Legislature(2013 - 2014)BARNES 124
03/24/2014 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| HB230 | |
| HB316 | |
| HB60 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 230 | TELECONFERENCED | |
| += | HB 316 | TELECONFERENCED | |
| += | HB 60 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 60-UNIFORM REAL PROPERTY TRANSFERS ON DEATH
4:10:38 PM
CHAIR OLSON announced that the final order of business would be
HOUSE BILL NO. 60, "An Act adopting and relating to the Uniform
Real Property Transfer on Death Act."
REPRESENTATIVE REINBOLD made a motion to adopt a proposed
committee substitute for HB 60, Version C, labeled 28-LS0265\C,
Bannister, 3/14/14 as the working document.
CHAIR OLSON objected for the purpose of discussion.
4:11:06 PM
REPRESENTATIVE MAX GRUENBERG, Alaska State Legislature, stated
this bill is a combination of two bills, HB 60, the Uniform
Transfer on Death Act, and HB 61, which repeals the prohibition
of joint tenancy with the right of survivorship in real
property. These bills both relate to the transfer of real
property for efficiency and to reduce costs.
4:12:21 PM
REPRESENTATIVE GRUENBERG explained that the Uniform Real
Property Transfer on Death Act allows a person to execute a
transfer on death (TOD) deed that becomes effective upon one's
death. The process would be to sign the transfer and record it
and it becomes effective when the person dies. The person can
revoke it or issue another superseding deed, and the person
designated to receive the property can disclaim the transfer of
property. He stated the only requirement is to ensure that the
document is recorded. In other words, a "wild" deed or will
that is not recorded will not affect the property. This bill,
HB 60, will make it very easy to determine who owns the
property. Federal and state law allow that TOD bank accounts,
securities, and personal property can be owned jointly and
transferred on death, with the advantage that it avoids probate
and is taxed as a transfer on death.
REPRESENTATIVE GRUENBERG said this matter was brought to his
attention when a retired attorney, Stan Titus, who owns property
in various other states, indicated that he would like to prepare
his estate. He pointed out that 21 other states have this
provision, with the latest state to adopt this provision being
South Dakota. Currently, three other states besides Alaska are
considering this change. He characterized it as being "the
coming thing," and he is not aware of any opposition to the bill
except by a couple of individual probate lawyers. He admitted
that in complex estates it probably is a good idea for lawyers
to be involved; however, the TOD deed process is a simple method
for parties who have limited assets, such as owning a house in
Big Lake and having a pension, since the TOD deed process avoids
probate and legal fees.
4:15:05 PM
REPRESENTATIVE GRUENBERG referred to Section 5, the repealer
section of HB 60. This bill even provides forms that can be
used, although it isn't required that these forms be used. He
pointed out that this act is uniform except for one provision in
which an inter vivos deed that doesn't expressly revoke a
transfer on death deed (or a part of the TOD deed) creates a
rebuttable presumption that the inter vivos deed is effective to
revoke a recorded TOD deed, or a part of the recorded TOD deed
if the deed meets certain requirements. He said this requires
that the deed completely divest the transferor of the
transferor's interest in the real property that is the subject
of the transfer on death deed. This provision was suggested by
a witness who testified before the District of Columbia city
council. It seemed to be a good idea, and Representative
Gruenberg discussed it with the [uniform law] commissioners, and
they do not have any objection, he said.
4:16:49 PM
REPRESENTATIVE GRUENBERG highlighted one other provision that is
not part of the uniform act and that is the repealer in Section
5. Currently, the state has an old statute from Alaska's
territorial days that says a person cannot hold real property
jointly with a right of survivorship; instead, it has to be by
tenancy in common. The difference between a tenancy in common
and joint tenancy with a right of survivorship is that in both
cases a present ownership in property exists. He explained it
is not like a TOD deed, in which the person receives the
ownership upon death, but a present ownership exists. However,
with a tenancy in common if you die, your estate obtains your
interest. In instances with joint tenancy with a right of
survivorship, the other co-owners obtain it. In those
instances, it really isn't necessary to prepare a will to
transfer the property, so it is a simpler method. He explained
that previously an old legal term, the four unities existed,
which is rarely used. That's the reason why they didn't allow
joint tenancy with the right of survivorship. The courts now
look to peoples' intent so most states have gotten away from the
old statutes that don't allow joint tenancy in real property.
