30 select this state as the location for the primary administration of the trust and the 31 selection is made by an instrument in writing that is signed and acknowledged by a
01 majority of the trustees; the instrument exercising this selection shall be kept with the 02 records of the invaded trust. 03 (o) In this section, "internal revenue code" means the Internal Revenue Code 04 of the United States (26 U.S.C.) as it exists on the effective date of this Act and as it is 05 amended from time to time. 06 Sec. 13.36.159. Implementation of power of appointment. (a) Unless the 07 authorized trustee provides otherwise, the appointment of 08 (1) all of the assets making up the principal of the invaded trust to an 09 appointed trust includes subsequently discovered assets of the invaded trust and 10 undistributed principal of the invaded trust acquired after the appointment to the 11 appointed trust; 12 (2) a part but not all of the assets making up the principal of the 13 invaded trust to an appointed trust may not include subsequently discovered assets 14 belonging to the invaded trust or principal paid to or acquired by the invaded trust 15 after the appointment to the appointed trust; those subsequently discovered assets 16 remain the assets of the invaded trust. 17 (b) The exercise of the power to appoint to an appointed trust under 18 AS 13.36.157 shall be evidenced by an instrument in writing that is signed, dated, and 19 acknowledged by the authorized trustee. The exercise of the power is effective 30 days 20 after the date of service of the instrument as specified in (d) of this section, unless the 21 persons entitled to notice consent in writing to a sooner effective date. 22 (c) An authorized trustee may exercise the power authorized by AS 13.36.157 23 without the consent of the settlor or a person interested in the invaded trust and 24 without court approval. However, an authorized trustee may seek court approval for 25 the exercise. When seeking court approval, notice shall be sent to all qualified 26 beneficiaries. 27 (d) A copy of the invaded trust, the appointed trust, and the instrument 28 exercising the power shall be delivered to 29 (1) the settlor, if living, of the invaded trust; 30 (2) a person having the right, under the terms of the invaded trust, to 31 remove or replace the authorized trustee exercising the power under AS 13.36.157;
01 and 02 (3) a qualified beneficiary or a person who may represent and bind a 03 qualified beneficiary under AS 13.06.120. 04 (e) Notice under (d) of this section to a qualified beneficiary is not required if 05 the settlor has exempted the authorized trustee from providing notification or 06 information to beneficiaries under AS 13.36.080(b). Notice under (d) of this section 07 shall be provided under AS 13.06.110. 08 (f) The instrument exercising the power must state whether the appointment is 09 of all or part of the assets making up the principal of the invaded trust and, if a part, 10 the approximate percentage of the value of the principal of the invaded trust that is the 11 subject of the appointment. A failure to state whether the appointment is of all or part 12 of the assets creates a presumption that only part of the assets is to be appointed. 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. 11. 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 a member of the class, to whom a trustee may distribute 06 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 if the right is not restricted by an ascertainable standard under 26 C.F.R. 27 25.2514-1. 28 * Sec. 12. AS 13.36.225(a) is amended to read: 29 (a) Except as otherwise provided in (b) of this section and AS 13.36.273, a 30 trustee who invests and manages trust assets owes a duty to the beneficiaries of the 31 trust to comply with the prudent investor rule set out in AS 13.36.230 - 13.36.290.
01 * Sec. 13. AS 13.36 is amended by adding a new section to read: 02 Sec. 13.36.273. Trustee duties relating to insurance. (a) With respect to a 03 contract for life insurance acquired or retained for a trust on the life of a qualified 04 person, a trustee does not have a duty to determine whether the contract was procured 05 or effected in accordance with AS 21.42.020 unless the trust instrument provides 06 otherwise or unless the trustee applied for or accepted ownership of a contract of life 07 insurance and had knowledge that 08 (1) when the contract of life insurance was issued, the benefits were 09 not payable to a person specified in AS 21.42.020; or 10 (2) the contract was purchased with resources or guarantees directly or 11 indirectly provided by a person who, when the contract was entered into, did not have 12 an insurable interest in the insured, and, when the contract was entered into there was 13 a verbal or written arrangement, agreement, or plan with a third party to transfer 14 ownership of the policy or the policy benefits in a manner that would violate the law 15 of this state. 16 (b) With respect to a contract for life insurance acquired or retained for a trust 17 on the life of a qualified person, if this subsection applies under (c) of this section, a 18 trustee does not have a duty to 19 (1) determine whether a contract of life insurance is a proper 20 investment; 21 (2) investigate the financial strength of the person issuing the life 22 insurance policy; 23 (3) determine whether to exercise a policy option available under the 24 contract; 25 (4) diversify the contract or the assets of the trust with respect to the 26 contract; or 27 (5) inquire about or investigate the health or financial condition of an 28 insured. 29 (c) Unless the trust instrument provides otherwise, (b) of this section applies 30 to a trustee if 31 (1) the trust instrument refers to this section and makes this section
01 applicable to contracts for life insurance held by the trust; or 02 (2) the trustee notifies the qualified beneficiaries or a person who may 03 represent and bind the qualified beneficiaries under AS 13.06.120 that the trustee is 04 electing to have this section apply to a contract for life insurance held by the trust. 05 (d) The notice provided under (c)(2) of this section must include a copy or 06 restatement of (b) of this section and shall be provided 07 (1) by mailing a copy of the notice by certified, registered, or ordinary 08 first-class mail addressed to the person being notified at the post office address given 09 in the person's demand for notice, if any, or at the person's office or place of residence, 10 if known; 11 (2) by delivering a copy of the notice personally to the person being 12 notified; or 13 (3) if the address or identity of the person is not known and cannot be 14 ascertained with reasonable diligence, by publishing, at least once a week for three 15 consecutive weeks, a copy of the notice in a newspaper having general circulation in 16 the judicial district where one of the trustees is located. 17 (e) If, within 30 days after a person receives notice under (d)(1) or (2) of this 18 section or 30 days after the last date of publication of the notice under (d)(3) of this 19 section, a person delivers to the trustee a written objection to the application of (b) of 20 this section, (b) of this section does not apply until the objection is withdrawn. 21 (f) Under (a) and (b) of this section, the trustee is not liable to the beneficiaries 22 of the trust or to another person for a loss sustained with respect to a life insurance 23 contract to which (a) and (b) of this section apply. 24 (g) Notwithstanding the other provisions of this section, unless the duties have 25 been delegated to another person under AS 13.36.270, (a) and (b) of this section do 26 not apply to a contract for life insurance purchased from an affiliate of a trustee or for 27 which a trustee or an affiliate of the trustee receives a commission. In this subsection, 28 "affiliate" means a person who controls, is controlled by, or is under common control 29 with the trustee. 30 (h) A trustee who performs fiduciary or advisory services related to a policy of 31 life insurance to which (a)(1) or (2) of this section applies may not be compensated for
