Legislature(2017 - 2018)BELTZ 105 (TSBldg)

01/30/2018 01:00 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Public Testimony --
-- Please Note Time Change --
*+ SB 126 VISITING PHYSICIANS WITH SPORTS TEAMS TELECONFERENCED
Moved SB 126 Out of Committee
+ HB 208 TRUSTS; COMM PROP TRUSTS; POWERS OF APPT TELECONFERENCED
Moved HB 208 Out of Committee
+= HB 102 LIMITED TEACHER CERTIFICATES; LANGUAGES TELECONFERENCED
Moved CSHB 102(EDC) Out of Committee
+ HB 114 BOILER/PRESSURE VESSEL INSPECTION REPORTS TELECONFERENCED
Moved HB 114 Out of Committee
+ HB 121 OCC. HEALTH AND SAFETY CIVIL PENALTIES TELECONFERENCED
Moved HB 121 Out of Committee
+ HB 124 BENEFIT CORPORATIONS TELECONFERENCED
Moved CSHB 124(FIN) Out of Committee
+ HB 86 STUDENT LOAN DEFAULT/OCC. LICENSE RENEWAL TELECONFERENCED
Heard & Held
+ HCR 8 KODIAK SEAFOOD & MARINE SCIENCE CENTER TELECONFERENCED
Moved HCR 8 AM Out of Committee
        HB 208-TRUSTS; COMM PROP TRUSTS; POWERS OF APPT                                                                     
                                                                                                                                
1:30:06 PM                                                                                                                    
CHAIR  COSTELLO  announced  the  consideration  of  HB  208.  She                                                               
reminded members that  the committee heard the  Senate version of                                                               
the bill last session.                                                                                                          
                                                                                                                                
1:30:31 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
1:34:08 PM                                                                                                                    
CHAIR COSTELLO reconvened the  meeting and invited Representative                                                               
Johnson to present HB 208.                                                                                                      
                                                                                                                                
1:34:29 PM                                                                                                                    
REPRESENTATIVE DELENA JOHNSON,  Alaska State Legislature, Juneau,                                                               
Alaska, sponsor  of HB 208,  stated that this  legislation amends                                                               
trust  law  by  making  it  more  responsive  to  current  market                                                               
conditions. Should  it pass, Alaska  will return to  its premiere                                                               
position of being among the  best jurisdictions in the country to                                                               
hold  trusts.   This  legislation  will  create   jobs  and  help                                                               
diversify the economy.                                                                                                          
                                                                                                                                
1:36:15 PM                                                                                                                    
ANDREW EVENS, Staff, Representative  DeLena Johnson, Alaska State                                                               
Legislature, Juneau,  Alaska, introduced  HB 208 speaking  to the                                                               
following sponsor statement:                                                                                                    
                                                                                                                                
     Alaska has always  sought be a leader  in adopting laws                                                                    
     to  improve   estate  and  tax  planning   options  for                                                                    
     Alaskans as  well as non-resident  trust holders.  As a                                                                    
     result,  by  1998 Alaska  ranked  among  the top  three                                                                    
     favorable environments to place trusts.                                                                                    
                                                                                                                                
     Since  the end  of the  1990s however,  states such  as                                                                    
     Nevada, New York, South Dakota,  and others have passed                                                                    
     newer  laws expanding  the  flexibilities available  to                                                                    
     trusts. As  a result,  Alaska is  now trailing  much of                                                                    
     the nation  in evolving  our trust related  statutes to                                                                    
     meet current  market realities and demands.   According                                                                    
     to  a leading  index,  Alaska's ranking  has fallen  to                                                                    
     eighth place  as an increasing number  of states become                                                                    
     superior trust-favorable environments.                                                                                     
                                                                                                                                
     This bill seeks  to reverse this trend  by updating and                                                                    
     increasing  flexibility  in  trust-related  regulation,                                                                    
     while maintaining  the protections already  codified in                                                                    
     existing statutes.                                                                                                         
                                                                                                                                
     This bill  will stimulate  increased investment  in our                                                                    
     economy through the creation  of more opportunities for                                                                    
     Alaskan  banks, trust  companies,  and other  financial                                                                    
     institutions.   It  will help  to create  higher paying                                                                    
     jobs in  the financial services  sector.  It  will help                                                                    
     to diversify Alaska's economy  by expanding an industry                                                                    
     that is  not 'resource economy' dependent,  and it will                                                                    
     add a source of fee-based income for state government.                                                                     
                                                                                                                                