He said that this just goes with the normal law in most places.
He said that Alaska is a not a "code state" but follows the
common law, and this will just put it back in the common law, he
explained.
4:18:59 PM
REPRESENTATIVE SADDLER referred to page 2, lines 27-30, and
asked for further clarification on the process.
REPRESENTATIVE GRUENBERG explained that many uniform acts are
drafted by a committee of commissioners on uniform state law,
with one professor - in this instance a professor from the
University of Iowa law school. This particular hypothetical
situation was apparently overlooked when the uniform act was
drafted. This provision means that if a second deed exists and
the person doesn't revoke the original deed, which normally
would contain a revocation clause, a rebuttable presumption
exists, such that it is presumed that the earlier TOD deed is
revoked. In instances in which the new deed completely divests
the grantor of his interest in the real property and also
satisfies AS 13.48.070 (1)(A)(2) means that it is "acknowledged
by the transferor after the acknowledgment of the deed being
revoked and recorded before the transferor's death in the
recording district where the deed is recorded." He emphasized
that it must be signed in front of a notary and recorded. He
said that there can be a rebuttal, but normally if one deed is
recorded and another deed is recorded and both indicate TOD
deed, it'd be clear that the person's intent is to follow the
later deed; however, a circumstance might exist where that
doesn't occur. In the District of Columbia ruling it is
absolute; however, he cautioned that he did not want to make it
absolute since he has found there will always be some factual
situation that wasn't anticipated. This language would make it
rebuttable to cover any unusual circumstance.
REPRESENTATIVE SADDLER acknowledged it should never be absolute.
4:22:22 PM
REPRESENTATIVE GRUENBERG agreed. He pointed out that Alaska is
the first state to adopt this provision. He indicated that it
does not disturb uniformity and it is possible the [uniform law]
commissioners may decide to pick up the provision later. In the
meantime, this will provide legislative history, he said.
4:23:06 PM
REPRESENTATIVE GRUENBERG, in response to a question, said that
the next committee of referral, the House Judiciary Standing
Committee, will examine things related [to the judiciary].
BENJAMIN ORZESKE, Legal Counsel, Uniform Law Commission for Real
Property, Trust, and Estate Acts, National Conference of
Commissioners on Uniform State Laws (NCCUSL), acknowledged that
Representative Gruenberg did a good job describing this bill.
He offered to answer any questions.
REPRESENTATIVE GRUENBERG referred to his written testimony in
members' packets.
4:24:48 PM
DEBORAH RANDALL, Attorney, stated she is an estate planning
attorney. She said she was absolutely delighted when the
uniform bill was presented to the estate and probate section.
She said she is a total believer in this. This bill will
simplify matters for clients who only own a piece of real
property. She explained that her typical client will have real
estate, such as a house and bank accounts that can be passed
through a joint account or with a beneficiary designation.
Thus, the only property that can't be transferred in that manner
is real property, and this bill will simplify this for countless
people. She supports the proposition to keep it simple and said
this bill will make it simple for people and she is not
concerned that this bill will adversely affect her workload.
She thinks that people will likely still use lawyers for advice,
but this will provide "one more quiver in our arsenal" that we
can use. She said she favored revoking the prohibition on joint
tenancy by survivorship of real property and offered her belief
that every state does this, including Arizona and Hawaii, which
works great for parents who wish to leave property to surviving
children. She reiterated that this will definitely simplify
estate planning for many people. She characterized this as a
"win-win" situation for everyone.
4:27:05 PM
REPRESENTATIVE GRUENBERG stated that Ms. Randall was very
involved on the probate and real estate sections. He pointed
out that [lines 22-27, page 5, of Version C,] carefully advises
that this action may have important legal consequences and if
the party has any questions, that he/she should consult an
attorney. He asked whether this was of considerable discussion.