01 performing the services to which (a)(1) or (2) of this section applies. 02 (i) In this section, "qualified person" means a person who 03 (1) is an insured or a proposed insured under a policy of life insurance 04 or the spouse of that person; and 05 (2) provides 06 (A) the actual funds used to acquire or pay the premiums for 07 the policy; or 08 (B) assets the income or principal of which are used to acquire 09 or pay the premiums for the policy. 10 * Sec. 14. AS 13.36.370(a) is amended to read: 11 (a) A trust instrument may provide for the appointment of a 12 [DISINTERESTED THIRD PARTY TO ACT AS A] trust protector. 13 * Sec. 15. AS 13.36.375 is amended by adding a new subsection to read: 14 (c) Notwithstanding (b) of this section, if, by the terms of the trust instrument, 15 a trustee is designated to follow the directions of an advisor who is not designated in 16 the trust instrument as being a trustee, the trustee who, by the terms of the trust 17 instrument, is required to follow the directions of the advisor is not liable, individually 18 or as a fiduciary, to a beneficiary for a consequence of the trustee's compliance with 19 the advisor's directions, regardless of the information available to the trustee, and the 20 trustee does not have an obligation to review, inquire, investigate, or make 21 recommendations or evaluations with respect to the exercise of a power of the trustee 22 if the exercise of the power complies with the directions given to the trustee. An 23 advisor under this subsection is liable to the beneficiaries as a fiduciary with respect to 24 the exercise of the advisor's directions by a trustee as if the trustee were not in office, 25 and the advisor has the exclusive obligation to account to the beneficiaries and to 26 defend an action brought by the beneficiaries with respect to the exercise of the 27 advisor's directions by the trustee. 28 * Sec. 16. AS 13.38.200(b) is amended to read: 29 (b) In exercising a discretionary power of administration regarding a matter 30 within the scope of this chapter, whether granted by the governing instrument or this 31 chapter, including AS 13.38.210 and 13.38.300 - 13.38.435 [13.38.300 - 13.38.410], a
01 fiduciary shall administer a trust or estate impartially based on what is fair and 02 reasonable to all of the beneficiaries, except to the extent that the governing 03 instrument clearly manifests an intention that the fiduciary shall or may favor one or 04 more of the beneficiaries. A determination in accordance with this chapter is presumed 05 to be fair and reasonable to all of the beneficiaries. 06 * Sec. 17. AS 13.38.210(c) is amended to read: 07 (c) A trustee may not make an adjustment under this section if 08 (1) the adjustment would diminish the income interest in a trust that 09 requires all of the income to be paid at least annually to a spouse and for which a 10 federal estate tax or gift tax marital deduction would be allowed, in whole or in part, if 11 the trustee did not have the power to make the adjustment; the prohibition in this 12 paragraph does not apply to a trust after the trustee determines that the marital 13 deduction has not been claimed or has not been allowed; 14 (2) the adjustment would reduce the actuarial value of the income 15 interest in a trust to which a person transfers property with the intent to qualify for a 16 federal gift tax exclusion; 17 (3) the adjustment would change the amount payable to a beneficiary 18 as a fixed annuity or a fixed fraction of the value of the trust assets; 19 (4) the adjustment is from any amount that is permanently set aside for 20 charitable purposes under the governing instrument and for which a federal estate or 21 gift tax charitable deduction has been taken, unless both income and principal are 22 permanently set aside for charitable purposes under the governing instrument; 23 (5) possessing or exercising the power to make an adjustment would 24 cause an individual to be treated as the owner of all or part of the trust for federal 25 income tax purposes, and the individual would not be treated as the owner if the 26 trustee did not possess the power to make an adjustment; 27 (6) possessing or exercising the power to make an adjustment would 28 cause all or part of the trust assets to be subject to federal estate or gift tax with respect 29 to an individual, and the assets would not be subject to federal estate or gift tax with 30 respect to the individual if the trustee did not possess the power to make an 31 adjustment;
01 (7) the trustee is a beneficiary of the trust; or 02 (8) the trust has been converted to a unitrust under AS 13.38.300 - 03 13.38.435 [AS 13.38.300 - 13.38.410]. 04 * Sec. 18. AS 13.38.300 is amended to read: 05 Sec. 13.38.300. Power to convert to unitrust. Unless expressly prohibited by 06 the governing instrument, a trustee may release the power to adjust under 07 AS 13.38.210 and may convert a trust into a unitrust as described in AS 13.38.300 - 08 13.38.435 [AS 13.38.300 - 13.38.410] if 09 (1) the trustee determines that the conversion will enable the trustee to 10 better carry out the intent of the settlor or testator and the purposes of the trust; 11 (2) the trustee gives written notice of the trustee's intention to release 12 the power to adjust, of the trustee's intention to convert the trust into a unitrust, of the 13 unitrust percentage selected, of the smoothing period selected, and of how the 14 unitrust will operate, including what initial decisions the trustee intends to [WILL] 15 make under AS 13.38.340 [THIS SECTION], to all the sui juris beneficiaries who 16 (A) are currently eligible to receive income from the trust; 17 (B) would be eligible, if a power of appointment were not 18 exercised, to receive income from the trust if the interest of all of the 19 beneficiaries eligible to receive income under (A) of this paragraph were to 20 terminate immediately before the giving of the notice; and 21 (C) would, if a power of appointment were not exercised, 22 receive a distribution of principal if the trust were to terminate immediately 23 before the giving of the notice; 24 (3) there are at least one sui juris beneficiary under (2)(A) of this 25 section and at least one sui juris beneficiary under (2)(B) or (C) of this section; and 26 (4) a sui juris beneficiary does not object to the conversion to a unitrust 27 in a writing delivered to the trustee within 60 days after the mailing of the notice under 28 (2) of this section. 29 * Sec. 19. AS 13.38.310(a) is amended to read: 30 (a) A trustee may petition the court to approve the conversion to a unitrust if 31 (1) a beneficiary timely objects to the conversion to a unitrust; [OR]
01 (2) there is not a sui juris beneficiary who is currently eligible under 02 AS 13.38.300(2)(A) or who would be eligible under AS 13.38.300(2)(B) or (C); or 03 (3) the trustee is a beneficiary [AS 13.38.300(2)(A), AND THERE 04 IS NOT A SUI JURIS BENEFICIARY WHO IS ELIGIBLE UNDER 05 AS 13.38.300(2)(B) OR (C)]. 06 * Sec. 20. AS 13.38.330(b) is amended to read: 07 (b) After a trust has been converted to a unitrust, "income" in the governing 08 instrument means an annual distribution equal to the amount produced by the 09 application of a fixed unitrust percentage established under (d) of this section to 10 [FOUR PERCENT OF] the net fair market value, as determined annually, of the trust's 11 assets, whether the assets would be considered income or principal under other 12 provisions of this chapter, averaged over the lesser of 13 (1) the preceding years in the smoothing period selected by the 14 trustee; or 15 (2) the period during which the trust has been in existence. 16 * Sec. 21. AS 13.38.330 is amended by adding a new subsection to read: 17 (d) The unitrust percentage to be used in determining the amount to be 18 distributed from a unitrust to a beneficiary must be a reasonable current return from 19 the unitrust of at least three percent and not more than five percent, taking into account 20 the intentions of the trustor of the unitrust as expressed in the governing instrument, 21 the needs of the beneficiaries, general economic conditions, projected current earnings 22 for the unitrust, projected appreciation for the unitrust, and the effect of projected 23 inflation on the unitrust. 24 * Sec. 22. AS 13.38.340 is amended to read: 25 Sec. 13.38.340. Trustee's discretionary powers regarding unitrust. The 26 trustee may, in the trustee's discretion, from time to time, determine 27 (1) the effective date of a conversion to a unitrust; 28 (2) the provisions for prorating a unitrust distribution for a short year 29 in which a beneficiary's right to payments commences or ceases; 30 (3) the frequency of unitrust distributions during the year; 31 (4) the effect of other payments from or contributions to the trust on