     House  Bill 208  will  bring Alaska  trust related  law                                                                    
     into  the 21st  century,  restore  the state's  ranking                                                                    
     among trust-friendly states,  stimulate stable economic                                                                    
     growth and  employment, and  bring in  additional state                                                                    
     revenue.                                                                                                                   
                                                                                                                                
     I respectfully ask for your support of House Bill 208.                                                                     
                                                                                                                                
1:40:47 PM                                                                                                                    
SENATOR GARDNER asked if the  trust professionals are required to                                                               
be Alaska residents.                                                                                                            
                                                                                                                                
MR. EVENS deferred the question to Mr. Blattmachr.                                                                              
                                                                                                                                
1:41:16 PM                                                                                                                    
MATHEW   BLATTMACHR,   Vice   President,  Peak   Trust   Company,                                                               
Anchorage, Alaska,  explained that  to be  deemed a  valid Alaska                                                               
trust some  administration must  occur within  the state  and the                                                               
trust  must  have  a  resident   Alaskan  trustee.  The  drafting                                                               
attorney does  not have  to be  a resident,  but it  is advisable                                                               
that  the trust  is  "blessed by  Alaska  counsel." Likewise,  an                                                               
accountant for  a trust is not  required to reside or  operate in                                                               
Alaska.                                                                                                                         
                                                                                                                                
MR.  BLATTMACHR added  that most  of the  provisions in  the bill                                                               
simply clarify  and enhance the flexibility  of existing statute.                                                               
He  cited the  changes to  the decanting  statute as  an example.                                                               
Alaska  passed its  decanting statute  20 years  ago and  several                                                               
states have  more modern decanting  laws. HB 208 seeks  to update                                                               
the statute and put Alaska back on par.                                                                                         
                                                                                                                                
CHAIR COSTELLO asked for an explanation of decanting.                                                                           
                                                                                                                                
MR. BLATTMACHR explained that decanting  in the trust industry is                                                               
similar  to decanting  wine. It  is  the gradual  pouring of  the                                                               
contents  of one  container into  another vehicle.  In the  trust                                                               
context, the assets stay the  same, but the container is changed.                                                               
Decanting is a  process that might be used to  make a change when                                                               
there is  a scrivener's error  in an irrevocable  trust document,                                                               
when there  is an unexpected tax  law change, or when  there is a                                                               
substantial change in beneficiary circumstances.                                                                                
                                                                                                                                
SENATOR MEYER asked  if a nonresident who doesn't  have assets in                                                               
Alaska can set up an Alaska trust.                                                                                              
                                                                                                                                
1:44:29 PM                                                                                                                    
MR. BLATTMACHR answered no; one  of the safe harbor provisions is                                                               
that some of the assets of the trust must be in Alaska.                                                                         
                                                                                                                                
SENATOR  MEYER  asked if  an  Alaskan  resident could  engage  an                                                               
Alaskan  attorney to  place both  their Alaska  assets and  their                                                               
Washington state assets in a single trust.                                                                                      
                                                                                                                                
MR. BLATTMACHR  said yes,  but he  and other  trust professionals                                                               
would recommend  engaging an attorney  who is either  licensed in                                                               
both  states or  who  works  with an  organization  that has  the                                                               
capability to offer advice on the laws of both states.                                                                          
                                                                                                                                
SENATOR MEYER  commented that  hiring an  attorney in  each state                                                               
would be an additional expense.                                                                                                 
                                                                                                                                
MR.  BLATTMACHR  agreed  and added  that  individuals  have  been                                                               
willing to  pay that  cost, so they  can accomplish  the planning                                                               
under Alaska's flexible trust laws.                                                                                             
                                                                                                                                
SENATOR MICCICHE asked  if the taxable value of the  trust is the                                                               
ultimate value to the state.                                                                                                    
                                                                                                                                
MR. BLATTMACHR answered yes.                                                                                                    
                                                                                                                                
SENATOR  MICCICHE observed  that  the bill  primarily deals  with                                                               
powers of appointment. He asked  if other issues have made Alaska                                                               
trust law less competitive.                                                                                                     
                                                                                                                                
