Legislature(2003 - 2004)
03/17/2004 08:02 AM Senate JUD
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
TRUSTS/ESTATES/PROPERTY TRANSFERS
MR. BRIAN HOVE, staff to Senator Seekins, sponsor of SB 344,
read the following sponsor statement.
A vital characteristic of our highly developed economy
is the ease with which financial resources flow from
one market to another. In fact the magnet-like
attraction between and the market that offers the most
advantageous terms is, perhaps, best demonstrated
within the financial services industry itself.
Over the years the Alaskan banking industry has
attracted funds to our state as the result of a
particular niche we have successfully developed in an
obscure corner of the industry known as trust and
estate services. Much of this success can be
attributed to the foresight demonstrated by the Alaska
State Legislature.
Since 1997, the legislature has passed numerous bills
effectively making Alaska a premier jurisdiction for
this financial specialty. Just last year, SB 87
adopted a more recent version of the Uniform Principal
& Income Act. And HB 212 updated other portions of
Alaska's trust laws. Both were signed into law last
summer.
While SB 344 may not be as far reaching, it
accomplishes the same purpose. It does this by making
a host of small technical revisions to current
statutes. It updates provisions relating to virtual
representation. It clarifies when a trustee can be
relieved of its liability. And it adds provisions,
which other jurisdictions have already adopted.
Keeping our trust statutes current has had a direct
positive impact on our state's economy. Over the
years, these periodic revisions have helped to bring
hundreds of millions of dollars of trust assets into
the state and added tens of millions of dollars to
local bank deposits. Furthermore, it has increased
business activity for attorneys, accountants, life
insurance agents and brokerage firms. This, in turn,
creates jobs.
Necessity, ingenuity and routine advances in
technology collaborate on a daily basis to reinvent
the world of financial products and services. To date,
Alaska has successfully staked out a place in this
world through our contemporary set of trust and estate
laws. SB 344 seeks to preserve our position in what
amounts to a highly fluid marketplace unrestricted by
geographical boundaries. It seems reasonable to keep
that money flowing this direction.
He noted that Beth Chapman and Doug Blattmacher were available
to speak to the technical portions of the bill.
SENATOR FRENCH commented that legislators have been told that
the growth of this industry has had a net positive effect on the
general fund. He asked if the Department of Revenue (DOR) has
any documentation to back that up.
MR. HOVE said he has not seen any documentation but believes it
is reasonable that bringing that money to this jurisdiction
would have a net positive impact on Alaska's economy.
CHAIR SEEKINS pointed out that last year, when considering
another trust bill, he saw that premium taxes alone on insurance
policies were significant.
MR. DOUG BLATTMACHER added:
We know that from the insurance premiums that we had -
of the premium payments that we had made, we estimate
that we've spent about a million and a half dollars
additional premium taxes in the state over the last
couple of years and that continues to - we continue to
get these large insurance policies, which generate
additional premium dollars in the state.
MR. STEVE GREER, an estate-planning attorney in Anchorage, said
he and a group of other estate planning attorneys have
approached the legislature each year with legislation to improve
existing legislation. He noted that Ms. Chapman was the
principal drafter of SB 344.
MS. BETH CHAPMAN, an attorney with Faulkner Banfield, told
members she has practiced primarily in the area of trusts and
estates for the past 16 years. She stated support for SB 344 as
it will update Alaska law so that Alaska will continue to have
prominence as the state in which individuals will want to
deposit their trust assets and a place where residents want to
retain their assets. She explained SB 344 has four main parts.
The first part contains technical corrections to the Uniform
Income Act, which was adopted last year. The second part adds
additional trusts to the types of trusts recognized under the
spendthrift provisions. These trusts are commonly used and
recognized under the Internal Revenue Code. The third part
expands the Doctrine of Subsequent Notice found under current
Alaska law so that trustees and trust beneficiaries have easier
access to the courts. Last, it establishes a statute of
limitations for claims against trustees. Current law contains no
statute of limitations against a trustee until the trust
relationship is terminated. Alaska law now allows perpetual
trusts, so that relationship could last for a very long time and
stale claims could be brought at any time in the future.
Enacting a statute of limitations will allow claims to be
brought when necessary soon after they occur or when notice of a
claim has been made known to a beneficiary. It also adds a
provision to notify beneficiaries of their limitation period,
which she believes will be more helpful to beneficiaries. If no
notification occurs, the statute of limitation will not run.
SENATOR THERRIAULT asked how long the statute of limitations is.
MS. CHAPMAN told members under current law, a claim must be
brought within six months after the final account. The six month
period will continue to be used, but it will run from any report
that discloses the nature of the claim so long as the
beneficiary is notified of the six-month time limit.
SENATOR FRENCH referred to page 2 of the sectional analysis,
which addresses changing the trust situs to Alaska. He asked how
one locates a trust in Alaska and whether the money must be
physically present in an Alaska bank.
MS. CHAPMAN said some of the funds do have to be deposited
within the state of Alaska in an Alaska bank. Also, the trust
must have an Alaska trustee and the trust must be registered
with the Alaska Court System.
SENATOR FRENCH asked how small of a sum would qualify for a
deposit.
MS. CHAPMAN thought the amount is not defined in the statute.
She noted, however, in her experience deposits have been of a
significant amount.
SENATOR THERRIAULT stated, for the record, that his wife is a
trust attorney and participates in the Alaska Trust Council. He
then moved SB 344 from committee with individual recommendations
and the attached zero fiscal notes.
CHAIR SEEKINS announced that without objection, the motion
carried.
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