01 the trust's valuation; 02 (5) whether to value the trust's assets annually or more frequently; 03 (6) whether to use a smoothing period of three, four, or five years; 04 (7) what valuation dates to use; 05 (8) [(7)] how frequently to value nonliquid assets and whether to 06 estimate their value; 07 (9) [(8)] whether to omit trust property occupied or possessed by a 08 beneficiary from the calculations; and 09 (10) [(9)] other matters necessary for the proper functioning of the 10 unitrust. 11 * Sec. 23. AS 13.38.350(b) is amended to read: 12 (b) Unless otherwise provided by the governing instrument, a unitrust 13 distribution shall be considered to have been paid from net income as net income 14 would be determined if the trust were not a unitrust. To the extent net income is 15 insufficient, the unitrust distribution shall be considered to have been paid from 16 ordinary income that is allocable under federal income tax rules to net income as 17 determined for a unitrust. To the extent that the ordinary income is insufficient, 18 the unitrust distribution is considered to have been paid from net realized short- 19 term capital gains. To the extent net income, ordinary income, and net realized short- 20 term capital gains are insufficient, the unitrust distribution shall be considered to have 21 been paid from net realized long-term capital gains. To the extent net income, 22 ordinary income, and net realized short-term and long-term capital gains are 23 insufficient, the unitrust distribution shall be paid from the principal of the trust. 24 * Sec. 24. AS 13.38.360 is amended to read: 25 Sec. 13.38.360. Court orders regarding unitrust. The trustee or, if the trustee 26 declines to petition the court, a beneficiary may petition the court to 27 [(1) SELECT A PAYOUT PERCENTAGE DIFFERENT THAN 28 FOUR PERCENT; 29 (2)] provide for a distribution of net income, as would be determined if 30 the unitrust [TRUST] were not a unitrust, in excess of the unitrust distribution if the 31 distribution is necessary to preserve a tax benefit [;
01 (3) AVERAGE THE VALUATION OF THE TRUST'S NET ASSETS 02 OVER A PERIOD OTHER THAN THREE YEARS]. 03 * Sec. 25. AS 13.38.390(b) is amended to read: 04 (b) If AS 13.38.380(a)(3), (4), or (6) applies to all the trustees, the trustees 05 may petition the court to direct a conversion. In the alternative, the trustees may 06 appoint an independent person who shall be granted the authority, while acting 07 in a fiduciary capacity, to make decisions in place of the trustees relating to a 08 conversion, reconversion, and the exercise of discretionary powers under 09 AS 13.38.340. 10 * Sec. 26. AS 13.38.400 is amended to read: 11 Sec. 13.38.400. Reconversion from a unitrust. A trustee may reconvert a 12 trust that has been converted into a unitrust under AS 13.38.300 by following the same 13 procedures provided in AS 13.38.300 - 13.38.435 [AS 13.38.300 - 13.38.410] for 14 converting a trust into a unitrust. If a unitrust is reconverted under this section, the 15 trustee's power to adjust under AS 13.38.210 applies to the trustee after the 16 reconversion. 17 * Sec. 27. AS 13.38 is amended by adding new sections to article 2 to read: 18 Sec. 13.38.420. Express total return unitrusts. (a) This section applies to a 19 trust that, by its governing instrument, requires the distribution, at least annually, of a 20 unitrust amount. 21 (b) The trustee of an express total return unitrust may determine the unitrust 22 amount by reference to the net fair market value of the unitrust's assets in one or more 23 years. 24 (c) Distribution of a unitrust amount is considered a distribution of all of the 25 income of an express total return unitrust and is considered to be an income interest. 26 (d) Distribution of a unitrust amount is considered to be a reasonable 27 apportionment of the total return of an express total return unitrust. 28 (e) An express total return unitrust that provides for a distribution based on a 29 unitrust percentage in excess of five percent of the net fair market value of the unitrust 30 assets a year is considered a distribution of all of the income of the unitrust and a 31 distribution of principal of the unitrust to the extent that the distribution exceeds five
01 percent a year. 02 (f) The governing instrument of an express total return unitrust may grant 03 discretion to the trustee to adopt a consistent practice of treating capital gains as part 04 of the unitrust amount to the extent that the unitrust amount exceeds the income 05 determined as if the trust were not an express total return unitrust, or the governing 06 instrument may specify the ordering of classes of income. 07 (g) Unless the terms of the express total return unitrust specifically provide 08 otherwise, a unitrust amount is considered a distribution made from the following 09 sources, which are listed in order of priority: 10 (1) net income determined as if the trust were not a unitrust; 11 (2) ordinary income not allocable to net income; 12 (3) net realized short-term capital gains; 13 (4) net realized long-term capital gains; and 14 (5) the principal of the trust estate. 15 (h) The governing instrument of an express total return unitrust may provide 16 that the trustee may exclude assets used by the unitrust's beneficiary, including a 17 residence property or tangible personal property, from the net fair market value of the 18 unitrust's assets for the purposes of computing the unitrust amount. These assets may 19 be considered equivalent to income or to the unitrust amount. 20 (i) In this section, 21 (1) "express total return unitrust" means a trust that, by its governing 22 instrument, requires the distribution, at least annually, of a unitrust amount; 23 (2) "unitrust amount" means an amount equal to a fixed percentage of 24 not less than three nor more than five percent each year of the net fair market value of 25 the annual value of the trust's assets distributed from an express total return unitrust to 26 a beneficiary. 27 Sec. 13.38.430. Power to treat gains as part of distribution of principal. 28 Unless prohibited by the unitrust's governing instrument or specifically addressed by 29 AS 13.38.350 or 13.38.420, the trustee of a unitrust may treat gains from the sale of 30 capital assets of the unitrust to be part of a distribution of principal to a beneficiary, 31 and, if the trustee treats those gains as part of a distribution of principal to a
01 beneficiary, the trustee shall treat those gains consistently on the unitrust's books, 02 records, and tax returns as part of a distribution to a beneficiary. 03 Sec. 13.38.435. Definitions. In AS 13.38.300 - 13.38.435, 04 (1) "smoothing period" means the period of years over which the fair 05 market value of the assets of a unitrust are averaged; 06 (2) "unitrust percentage" means the unitrust percentage established 07 under AS 13.38.330(d). 08 * Sec. 28. AS 13.38.690(a) is repealed and reenacted to read: 09 (a) A trustee shall allocate 10 (1) to income that portion of a payment that equals the greater of the 11 following: 12 (A) the portion that the payor characterizes as interest, a 13 dividend, a remittance in place of interest, or a remittance in place of a 14 dividend; or 15 (B) the portion that is characterized as imputed interest for 16 federal income purposes; 17 (2) to principal that portion of a payment that remains after the 18 allocation is made under (1) of this subsection. 19 * Sec. 29. AS 13.38.690(b) is amended to read: 20 (b) If no [A] part of a payment under a contract calling for equal installments 21 over a fixed period of time is [NOT] allocable to income under the provisions of (a) of 22 this section, the difference between the trust's acquisition value of the contract and the 23 total expected return is [SHALL BE] considered to be interest. The trustee shall 24 allocate to income the portion of each payment equivalent to interest on the then 25 unpaid principal balance at the rate specified in the contract or at a rate necessary to 26 amortize the difference between the expected return and the acquisition value, where 27 that rate is readily ascertainable by the trustee. 28 * Sec. 30. AS 13.38.690(c) is amended to read: 29 (c) If no [THERE IS NOT A] portion of a payment from a separate fund held 30 exclusively for the benefit of the trust [THAT] is allocable to income under (a) or (b) 31 of this section, but the internal net income of the fund determined as if the fund were a