MR.  BLATTMACHR  clarified  that  the decanting  statute  is  the                                                               
greatest  factor  for  Alaska  being  a  less  competitive  trust                                                               
landscape.  Powers  of  appointment   is  a  smaller  piece  that                                                               
clarifies when those powers are triggered.                                                                                      
                                                                                                                                
SENATOR MICCICHE asked if he agrees  that the benefits of a trust                                                               
vary depending on the individual.                                                                                               
                                                                                                                                
MR. BLATTMACHR  agreed that the  best trust  jurisdiction depends                                                               
on the planning scenario.                                                                                                       
                                                                                                                                
1:49:15 PM                                                                                                                    
CHAIR COSTELLO opened public testimony on HB 208.                                                                               
                                                                                                                                
1:49:41 PM                                                                                                                    
ABIGAIL O'CONNOR, representing self,  Anchorage, Alaska, said she                                                               
is a trust  and estate attorney testifying in support  of HB 208.                                                               
She referenced  the question about trust  decanting and explained                                                               
that this  is a very  important feature  to "fix" a  broken trust                                                               
without going to  court. Many states have  greatly expanded their                                                               
rules  on perpetuity  which means  that trusts  can exist  longer                                                               
than  estate planning  attorneys  can envision  in  terms of  the                                                               
interests of the beneficiaries.  Decanting allows the assets from                                                               
the  current trust  to be  placed in  a new  trust. She  cited an                                                               
example  of a  trust  with mandatory  distributions  that are  no                                                               
longer appropriate because the beneficiary  is disabled and needs                                                               
protection. The decanting provision in  HB 208 will make Alaska a                                                               
more flexible jurisdiction  and may bring more  trust business to                                                               
the state.                                                                                                                      
                                                                                                                                
1:53:32 PM                                                                                                                    
JONATHAN BLATTMACHR,  representing self,  Long Island,  New York,                                                               
stated that he  was the original drafter of the  Alaska Trust Act                                                               
that passed in 1997, and he  wrote the first decanting statute in                                                               
the nation.  It was for New  York and the second  was for Alaska.                                                               
He said  his goal has been  to make Alaska the  premier financial                                                               
capital in the country. He agreed  with Mr. Evens that Alaska has                                                               
seen tremendous  competition from other jurisdictions.  He opined                                                               
that HB  208 will  help return  Alaska to the  front of  the line                                                               
thereby attracting more business and bringing in new revenue.                                                                   
                                                                                                                                
1:55:23 PM                                                                                                                    
DOUGLAS  BLATTMACHR,  President  and  CEO,  Peak  Trust  Company,                                                               
Anchorage, Alaska, stated wholehearted support  for HB 208. It is                                                               
advantageous for Alaskans and the state.                                                                                        
                                                                                                                                
1:56:01 PM                                                                                                                    
RICH HOMPESCH, representing self,  Fairbanks, Alaska, stated that                                                               
he is an  attorney in private practice and would  like to respond                                                               
to earlier questions  related to HB 208. Senator  Meyer asked how                                                               
assets from other  states end up in an Alaska  trust. He said his                                                               
experience  is  that  the  nonresident  client  forms  an  Alaska                                                               
limited  liability company  (LLC), transfers  the assets  to that                                                               
LLC, and  then transfers  the membership interest  in the  LLC to                                                               
the Alaska trust.  The state benefits because  those entities pay                                                               
a $250 fee to form an LLC and  a $100 biannual tax. He added that                                                               
the decanting  provision will be particularly  valuable to trusts                                                               
that Alaska attorneys prepared 25 years ago that need updating.                                                                 
                                                                                                                                
1:58:11 PM                                                                                                                    
CHAIR COSTELLO  closed public  testimony on HB  208 and  said she                                                               
would look to the will of the committee.                                                                                        
                                                                                                                                
1:58:23 PM                                                                                                                    
SENATOR  GARDNER asked  what proportion  of  Alaskans use  Alaska                                                               
trusts. She posited  that only a handful of  people are following                                                               
the bill.                                                                                                                       
                                                                                                                                
