03/21/2012 01:00 PM House JUDICIARY

       HB 292 - PRINCIP.& INC/PROBATE/UTMA/RETIREMT/ETC.                                                                    
                                                                                                                                
2:13:36 PM                                                                                                                    
                                                                                                                                
VICE CHAIR  THOMPSON announced that  the final order  of business                                                               
would  be  HOUSE BILL  NO.  292,  "An  Act relating  to  property                                                               
exemptions for  retirement plans; relating to  pleadings, orders,                                                               
liability, and  notices under the Uniform  Probate Code; relating                                                               
to the  Alaska Principal and  Income Act; relating to  the Alaska                                                               
Uniform Transfers to  Minors Act; relating to  the disposition of                                                               
human  remains;   relating  to   insurable  interests   for  life                                                               
insurance   policies;  relating   to   transfers  of   individual                                                               
retirement plans;  relating to the community  property of married                                                               
persons;  and amending  Rule 301(a),  Alaska Rules  of Evidence."                                                               
[Before the committee was CSHB 292(L&C).]                                                                                       
                                                                                                                                
2:13:49 PM                                                                                                                    
                                                                                                                                
JANE  W. PIERSON,  Staff, Representative  Steve Thompson,  Alaska                                                               
State  Legislature,  on  behalf of  the  sponsor,  Representative                                                               
Thompson,  explained  that HB  292  would  extend protection  for                                                               
retirement-plan assets  to the beneficiaries of  retirement plans                                                               
-   often  the   surviving   spouse;  would   provide  means   of                                                               
representation for  minors and  incapacitated persons  in dealing                                                               
with  settlements of  accounts  or  settlement agreements;  would                                                               
amend  the Alaska  Principal  and  Income Act  -  AS  13.38 -  to                                                               
conform with current Internal  Revenue Service (IRS) regulations;                                                               
would provide  rules concerning who  may control  the disposition                                                               
of  decedents'  remains;  would  make  conforming  amendments  to                                                               
Alaska law regarding  insurable interests in order  to align with                                                               
changes to  the federal Uniform  Trust Code (UTC);  would provide                                                               
that  individual   retirement  account  (IRA)  interest   can  be                                                               
voluntarily  transferred  to  a  family member  or  trust;  would                                                               
update and  clarify provisions of  the Alaska  Community Property                                                               
Act - AS  34.77 - regarding ownership of  community property; and                                                               
would allow a beneficiary to extend  the time funds would be held                                                               
in  [an account  under  the Alaska  Uniform  Transfers to  Minors                                                               
Act].                                                                                                                           
                                                                                                                                
2:16:03 PM                                                                                                                    
                                                                                                                                
DAVID  G. SHAFTEL,  Attorney at  Law -  after mentioning  that he                                                               
practices in  the field of  estate planning and estate  and trust                                                               
administration, and  is a  member of an  informal group  of trust                                                               
and   estate  planning   attorneys   and   trust  officers   that                                                               
periodically  recommends updates  to  Alaska's  trust and  estate                                                               
laws -  characterized HB 292  as having a  lot of very  solid and                                                               
important provisions.  Section 1  of CSHB 292(L&C), he explained,                                                               
addresses  asset  protection   for  inherited  retirement  plans;                                                               
federal   case  law   extends   protection   from  creditors   to                                                               
beneficiaries  of retirement  plans, and  Section 1  would codify                                                               
that  protection in  Alaska statute.   Sections  2 and  3 provide                                                               
conforming  and   definition  changes   related  to   Section  1.                                                               
[Sections  4 and  5 together]  clarify  that AS  13.06.120 -  the                                                               
statute pertaining  to pleadings,  to when  parties are  bound by                                                               
orders, and to  notice - also applies to  "settlements that occur                                                               
outside of court."                                                                                                              
                                                                                                                                
MR. SHAFTEL  explained that Sections  6-8 of CSHB  292(L&C) would                                                               
update  Alaska's statutes  pertaining  to  modifying an  existing                                                               
trust,  so that  they closely  track New  York's recently-revised                                                               
statutes, which have many  built-in safeguards for beneficiaries;                                                               
Alaska's  statutes  addressing   such  trust  modifications  were                                                               
originally  copied from  New York's  statutes,  and currently  13                                                               
states have  such provisions, and  3 more states  are considering                                                               
adding them.   Sections  9-25 would  update the  Alaska Principal                                                               
and  Income Act  to  take advantage  of  new federal  regulations                                                               
pertaining to  unitrusts, wherein a certain  percentage of income                                                               
is distributed  annually to a  current beneficiary.   This update                                                               
would  provide   trustees  with   more  flexibility,   provide  a                                                               
definition  of   unitrust  income,   provide  for   "ordering  of                                                               
distributions   among  the   different   types   of  income   and                                                               
principal," provide a five-year  period for averaging assets, and                                                               
clarify how the unitrust rules apply to retirement benefits.                                                                    
                                                                                                                                