01 separate trust subject to AS 13.38.200 - 13.38.410, 13.38.500 - 13.38.690, or 02 13.38.710 - 13.38.860 [AS 13.38.500 - 13.38.860] is readily ascertainable by the 03 trustee, the internal net income of the fund is considered to be the income earned 04 by the fund, and the portion of the payment equal to the then undistributed net 05 income of the fund realized since the trust acquired its interest in the fund is 06 considered to be a distribution of that internal net income of the fund and shall be 07 allocated to the trust income account. The balance of the payment described in this 08 subsection shall be allocated to principal. The power to adjust under AS 13.38.210, 09 the power to convert to a unitrust under AS 13.38.300, and the provisions of 10 AS 13.38.420 apply to retirement benefits covered by this subsection that are 11 payable to a trust. Those powers and provisions may be exercised by the payee 12 trustee or in the governing instrument for the retirement benefits separately and 13 independently from the exercise by the payee trustee or in the governing 14 instrument of those powers and provisions for the trust, as if the retirement 15 benefits and the trust were separate trusts subject to this chapter. 16 * Sec. 31. AS 13.38.690(d) is amended to read: 17 (d) A trustee shall allocate 10 percent of the part of the payment that is 18 required to be made during the accounting period to income and the balance to 19 principal if there is no [NOT A] part of the payment that is allocable to income under 20 (a) - (c) of this section and all or part of the payment is required to be made. The 21 trustee shall allocate the entire payment to principal if no [A] part of a payment is 22 [NOT] required to be made or the payment received is the entire amount to which the 23 trustee is entitled. In this subsection, a payment is not "required to be made" to the 24 extent that it is made because the trustee exercises a right of withdrawal. 25 * Sec. 32. AS 13.38.690(e) is amended to read: 26 (e) If, to obtain a federal estate or gift tax marital deduction for a trust, the 27 trustee must allocate more of a payment to income than provided for by this section, 28 the trustee shall allocate to income the additional amount necessary to obtain the 29 marital deduction [TO INCOME]. 30 * Sec. 33. AS 13.46.190 is amended to read: 31 Sec. 13.46.190. Termination of custodianship. The custodian shall transfer in
01 an appropriate manner the custodial property to the minor or to the minor's estate upon 02 the earlier of the 03 (1) minor's attainment of 21 years of age with respect to property 04 transferred under AS 13.46.030 or 13.46.040 unless the time of transfer of the 05 custodial property to the minor is changed under AS 13.46.195 or 13.46.197; 06 (2) minor's attainment of 18 years of age with respect to property 07 transferred under AS 13.46.050 or 13.46.060, unless the time of transfer of the 08 custodial property to the minor is changed under AS 13.46.197; 09 (3) time specified in the transfer under AS 13.46.080 if the time of 10 transfer of the custodial property to the minor is changed under AS 13.46.195 or 11 13.46.197; or 12 (4) minor's death. 13 * Sec. 34. AS 13.46 is amended by adding a new section to read: 14 Sec. 13.46.197. Extension of custodial term by custodian. (a) A custodian 15 may extend the custodial term under this section to an age older than the age that is 16 specified by this chapter or a transferring document made under AS 13.46.080, subject 17 to the right of the minor to compel immediate distribution under (c) of this section. 18 (b) To extend the custodial term under (a) of this section, the custodian shall 19 give the minor written notice of the custodian's intent to extend the custodial term. The 20 notice must specify the duration of the extension by indicating the new custodial term 21 and must inform the minor of the minor's right to compel immediate distribution under 22 (c) of this section. The custodian shall give the notice during the later of the following 23 periods: 24 (1) the six-month period that precedes the last day of the custodial 25 term; or 26 (2) the six-month period that begins on the minor's 18th birthday. 27 (c) Rather than permit the extension of the custodial term, the minor may 28 compel immediate distribution of all or part of the custodial property by giving written 29 notice to the custodian 30 (1) during the six-month period that begins on the day that is the last 31 day of the current custodial term; or
01 (2) within 90 days after receiving the custodian's notice under (b) of 02 this section. 03 (d) If a minor does not exercise the minor's right to compel distribution under 04 (c) of this section, the custodial term shall be extended as indicated in the custodian's 05 notice given under (b) of this section, and the minor may not compel the immediate 06 distribution of custodial property before the end of the custodial term, as extended. 07 (e) A custodian may extend the custodial term more than once under this 08 section. 09 (f) In this section, "custodial term" means the time provided in or allowed by 10 this chapter during which the custodian is directed to hold custodial property until the 11 property is transferred to the minor. 12 * Sec. 35. AS 13.46.990(11) is amended to read: 13 (11) "minor" means an individual who has not attained the age of 18 14 years, except that when used in reference to the beneficiary for whose benefit 15 custodial property is held or to be held, "minor" means an individual who has not 16 attained the age at which the custodian is required under AS 13.46.190, [AND] 17 13.46.195, and 13.46.197 to transfer the custodial property to the beneficiary; 18 * Sec. 36. AS 13 is amended by adding a new chapter to read: 19 Chapter 75. Disposition of Human Remains. 20 Sec. 13.75.010. Directions by decedent. (a) A person may provide directions 21 for the disposition of the person's remains by placing the directions in a disposition 22 document. The directions may include or be limited to designating an agent to control 23 the disposition of the person's remains. 24 (b) A disposition document must be signed by the person and acknowledged 25 before a notary public, and contain the form and contents required by AS 13.75.030. A 26 disposition document may be a separate document or it may be contained in another 27 document, including a will or prepaid funeral or burial contract. The disposition 28 document may be modified or revoked only by a subsequent disposition document that 29 complies with this subsection. 30 Sec. 13.75.020. Persons authorized to control disposition. (a) The following 31 persons, in the priority listed, may control disposition of a decedent's remains:
01 (1) a person designated in a disposition document as the disposition 02 agent for the decedent; 03 (2) a person serving, or nominated by the decedent in the decedent's 04 will to serve, as the personal representative of the decedent's estate, if the person is 05 acting according to the decedent's written instructions contained in the decedent's will; 06 (3) the individual who was the spouse of the decedent at the time of the 07 decedent's death; 08 (4) the sole surviving competent adult child of the decedent, or, if there 09 is more than one surviving competent adult child of the decedent, the majority of the 10 surviving competent adult children; fewer than one-half of the surviving competent 11 adult children may exercise the rights and duties of this section if these surviving adult 12 children use reasonable efforts to notify all other surviving competent adult children 13 that they are exercising these rights and duties and are not aware of any opposition by 14 one-half or more of all of the surviving competent adult children; 15 (5) the surviving competent parents of the decedent; if one of the 16 surviving competent parents is absent, the remaining competent parent may exercise 17 the rights and duties of this section after reasonable efforts have been unsuccessful in 18 locating the absent surviving competent parent; in this paragraph, "absent" means a 19 person who is unable to communicate decisions or participate in making decisions 20 regarding the disposition of a decedent's remains personally, telephonically, or through 21 electronic communication; 22 (6) the surviving competent adult person in the next degrees of 23 kindred, the two surviving competent adult persons of the same degree of kindred if 24 there are two, or, if there are more than two surviving competent adult persons of the 25 same degree of kindred, the majority of those persons; fewer than the majority of 26 surviving competent adult persons of the same degree of kindred may exercise the 27 rights and duties of this section if those persons use reasonable efforts to notify all 28 other surviving competent adult persons of the same degree of kindred that they are 29 exercising these rights and duties and are not aware of any opposition by one-half or 30 more of all surviving competent adult persons of the same degree of kindred; 31 (7) in the case of an indigent or another individual whose final
