Legislature(1995 - 1996)

03/27/1996 01:30 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
          HB 459 TRUSTS & PROPERTY TRANSFERS IN TRUST                         
                                                                              
 JOE RYAN, legislative aide to Representative Al Vezey, sponsor of             
 HB 459, asked Dick Thwaites to provide the committee with an                  
 overview of the legislation.                                                  
                                                                               
 SENATOR ELLIS asked why the sponsor was not available to testify on           
 HB 459.  MR. RYAN replied Representative Vezey was attending a                
 House Judiciary committee hearing at this time.                               
                                                                               
 DICK THWAITES, an estate planning attorney, gave the following                
 summary of HB 459.  The measure addresses Alaska statutes in the              
 area of trust and probate law (Title 13) and other related                    
 statutes, including the statute of frauds, the rule against                   
 perpetuities, and other sections of the code.  The Alaska statutes            
 are not comprehensive in the area of trust law; they are general              
 and generic.  HB 459 will create several types of trusts defined as           
 irrevocable family trusts.  They are asset protection trusts which            
 essentially give the same protections to a family that a                      
 corporation gives to a business.  Assets unencumbered by spousal or           
 child support rights, creditor's claims, collateral interests of              
 banks, could be transferred into a trust which would allow the                
 grantor of the trust to be among the class of beneficiaries.  Under           
 present law, if a grantor is a beneficiary of an irrevocable trust,           
 the grantor is deemed to have the power to control the trust,                 
 therefore it is accessible by the grantor's creditors.  HB 459 will           
 change the statute to allow the trust to be irrevocable and for the           
 grantor to be among the class of beneficiaries.  It would allow for           
 a family nest egg, and provides an exception to the rule of                   
 perpetuities.  Alaska is in a beneficial position in that it does             
 not have a lot of trust law and case law to encumber the                      
 establishment of such trusts, as Missouri did.  This type of trust            
 will provide an alternative for individuals who might want to pass            
 property to offshore trusts; Alaska would be the unique                       
 jurisdiction within the United States to accomplish that.  This               
 type of trust provides certain estate tax advantages yet does not             
 avoid income, estate, or gift taxes.  The fact that Alaska has no             
 state income tax adds to its appeal as a situs jurisdiction.  The             
 trustee of the estate would have to be an Alaska resident                     
 (according to the Permanent Fund dividend definition), an Alaska              
 Trust Company, an Alaska State bank with trust powers, or a                   
 national banking association with trust powers having its principle           
 place of business in the State of Alaska.  If large sums of money             
 are transferred to Alaska, it is likely large banks will establish            
 Alaska trust companies as wholy owned subsidiaries.                           
                                                                               
 BOB MANLEY testified on his own behalf in support of HB 459.  He              
 suggested the language "some or all" on page 2, line 11, and on               
 page 3, line 1, be changed to approximately 10 percent of the trust           
 assets to enhance the benefits to Alaska and its financial                    
 institutions.                                                                 
                                                                               
 MR. THWAITES agreed with Mr. Manley's philosophy, but believed                
 imposing such a limit would discourage clients.  He suggested that            
 change be considered in the future.                                           
                                                                               
 SENATOR GREEN moved CSHB 459(JUD)am out of committee with                     
 individual recommendations.  There being no objection, the motion             
 carried.                                                                      

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