Legislature(2001 - 2002)
02/21/2001 01:38 PM Senate JUD
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
Number 978
SB 81-NONADEMPTION OF TRANSFERS IN TRUSTS
SENATOR THERRIAULT, sponsor of SB 81, said the bill is a clean up
for a piece of legislation that was passed last year - HB 275. One
section of HB 275 had incorrect language that rendered a portion of
the new law ineffective. SB 81 proposes a fix for this problem.
SENATOR ELLIS asked if SB 81 is the "clean-up of the clean-up last
year that was the clean-up of the Joe Ryan trust bill."
Number 1057
CHAIRMAN TAYLOR said seven or eight bills have been passed over the
years tying to keep up with supreme court and tax court changes -
trying to make Alaska an attractive state for people to place their
money in trust.
SENATOR ELLIS said a more comprehensive look at SB 81 might be in
order.
CHAIRMAN TAYLOR said he has received a report on this question and
would be scheduling a meeting at a later time.
SENATOR THERRIAULT said Section 1. AS 13.12.712(b), of HB 275, used
language such as "authority of a durable power of attorney for an
incapacitated principal." This was incorrect language with regard
to trusts - when there is a trust there are trustees. This error
has been corrected. The AG's office has sent a memo saying SB 81
appears to amend AS 13.12.712 "to properly reflect the purpose for
the entire statute, namely the nonademption of specific transfers
in trusts."
Number 1220
SENATOR ELLIS thanked Senator Therriault for going to the revisor
first.
CHAIRMAN TAYLOR said Senator Ellis' point was a very good one.
Often times the revisor is not consulted and bills are just
created.
SENATOR THERRIAULT said the State Affairs Committee saw the
revisor's bill on 2/20/01.
Number 1350
MR. STEPHEN GREER, Attorney, testifying via teleconference from
Anchorage, said HB 275 was a complicated bill trying to give Alaska
citizens the benefit of certain tax selections. Section 2, which
was a non-tax provision, attempted to make the law applicable to
wills equally applicable to revocable trusts. People use revocable
trusts to avoid the expense of a probate proceeding. SB 81 cleans
up HB 275 with respect to one particular section.
CHAIRMAN TAYLOR asked for the definition of nonademption.
MR. GREER said the definition means not extinguished. As an
example: In a will or trust if you give a piece of property to a
relative, and that piece of property has been sold by you prior to
your death - under the general rule - this request would be adeemed
or extinguished because the property does not exist at the time of
death and the relative would not receive the property.
MR. GREER said there are a few instances when a specific bequest is
not adeemed or extinguished and SB 81 is meant to cover this
situation with respect to revocable trusts. He gave the following
examples for bequeaths not adeemed:
The first instance is when a property is being condemned
and there is an unpaid condemnation award for the taking
of the property - the person who would have received the
property is instead entitled to receive the condemnation
award.
The second instance is when a piece of property has been
directed to a relative and that piece of property is
destroyed and insurance proceeds remain unpaid at death,
the relative would be entitled to the unpaid insurance
proceeds.
Another instance is when a person is the obligee of a
promissory note and that person wants the note to go to a
relative but before the person's death, there is
foreclosure on the note and the property that was used to
secure the note is taken back. In this case, the
relative would be entitled to that piece of property.
Section (b) is meant to address the situation when a
settlor makes a specific bequest but becomes incompetent
and the trustee sells the property. In this case, the
intended recipient of the specifically bequeathed
property is entitled to other properties of equal value.
MR. GREER said all of these examples are in conformity with the
Uniform Probate Code.
Number 1526
SENATOR COWDERY asked - for a deed of trust - if the value is
larger after a foreclosure than the balance of the money owed - is
this an issue for SB 81?
MR. GREER said the Uniform Probate Code has contemplated this - the
excess value would go to the residuary estate.
SENATOR COWDERY moved to pass SB 81 from committee with individual
recommendations. There being no objection, the motion passed.
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