01 disposition is the responsibility of the state or a municipality, a public administrator, 02 medical examiner, coroner, or another public official charged with arranging the final 03 disposition of the decedent; or 04 (8) another person who is willing to assume legal and financial 05 responsibility. 06 (b) If a person takes control of the disposition under (a) of this section, the 07 person is liable for the reasonable costs of the disposition if the assets of the estate or 08 other available assets are not adequate to pay the costs of the disposition. 09 (c) In this section, 10 (1) "adult" means a person who is 18 years of age or older; 11 (2) "competent" means a person who does not suffer from disabilities 12 that prevent the person from managing the person's property or affairs. 13 Sec. 13.75.030. Form of disposition document. A disposition document must 14 be in substantially the following form: 15 DISPOSITION DOCUMENT 16 You can select Part 1, Part 2, or both, by completing the part(s) 17 you select, including providing any signatures indicated. Part 3 contains 18 general statements and a place for your signature. You must sign in 19 front of a notary. 20 PART 1. APPOINTMENT OF AGENT TO CONTROL 21 DISPOSITION OF REMAINS. If you appoint an agent, you and your 22 agent must complete this part as indicated, and the agent must sign this 23 part. 24 I, ______________, being of sound mind, wilfully and 25 voluntarily make known my desire that, on my death, the disposition of 26 my remains shall be controlled by _____________ (name of agent first 27 named below), and, with respect to that subject only, I appoint that 28 person as my agent. All decisions made by my agent with respect to the 29 disposition of my remains, including cremation, are binding. 30 ACCEPTANCE BY AGENT OF APPOINTMENT. 31 THE AGENT, AND EACH SUCCESSOR AGENT, BY
01 ACCEPTING THIS APPOINTMENT, AGREES TO AND ASSUMES 02 THE OBLIGATIONS PROVIDED IN THIS DOCUMENT. AN 03 AGENT MAY SIGN AT ANY TIME, BUT AN AGENT'S 04 AUTHORITY TO ACT IS NOT EFFECTIVE UNTIL THE AGENT 05 SIGNS BELOW TO INDICATE THE ACCEPTANCE OF 06 APPOINTMENT. ANY NUMBER OF AGENTS MAY SIGN, BUT 07 ONLY THE SIGNATURE OF THE AGENT ACTING AT ANY 08 TIME IS REQUIRED. 09 AGENT: 10 Name: ___________________________________________________ 11 Address: _________________________________________________ 12 Telephone Number: _________________________________________ 13 Signature Indicating Acceptance of Appointment: 14 _________________________________________________________ 15 Date of Signature: __________________________________________ 16 SUCCESSORS: 17 If my agent dies, becomes legally disabled, resigns, or refuses to 18 act, I appoint the following persons (each to act alone and successively, 19 in the order named) to serve as my agent to control the disposition of 20 my remains as authorized by this document: 21 (1) First Successor 22 Name: ___________________________________________________ 23 Address: _________________________________________________ 24 Telephone Number: _________________________________________ 25 Signature of First Successor Indicating Acceptance of Appointment: 26 _________________________________________________________ 27 Date of Signature: __________________________________________ 28 (2) Second Successor 29 Name: ___________________________________________________ 30 Address: _________________________________________________ 31 Telephone Number: _________________________________________
01 Signature of Second Successor Indicating Acceptance of Appointment: 02 _________________________________________________________ 03 Date of Signature: __________________________________________ 04 PART 2. DIRECTIONS FOR THE DISPOSITION OF MY 05 REMAINS. 06 Stated below are my directions for the disposition of my remains: 07 _________________________________________________________ 08 _________________________________________________________ 09 _________________________________________________________ 10 _________________________________________________________ 11 If the disposition of my remains is by cremation, then (pick one): 12 ( ) I do not wish to allow any of my survivors the option of 13 canceling my cremation and selecting alternative arrangements, 14 regardless of whether my survivors consider a change to be appropriate. 15 ( ) I wish to allow only the survivors I have designated below to 16 have the option of canceling my cremation and selecting alternative 17 arrangements, if they consider that a change to be appropriate: 18 _________________________________________________________ 19 _________________________________________________________ 20 _________________________________________________________ 21 _________________________________________________________ 22 PART 3. GENERAL PROVISIONS AND SIGNATURE. 23 WHEN DIRECTIONS BECOME EFFECTIVE. The directions, 24 including any appointment of an agent, in this disposition document 25 become effective on my death. 26 REVOCATION OF PRIOR APPOINTMENTS. I revoke any 27 prior appointment of any person to control the disposition of my 28 remains. 29 SIGNATURE OF PERSON MAKING DISPOSITION DOCUMENT 30 Signature: ________________________________________________ 31 Date of signature: __________________________________________
01 (Notary acknowledgment of signature) 02 Sec. 13.75.040. Agent's appointment. The person appointed as an agent in a 03 disposition document may sign the disposition document at any time, but the agent's 04 authority to act is not effective until the agent signs the instrument. 05 Sec. 13.75.050. Exercise of authority. If a person fails to exercise the person's 06 authority to control disposition under AS 13.75.020 within 48 hours after receiving 07 notification of the decedent's death or within 48 hours after the decedent's death, 08 whichever is earlier, the person may not control the disposition of the decedent's 09 remains, and the right to control the disposition of the decedent's remains passes to the 10 person who is next listed in priority under AS 13.75.020. If the person to whom the 11 right to control the disposition passes under this section fails to exercise the person's 12 authority to control the disposition within 48 hours after being notified that the 13 authority to control the disposition has passed to the person, the authority to control 14 the disposition passes to the person who is next listed in priority under AS 13.75.020. 15 Sec. 13.75.060. Certain persons prohibited from control. If a person is 16 charged with a felonious killing in connection with a decedent's death and if the 17 funeral director or the cemetery knows about the charge, then the person may not 18 control disposition, and the right to control disposition passes to the person who is 19 next listed in priority under AS 13.75.020. 20 Sec. 13.75.070. Prohibition of cremation; written instructions. A person 21 may not authorize cremation for a decedent's remains if a decedent has left directions 22 in a disposition document that the decedent does not wish to be cremated. 23 Sec. 13.75.080. Implementation of directions. (a) The person authorized to 24 control the disposition shall carry out the directions of the decedent to the extent that 25 the decedent's estate or the person is financially able to carry out the directions. 26 (b) Notwithstanding any other provision in AS 13.06 - 13.36 (Uniform 27 Probate Code), if a person provides directions in a disposition document that is 28 contained in a will, the directions shall be carried out immediately without the 29 necessity of probate. If the will is not probated or is declared invalid for testamentary 30 purposes, the directions are valid to the extent to which they have been acted on in 31 good faith.