MS. RANDALL said that the main consideration was that people
would be doing transfers without understanding what they were
doing. She expressed that this specific language will put
people on notice that more issues could exist besides the
transfer of property, like creditor claims or issues surrounding
children with disabilities. She said that she thought perhaps
this warning would make them stop and think before they act.
4:28:50 PM
REPRESENTATIVE HERRON asked to place on the record the reason
for the prohibition during territorial days and carried forward.
REPRESENTATIVE GRUENBERG said he not been able to do extensive
research, but he recalled one case, Carver v. Gilbert 387 P.2d
928 (1963). The case discussed the genesis of this statute. He
recalled that this was taken from Oregon laws, and at the time
of the Organic Act in the late 19th Century, many laws were
taken from Oregon, and the four unities were important,
including unity of time, title, possession, and interest. He
characterized the time period as being more formal than now, and
the court did not consider intention of the parties, such as how
to get out from under joint tenancy and revoke it. He noted the
difficultly researching Oregon laws that date back to the 1890s.
4:31:20 PM
REPRESENTATIVE SADDLER asked how much property is transferred on
transfer on death provisions in other states. He expressed an
interest in the market share that would be taken away from
probate courts by TOD provisions.
REPRESENTATIVE GRUENBERG deferred to Mr. Orzeske.
MR. ORZESKE said he doesn't have hard statistics, but the first
state that allowed these was Missouri in 1989, and the second
state followed about eight years later. Even in Missouri, TODs
represents a small percentage of transfers. He estimated it is
5 to 15 percent of transfers.
4:32:39 PM
REPRESENTATIVE SADDLER asked if this action is outside the will.
REPRESENTATIVE GRUENBERG answered that [under the bill] the
transfer would not be done with a will, which would generally go
through probate. He added that this [transfer on death deed]
can be done 20 years prior to a will or a few weeks prior to
death, but it is definitely not part of the will.
4:33:20 PM
KEN HELANDER, Associate State Director, Legislative Advocacy,
AARP, offered support for HB 60 including the repeal of the
prohibition of joint tenancy with right of survivorship. He
stated that probate laws which govern the transfer of property
at death vary significantly from state to state. The variations
and complexity of these laws have contributed to a
misunderstanding of this process. In fact, this has led to the
development of uniform model legislation to simplify the process
for the average consumer. Non-probate transfers, such as
payment on death accounts, accounts passing by beneficiary
designation, and joint accounts passing by right of survivorship
do not involve the court system and thus give people a way to
transfer control of personal assets without the costs and
unwanted side effects of probate litigation. He said this bill
would authorize TOD deeds to enable revocable non-probate real
property transfers. Many older people have fixed or limited
incomes and very often their principal asset is their home.
Placing survivors through complex, costly, and lengthy probate
procedures to settle simple matters is an unnecessary burden
during a time of bereavement and stress. Transfers on death
deeds also protect the property interests of the owner by
avoiding many of the pitfalls that occur with deeds in common,
which can even lead to financial exploitation of a vulnerable
elder. The AARP believes that HB 60 will serve the best
interests of Alaskans, and he encouraged passage of the bill.
4:35:39 PM
MARIE DARLIN, Chair, Legislative Advocacy, AARP, said she agreed
with Mr. Helander. She said the work on HB 60 started last year
and the bill has had some good work since then. She urged
members to please finalize the bill. She acknowledged that the
AARP membership is often involved in these types of issues more
than others. She offered AARP's support for the bill.
4:37:29 PM
ERROL CHAMPION, Chair, Alaska Association of Realtors, Inc.,
stated he provided written testimony a year ago in support of HB
60, and the Alaska Association of Realtors continues to support
the bill. He said this is the right direction, since the most
important asset many families often have is their home. This
bill will allow the right of passage without surviving relatives
having to go through legal costs and the length of time to go
through probate. He urged adoption of HB 60.
4:38:25 PM
REPRESENTATIVE SADDLER appreciated him putting this on the
record. He said he had received a letter of support from
realtors in Eagle River so he was pleased to have his testimony.
MR. CHAMPION said it was amazing how many real estate
transactions are related to the passage of ownership due to a
death.
[HB 60 was held over.]