Legislature(2007 - 2008)CAPITOL 120
04/04/2007 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HB196 | |
| HB197 | |
| HB201 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 196 | TELECONFERENCED | |
| *+ | HB 197 | TELECONFERENCED | |
| *+ | HB 201 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 197 - TRUSTS 1:50:22 PM CHAIR RAMRAS announced that the next order of business would be HOUSE BILL NO. 197, "An Act relating to the issuance of shares of professional corporations to a trust, to trusts, to trustees, to the removal of a trustee, to the compensation of a trustee and a person employed by a trustee, to a trustee's accepting or rejecting a trusteeship, to co- trustees, to a vacancy in a trusteeship, to the resignation of a trustee, to delivery of trust property by former trustees, to the reimbursement of trustee expenses, to the certification of a trust, to the suitability of a trustee, to the place of administration of a trust, to a trustee's power to appoint property to another trust, to a change of the percentage of trust property to be considered principal, to the determination of the value of a trust, and to a settlor's intent when transferring property in trust; amending Rules 54 and 82, Alaska Rules of Civil Procedure; and providing for an effective date." 1:51:46 PM JANE W. PIERSON, Staff to Representative Jay Ramras, Alaska State Legislature, offered on behalf of the House Judiciary Standing Committee, sponsor of HB 197, that a "trust" is defined [in part in Black's Law Dictionary] as: ... a property interest held by one person (the trustee) at the request of another (the settlor) for the benefit of a third party (the beneficiary). ... "[A] trust involves three elements, namely, (1) a trustee, who holds the trust property and is subject to equitable duties to deal with it for the benefit of another; (2) a beneficiary, to whom the trustee owes equitable duties to deal with the trust property for his benefit; (3) trust property, which is held by the trustee for the beneficiary." MS. PIERSON said the goal of HB 197 is to make Alaska the premier place for trust and estates, adding that it is important that Alaska stay competitive with other states that do not have a personal income tax. The trust industry is important to the state of Alaska in that it provides employment for accountants, attorneys, insurance agents, bankers, and their support staff; for example, there is between $30 million and $70 million on deposit with Alaska banks through the Alaska Trust Company alone. Furthermore, there are [approximately] 1,000 clients with trusts in Alaska, having chosen Alaska because of its unique trust laws. Since 1997, Alaska has passed over 15 pieces of legislation designed to keep Alaska's trust industry vibrant and competitive. MS. PIERSON explained that under HB 197, shares in a professional corporation may be held by the trustees of the [professional corporation's] revocable trust. The bill also expands the coverage of AS 13.36.157, which allows the trustee of a trust to transfer trust assets to a similar trust; this expansion will only occur if the trust has an Alaskan trustee and the trust has its primary administration in Alaska. House Bill 197 allows the Alaska trustee of a charitable trust to change the percentage of the value of the trust that will be considered income whenever the trustee determines that the new percentage is necessary and prudent. The bill clarifies that a settlor's express intention to protect trust assets from the beneficiary's potential future creditors is not evidence of an intent to defraud. House Bill 197 [adds necessary default] provisions relating to trustees, provisions pertaining to: compensation, accepting or declining trusteeship, co-trustees, vacancy, resignation, removal, delivery of property by a former trustee, reimbursement of expenses, and certification of the trust. 1:54:19 PM DOUGLAS J. BLATTMACHR, President and CEO, Alaska Trust Company, reiterated portions of Ms. Pierson's explanation of the provisions of HB 197. 1:56:28 PM STEPHEN E. GREER, Attorney at Law, offered his understanding that HB 197 has been thoroughly vetted by Alaska's estate planning attorneys. He then provided a comment regarding HB 196. 2:00:29 PM DAVID G. SHAFTEL, Attorney at Law, offered his belief that HB 197 will address what he characterized as a big void in the law dealing with trustees; currently there are not default rules outlined in statute, and the aforementioned default provisions will help protect those who might not have a thorough estate plan. REPRESENTATIVE GRUENBERG referred to proposed AS 13.36.157, and asked whether [a trustee] could use that provision to set up another trust in order to escape a creditor who is attempting to get at the assets of a particular trust. MR. SHAFTEL opined that doing so would be considered a fraudulent transfer and therefore such a trust would be set aside. REPRESENTATIVE GRUENBERG referred to the Alaska Uniform Transfers to Minors Act, and questioned whether HB 197 would allow a custodial trust to be set up such that it needn't be terminated even when the beneficiary reached the age of 25 if the beneficiary is still not capable of handling the trust's assets; if the bill doesn't allow such flexibility, perhaps an amendment to address that sort of situation should be forthcoming. He disclosed that he is having to consider just such a situation as it pertains to his son. 2:04:32 PM RICHARD S. THWAITES, JR., Attorney at Law, relayed that he would have concerns with such an amendment because of Internal Revenue Service (IRS) gifting restrictions. He suggested, therefore, that the committee review any such amendment carefully before modifying the bill in that fashion. REPRESENTATIVE GRUENBERG agreed to do so. MR. SHAFTEL remarked that that is a controversial and complex area of the law, and therefore it may take some time to develop a solution. REPRESENTATIVE GRUENBERG remarked that he may consider addressing that point via separate legislation. MR. THWAITES explained that Alaska allows the establishment of what he termed "holographic wills" - such wills essentially allow someone to leave all of his/her assets in trust, adding that HB 197 "goes a huge distance towards stretching over that gap." REPRESENTATIVE GRUENBERG surmised, then, that HB 197 will help people effectuate "that desire." MR. THWAITES concurred. CHAIR RAMRAS, after ascertaining that no one else wished to testify, closed public testimony on HB 197. REPRESENTATIVE GRUENBERG indicated that he might have the interested parties talk to each other regarding the aforementioned possible amendment. CHAIR RAMRAS indicated that if such an amendment proves necessary, he would be willing to help with it. 2:08:24 PM REPRESENTATIVE LYNN moved to report HB 197 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 197 was reported from the House Judiciary Standing Committee.
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