01 Sec. 13.75.090. Misrepresentation; liability. If a person represents that the 02 person knows the identity of a decedent, and, with the intent to procure the disposition 03 of the decedent's remains, signs a statement, other than a death certificate, that 04 identifies the decedent, the person guarantees the identity of the decedent and is liable 05 for any damages that result, directly or indirectly, from that guarantee. 06 Sec. 13.75.100. Liability. (a) A disposition organization is not liable for 07 carrying out the directions of a decedent if the disposition organization carries out the 08 directions of a decedent or a person who establishes that the person is entitled to 09 control the disposition. 10 (b) This section may not be construed to reduce or eliminate the liability of a 11 disposition organization for its negligence or reckless acts. 12 Sec. 13.75.110. Disputes. (a) A person listed in AS 13.75.020 who is involved 13 in a dispute with one or more persons listed in AS 13.75.020 about which of the 14 persons has the authority to control disposition may bring an action in the superior 15 court to resolve the dispute. 16 (b) If there is a dispute with one or more persons listed in AS 13.75.020 about 17 which person has the authority to control disposition, a cemetery organization or 18 funeral establishment is not liable for refusing to accept, to inter, or otherwise to 19 dispose of the decedent's remains until the cemetery organization or funeral 20 establishment receives a court order or another suitable confirmation that the dispute 21 has been resolved. 22 Sec. 13.75.120. Exemptions. The disposition of the remains of a member of 23 the organized militia under AS 26.05.262, the disposition of the remains of a member 24 of the armed forces under AS 26.10.065(a), and the disposition of the remains of a 25 member of the United States Coast Guard under AS 26.10.065(b) are exempt from this 26 chapter. 27 Sec. 13.75.190. Definitions. In this chapter, 28 (1) "control" means the authority to control disposition; 29 (2) "directions" means 30 (A) instructions for the disposition of a person's remains; 31 (B) the appointment of an agent to handle the disposition of a
01 person's remains; or 02 (C) both (A) and (B) of this paragraph; 03 (3) "disposition" means disposition of a decedent's remains, including 04 cremation, but does not include an anatomical gift; in this paragraph, "anatomical gift" 05 has the meaning given in AS 13.52.390; 06 (4) "disposition document" means a disposition document authorized 07 by AS 13.75.010 08 (A) in which a person provides directions regarding the 09 disposition of the person's remains; and 10 (B) that complies with AS 13.75.030; 11 (5) "disposition organization" means 12 (A) a cemetery association formed under AS 10.30.010; 13 (B) a nonprofit cemetery corporation authorized by 14 AS 10.30.055; 15 (C) a person operating a crematory; 16 (D) a person operating a columbarium; 17 (E) a funeral home or other type of funeral establishment; 18 (F) a funeral director or an embalmer. 19 Sec. 13.75.195. Short title. This chapter may be cited as the Disposition of 20 Human Remains Act. 21 * Sec. 37. AS 21.09.210(m) is amended to read: 22 (m) The tax imposed under this section for a single [AN INDIVIDUAL] life 23 insurance policy or for a group or other type of policy that insures the life of one 24 or more individuals shall be computed at the rate of 25 (1) 2.7 percent of policy year premium up to $100,000; and 26 (2) one-tenth of one percent of policy year premium exceeding 27 $100,000. 28 * Sec. 38. AS 21.42.020 is amended by adding new subsections to read: 29 (e) Notwithstanding (a) of this section, a trustee, acting in a fiduciary capacity, 30 may procure or cause to be procured an insurance contract that is on the life or body of 31 an individual and under which the proceeds of the insurance contract are payable to
01 the trustee, acting in a fiduciary capacity, if 02 (1) the trustee, acting in a fiduciary capacity, owns the insurance 03 contract or the trust itself owns the insurance contract; 04 (2) on the date the contract is made, a settlor of the trust is the 05 individual insured, has an insurable interest in the individual insured, or would have 06 had an insurable interest in the individual insured if the settlor were living at the time 07 the contract was made; in this paragraph, "settlor" means a person, including a person 08 for whom a fiduciary or agent is acting, who executes the trust instrument; and 09 (3) the proceeds of the contract are primarily for the benefit of a trust 10 beneficiary who has an insurable interest in the individual insured, except that, if the 11 determination of the trust beneficiary's insurable interest is based on (d)(1) of this 12 section, the trust beneficiary's relation by blood or law must be within the third degree. 13 (f) A person who has an insurable interest in the life or body of an individual 14 may form a business firm that is substantially or solely for the purpose of purchasing, 15 holding, or administering an insurance contract on the life or body of the individual. In 16 this subsection, "firm" has the meaning given in AS 21.97.900, but also includes a 17 business trust and a joint venture. 18 * Sec. 39. AS 32.11.340(b) is amended to read: 19 (b) This section provides the exclusive remedy that a judgment creditor of a 20 general or limited partner or of the general or limited partner's assignee may use to 21 satisfy a judgment out of the judgment debtor's interest in the partnership. Other legal 22 or equitable remedies, including foreclosure on the general or limited partner's 23 partnership interest and a court order for directions, accounts, and inquiries that the 24 debtor general or limited partner might have made, are not available to the judgment 25 creditor attempting to satisfy the judgment out of the judgment debtor's interest in the 26 limited partnership and may not be ordered by a court. 27 * Sec. 40. AS 34.40.110(b) is amended to read: 28 (b) If a trust contains a transfer restriction allowed under (a) of this section, 29 the transfer restriction prevents a creditor existing when the trust is created or a person 30 who subsequently becomes a creditor from satisfying a claim out of the beneficiary's 31 interest in the trust, unless the creditor is a creditor of the settlor and
01 (1) the creditor establishes by clear and convincing evidence that the 02 settlor's transfer of property in trust was made with the intent to defraud that creditor, 03 and a cause of action or claim for relief with respect to the fraudulent transfer 04 complies with the requirements of (d) of this section; however, a settlor's expressed 05 intention to protect trust assets from a beneficiary's potential future creditors is not 06 evidence of an intent to defraud; 07 (2) the trust, except for an eligible individual retirement account trust, 08 provides that the settlor may revoke or terminate all or part of the trust without the 09 consent of a person who has a substantial beneficial interest in the trust and the interest 10 would be adversely affected by the exercise of the power held by the settlor to revoke 11 or terminate all or part of the trust; in this paragraph, "revoke or terminate" does not 12 include a power to veto a distribution from the trust, a testamentary or lifetime 13 nongeneral power of appointment or similar power, or a right to receive a distribution 14 of income or principal under (3)(A), (B), (C), or (D) of this subsection; 15 (3) the trust, except for an eligible individual retirement account trust, 16 requires that all or a part of the trust's income or principal, or both, must be distributed 17 to the settlor; however, this paragraph does not apply to a settlor's right to receive the 18 following types of distributions, which remain subject to the restriction provided by 19 (a) of this section until the distributions occur: 20 (A) income or principal from a charitable remainder annuity 21 trust or charitable remainder unitrust; in this subparagraph, "charitable 22 remainder annuity trust" and "charitable remainder unitrust" have the meanings 23 given in 26 U.S.C. 664 (Internal Revenue Code) [AS THAT SECTION 24 READS ON OCTOBER 8, 2003,] and as it may be amended; 25 (B) a percentage of the value of the trust each year as 26 determined from time to time under the trust instrument, but not exceeding the 27 amount that may be defined as income under AS 13.38 or under 26 U.S.C. 28 643(b) (Internal Revenue Code) [AS THAT SUBSECTION READS ON 29 OCTOBER 8, 2003,] and as it may be amended; 30 (C) the transferor's potential or actual use of real property held 31 under a qualified personal residence trust within the meaning of 26 U.S.C.