2:25:57 PM                                                                                                                    
                                                                                                                                
MR.  SHAFTEL  explained  that Sections  26-28  would  update  the                                                               
Alaska  Uniform Transfers  to Minors  Act -  AS 13.46  - so  that                                                               
under certain  circumstances, the  age of distribution  of assets                                                               
could be extended; this update  would address situations in which                                                               
the beneficiary  doesn't want, or  isn't ready or able  to manage                                                               
his/her assets upon  reaching the age of 18 or  21.  He proffered                                                               
that allowing for  such extensions would be very  helpful to many                                                               
families.    Section  29  adds  a new  Chapter  75  to  Title  13                                                               
addressing  the disposition  of human  remains; the  proposed new                                                               
chapter is  necessary because existing state  law doesn't address                                                               
this  issue and  thus  disputes over  a  decedent's remains  have                                                               
resulted.   The bill's  proposed AS  13.75 includes,  among other                                                               
things,  provisions   addressing  directions  by   the  decedent,                                                               
persons  authorized to  control disposition,  and the  form of  a                                                               
disposition document; the need for  proposed AS 13.75 was brought                                                               
forth by Alaska's funeral parlor industry.                                                                                      
                                                                                                                                
MR. SHAFTEL  indicated that Section  30 [clarifies that  a person                                                               
with an  insurable interest  may form a  business entity  for the                                                               
purpose of purchasing, holding,  and administering life insurance                                                               
contracts];  Section  30's  proposed changes  reflect  amendments                                                               
made  to the  federal Uniform  Trust Code  (UTC) by  the National                                                               
Conference  of Commissioners  on Uniform  State Laws  (NCCUSL) in                                                               
response  to  a  federal  case,   Chawla,  ex  rel  Giesinger  v.                                                             
Transamerica Occidental Life Ins. Co.,  [in which the court found                                                             
that  the  law  lacked  provision   specifying  that  trusts  and                                                               
business entities  could have an  insurable interest in  the life                                                               
or body of  the insured].  Section  31 adds a new  section 113 to                                                               
AS 34.40  clarifying that  a person  may voluntarily  transfer or                                                               
assign his/her interest in an IRA.                                                                                              
                                                                                                                                
2:34:38 PM                                                                                                                    
                                                                                                                                
MR.  SHAFTEL  explained  that Sections  32-36  would  update  the                                                               
Alaska Community  Property Act by adding  references to community                                                               
property  trusts;  providing a  new  statute  of limitations  for                                                               
beginning  action  based  on  a claim  of  wrongful  transfer  of                                                               
community property;  clarifying that property which  both spouses                                                               
agree  is   community  property   [shall  be  treated   as  such]                                                               
regardless  of the  form of  title to  the property;  providing a                                                               
rebuttable   presumption   that   beneficiary   designations   or                                                               
survivor-ownerships were  made or provided  for with  the consent                                                               
of both spouses, and that  beneficiary designations are effective                                                               
for  only  the  half  interest  that  is  being  designated;  and                                                               
providing  remedies and  limitation periods  to address  improper                                                               
transfers.                                                                                                                      
                                                                                                                                
MR.  SHAFTEL,  in conclusion,  stated  that  [HB 292's]  proposed                                                               
changes constitute  very important improvements that  will impact                                                               
a large number of Alaskans.                                                                                                     
                                                                                                                                
2:38:27 PM                                                                                                                    
                                                                                                                                
DOUGLAS J.  BLATTMACHR, President and CEO,  Alaska Trust Company,                                                               
characterized HB  292 as a  good piece of legislation  that would                                                               
modernize Alaska's trust  laws, and stated that  the Alaska Trust                                                               
Company strongly supports HB 292.                                                                                               
                                                                                                                                
2:39:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KELLER  moved  to  report CSHB  292(L&C)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal  note.  There  being no objection, CSHB  292(L&C) was                                                               
reported from the House Judiciary Standing Committee.