01 2702(c) (Internal Revenue Code) [AS THAT SUBSECTION READS ON 02 SEPTEMBER 15, 2004,] or as it may be amended in the future; or 03 (D) income or principal from a grantor retained annuity trust or 04 grantor retained unitrust that is allowed under 26 U.S.C. 2702 (Internal 05 Revenue Code) [AS THAT SECTION READS ON SEPTEMBER 15, 2004,] 06 or as it may be amended in the future; or 07 (4) at the time of the transfer, the settlor is in default by 30 or more 08 days of making a payment due under a child support judgment or order. 09 * Sec. 41. AS 34.40.110(d) is amended to read: 10 (d) A cause of action or claim for relief with respect to a fraudulent transfer of 11 a settlor's assets under (b)(1) of this section is extinguished unless the action under 12 (b)(1) of this section is brought by a creditor of the settlor who 13 (1) is a creditor of the settlor before the settlor's assets are transferred 14 to the trust, and the action under (b)(1) of this section is brought within the later of 15 (A) two [FOUR] years after the transfer is made; or 16 (B) six months [ONE YEAR] after the transfer is or reasonably 17 could have been discovered by the creditor if the creditor 18 (i) can demonstrate, by a preponderance of the 19 evidence, that the creditor asserted a specific claim against the settlor 20 before the transfer; or 21 (ii) files another action, other than an action under 22 (b)(1) of this section, against the settlor that asserts a claim based on an 23 act or omission of the settlor that occurred before the transfer, and the 24 action described in this sub-subparagraph is filed within two [FOUR] 25 years after the transfer; or 26 (2) becomes a creditor subsequent to the transfer into trust, and the 27 action under (b)(1) of this section is brought within two [FOUR] years after the 28 transfer is made. 29 * Sec. 42. AS 34.40 is amended by adding new sections to read: 30 Sec. 34.40.113. Discretionary interests in irrevocable trusts. (a) This section 31 applies to a creditor's claim with respect to a discretionary interest in an irrevocable
01 trust, unless the trust instrument provides otherwise. 02 (b) A discretionary interest in an irrevocable trust is not a property interest or 03 an enforceable right. It is an expectancy that a creditor of a beneficiary may not attach 04 or otherwise reach. 05 (c) A creditor of a beneficiary may not force a distribution with regard to a 06 discretionary interest in an irrevocable trust. A creditor may not compel a trustee to 07 exercise the trustee's discretion to make a distribution with regard to a discretionary 08 interest in an irrevocable trust. 09 (d) Even if a beneficiary has an outstanding creditor, in the case of a 10 discretionary interest in an irrevocable trust, a trustee who has the authority to pay 11 income or principal to a beneficiary may pay it to a third party if the payment is for the 12 benefit of the beneficiary. A trustee is not liable to a creditor for paying income or 13 principal on behalf of the beneficiary. 14 (e) A creditor of a beneficiary may not maintain an action or a proceeding in 15 court that interferes with the trustee's discretion to apply income or principal on behalf 16 of the beneficiary. 17 (f) A creditor of a beneficiary may not obtain an order of attachment or similar 18 relief that would prevent a trustee from making a discretionary payment to a third 19 party on behalf of the beneficiary. 20 (g) This section does not prevent a creditor from obtaining relief from a 21 fraudulent transfer under AS 34.40.110. 22 (h) In this section, a beneficiary's entitlement to a distribution is within the 23 discretion of a trustee, whether or not the trust instrument states the purposes for the 24 distribution or uses "may," "shall," "sole and absolute," "uncontrolled," or similar 25 words. 26 (i) In this section, "discretionary interest" means a beneficiary's interest in an 27 irrevocable trust if the beneficiary's entitlement to a distribution is within the 28 discretion of the trustee. 29 Sec. 34.40.118. Transfers of individual retirement accounts. (a) 30 Notwithstanding a provision in AS 09.38.017(d), AS 34.40.110, or another law to the 31 contrary, a person may voluntarily transfer or assign the person's interest in an
01 individual retirement account if the person 02 (1) is the owner of or a participant in the individual retirement account; 03 or 04 (2) acquired the interest as a result of the death of another individual. 05 (b) In this section, "individual retirement account" means an individual 06 retirement account established under 26 U.S.C. 408 or a Roth IRA established under 07 26 U.S.C. 408A. 08 * Sec. 43. AS 34.77.030(g) is amended to read: 09 (g) Whether or not the community property agreement provides that all 10 property acquired by either or both spouses during the marriage is community 11 property, and except to the extent otherwise expressly provided by the spouses in the 12 community property agreement or by the settlors in a community property trust, 13 property acquired by a spouse during marriage and after the determination date is 14 individual property if acquired 15 (1) by gift or a disposition at death made by a third person to the 16 spouse and not to both spouses; 17 (2) in exchange for or with the proceeds of other individual property of 18 the spouse; 19 (3) from appreciation or income of the spouse's individual property 20 except to the extent that the income or appreciation is classified as community 21 property under AS 34.77.130; 22 (4) by a decree, community property agreement, written consent, or 23 reclassification under AS 34.77.060(b) designating it as the individual property of the 24 spouse; 25 (5) as a recovery for damage to property under AS 34.77.140, except 26 as specifically provided otherwise in a decree, community property agreement, 27 community property trust, or written consent; [OR] 28 (6) as a recovery for personal injury, except for the amount of the 29 recovery attributable to expenses paid or otherwise satisfied from community 30 property; or 31 (7) as a transfer to a community property trust and declared by
01 the trust to be the individual property of the spouse. 02 * Sec. 44. AS 34.77.050(b) is amended to read: 03 (b) A gift of community property to a third person that is not allowed under 04 (a) of this section is subject to AS 34.77.140(e) - (h) [(d) OF THIS SECTION] unless 05 both spouses act together in making the gift or the other spouse ratifies the gift. 06 * Sec. 45. AS 34.77.110 is amended by adding new subsections to read: 07 (f) Property that spouses agree in a community property agreement is 08 community property or property that is transferred to a community property trust and 09 expressly declared by the trust to be community property is owned as community 10 property regardless of the form of title to the property, even if the title indicates that 11 the property is owned unequally by the spouses or is only in the name of one spouse. 12 (g) If the title to community property is in a form that provides for ownership 13 by survivorship between the spouses, then ownership by survivorship is presumed to 14 have been made with the consent of both spouses. 15 (h) If a spouse with management and control of community property 16 designates a beneficiary for the property on the death of one or both of the spouses, 17 and if the community property is held in a form of title that permits a beneficiary 18 designation, the beneficiary designation is effective only for the designating spouse's 19 one-half interest in the community property unless the other spouse consents in 20 writing to the designation. A designation of the following as the beneficiary is 21 presumed to have been made with the consent of the other spouse: 22 (1) the other spouse or an ancestor or descendant of either spouse; 23 (2) a charity; or 24 (3) a trust, to the extent that the beneficiaries consist of persons or 25 entities identified in (1) or (2) of this subsection. 26 (i) The testimony of one spouse is sufficient to rebut a presumption 27 established under this section. 28 (j) A disposition of community property contrary to (e) - (h) of this section is 29 voidable. An action in court to void the disposition must be commenced within the 30 time specified by AS 34.77.140(e). 31 * Sec. 46. AS 34.77.140(d) is amended to read:
01 (d) Except as provided otherwise in (e) - (h) of this section 02 [AS 34.77.050(d)], a spouse must begin an action against the other spouse under (a) of 03 this section within three years after acquiring actual knowledge of the facts giving rise 04 to the claim. 05 * Sec. 47. AS 34.77.140 is amended by adding new subsections to read: 06 (e) Except as provided by (f) - (h) of this section, if a gift of community 07 property during marriage by a spouse does not comply with AS 34.77.050(a), the 08 nondonor spouse may bring an action to recover the property or the amount of money 09 by which the gift exceeded the limit under AS 34.77.050(a). The nondonor spouse 10 may bring the action against the donor spouse, the gift recipient, or both. The 11 nondonor spouse must commence the action within the earliest of the following times: 12 (1) one year after the nondonor spouse receives notice of the gift; 13 (2) one year after dissolution of the marriage; or 14 (3) on or before the deadline for filing a claim under AS 13.16.460 15 after the death of the donor spouse. 16 (f) If a recovery under (e) of this section occurs during the marriage of the 17 donor spouse and the nondonor spouse, the property or money that is recovered is 18 considered community property. If the recovery occurs after the dissolution of the 19 marriage of the donor and nondonor spouses or after the death of either the donor or 20 the nondonor spouse, the recovery is limited to 50 percent of the property or money 21 that would have been recovered if the recovery had occurred during the marriage. 22 (g) If a transfer of community property to a third person during marriage by a 23 spouse acting without the other spouse becomes a completed gift on the death of the 24 donor spouse, or if an arrangement involving community property during marriage by 25 a spouse acting without the other spouse is intended to be and becomes a gift to a third 26 person on the death of the donor spouse, the surviving spouse may bring an action in 27 court against the gift recipient to recover one-half of the gift. To bring an action under 28 this subsection, the surviving spouse must commence the action on or before the 29 deadline for filing a claim under AS 13.16.460. 30 (h) If a spouse who would have been entitled to bring an action under (e) - (g) 31 of this section predeceases the donor spouse, the deceased spouse's successor in
01 interest may bring an action for recovery under (e) - (g) of this section, but the action 02 must be commenced within one year after the deceased spouse's death. Recovery in an 03 action under this subsection is the same as if the donor spouse had predeceased the 04 spouse entitled to the recovery, but the amount of the recovery is calculated as of the 05 date of the death of the spouse entitled to the recovery. 06 * Sec. 48. AS 13.38.330(c); AS 34.77.050(d), and 34.77.110(d) are repealed. 07 * Sec. 49. The uncodified law of the State of Alaska is amended by adding a new section to 08 read: 09 INDIRECT COURT RULE AMENDMENTS. (a) AS 34.40.113(f), enacted by sec. 42 10 of this Act, has the effect of amending Rule 64, Alaska Rules of Civil Procedure, by 11 prohibiting a creditor or beneficiary from obtaining an order of attachment or similar relief in 12 certain cases. 13 (b) AS 34.77.110(i), enacted by sec. 45 of this Act, has the effect of amending Rule 14 301(a), Alaska Rules of Evidence, by specifying the evidence that is sufficient to rebut a 15 presumption under AS 34.77.110(i), enacted by sec. 45 of this Act. 16 * Sec. 50. The uncodified law of the State of Alaska is amended by adding a new section to 17 read: 18 APPLICABILITY. (a) AS 09.38.017(a), as amended by sec. 1 of this Act, 19 AS 09.38.017(d), as amended by sec. 2 of this Act, and AS 09.38.017(e), as amended by sec. 20 3 of this Act, apply to a retirement plan that exists before, on, or after the effective date of this 21 Act. In this section, "retirement plan" has the meaning given in AS 09.38.017(e), as amended 22 by sec. 3 of this Act. 23 (b) AS 13.36.157, as repealed and reenacted by sec. 9 of this Act, AS 13.36.158 and 24 13.36.159, enacted by sec. 10 of this Act, AS 13.36.072(c), enacted by sec. 8 of this Act, 25 AS 13.36.215(b), enacted by sec. 11 of this Act, AS 13.36.225(a), as amended by sec. 12 of 26 this Act, AS 13.36.273, enacted by sec. 13 of this Act, AS 13.36.370(a), as amended by sec. 27 14 of this Act, and AS 13.36.375(c), enacted by sec. 15 of this Act, apply to a trust that exists 28 before, on, or after the effective date of this Act. 29 (c) AS 13.46.190, as amended by sec. 33 of this Act, AS 13.46.197, enacted by sec. 30 34 of this Act, and AS 13.46.990(11), as amended by sec. 35 of this Act, apply to a transfer 31 that is made before, on, or after the effective date of this Act. In this section, "transfer" has the
01 meaning given in AS 13.46.990. 02 (d) AS 34.40.118, enacted by sec. 42 of this Act, applies to an individual retirement 03 account that exists before, on, or after the effective date of this Act. In this section, "individual 04 retirement account" means an individual retirement account established under 26 U.S.C. 408 05 or a Roth IRA established under 26 U.S.C. 408A. 06 * Sec. 51. The uncodified law of the State of Alaska is amended by adding a new section to 07 read: 08 CONDITIONAL EFFECT. (a) AS 34.40.113(f), enacted by sec. 42 of this Act, takes 09 effect only if sec. 49(a) of this Act receives the two-thirds majority vote of each house 10 required by art. IV, sec. 15, Constitution of the State of Alaska. 11 (b) AS 34.77.110(i), enacted by sec. 45 of this Act, takes effect only if sec. 49(b) of 12 this Act receives the two-thirds majority vote of each house required by art. IV, sec. 15, 13 Constitution of the State of Alaska.