DOUGLAS BLATTMACHR said Peak Trust  Company sees a fair number of                                                               
Alaskans  who  use  this  type   of  planning,  and  they  aren't                                                               
necessarily  high  net worth  individuals.  He  noted that  trust                                                               
planning is also used for special needs beneficiaries.                                                                          
                                                                                                                                
SENATOR MEYER  asked if  there is any  protection of  assets that                                                               
the settlor neglected to add to or include to the trust.                                                                        
                                                                                                                                
DOUGLAS  BLATTMACHR said  an asset  purchased in  an individual's                                                               
name would  not have  the protection of  the trust.  However, the                                                               
individual  could transfer  the  asset  to the  LLC  and have  it                                                               
placed inside the trust.                                                                                                        
                                                                                                                                
SENATOR MICCICHE asked  him to clarify that  individuals may have                                                               
different trusts  for different purposes  and they may  choose to                                                               
hold certain assets outside the trust.                                                                                          
                                                                                                                                
MR. BLATTMACHR confirmed that individuals  may have more than one                                                               
trust and that it's not necessarily an all or none scenario.                                                                    
                                                                                                                                
CHAIR  COSTELLO  found  no  further  questions  and  solicited  a                                                               
motion.                                                                                                                         
                                                                                                                                
2:02:23 PM                                                                                                                    
SENATOR  MICCICHE moved  to  report HB  208  from committee  with                                                               
individual recommendations and attached fiscal note(s).                                                                         
                                                                                                                                
2:02:38 PM                                                                                                                    
CHAIR COSTELLO  found no objection  and stated that HB  208 moves                                                               
from the Senate Labor and Commerce Standing Committee.                                                                          

Document Name Date/Time Subjects
SB 126 Sectional Analysis.pdf SL&C 1/30/2018 1:00:00 PM
SB 126
SB 126 Sponsor Statement.pdf SL&C 1/30/2018 1:00:00 PM
SB 126
SB 126 Testimony.pdf SL&C 1/30/2018 1:00:00 PM
SB 126
SB126-DCCED-CBPL-01-26-18.pdf SL&C 1/30/2018 1:00:00 PM
SB 126
HB208 Sectional Analysis ver A 4.10.17.pdf SL&C 1/30/2018 1:00:00 PM
HB 208
HB208-LAW-CIV-01-26-2018.pdf SL&C 1/30/2018 1:00:00 PM
HB 208
Sponsor Statement - HB - 208.pdf SL&C 1/30/2018 1:00:00 PM
HB 208 Fiscal Note 01.26.18
HB102 Supporting Document-Nome Schools Resolution 1.26.18.pdf SL&C 1/30/2018 1:00:00 PM
HB 102
HB102 Supporting Document-Koniag KANA Roundtable Resolution 1.26.18.pdf SL&C 1/30/2018 1:00:00 PM
HB 102
HB102 Supporting Document-Dr Wilson Letter 1.26.18.pdf SL&C 1/30/2018 1:00:00 PM
HB 102
HB102 Supporting Document-Native Village of Port Lions Resolution 1.26.18.pdf SL&C 1/30/2018 1:00:00 PM
HB 102
HCR 8 Supporting Document-KSMSC Budget.pdf SL&C 1/30/2018 1:00:00 PM
HCR 8
HCR 8 Supporting Document-APICDA 12.10.15.pdf SL&C 1/30/2018 1:00:00 PM
HCR 8
HCR 8 Supporting Document AML 11.5.15.pdf SL&C 1/30/2018 1:00:00 PM
HCR 8
HCR 8 ver A.A.PDF SL&C 1/30/2018 1:00:00 PM
HCR 8
HCR 8 Explanation of Changes ver A.A 1.28.17.pdf SL&C 1/30/2018 1:00:00 PM
HCR 8
HCR 8 Leg Research Report 1.2.16.pdf SL&C 1/30/2018 1:00:00 PM
HCR 8
HCR 8 Sponsor Statement ver A.A 1.28.18.pdf SL&C 1/30/2018 1:00:00 PM
HCR 8
HCR8-LEG-SESS-01-29-18.pdf SL&C 1/30/2018 1:00:00 PM
HCR 8
HB102 Fiscal Note EED-SSA-01-26-18.pdf SL&C 1/30/2018 1:00:00 PM
HB 102
HB102.PDF SL&C 1/30/2018 1:00:00 PM
HB 102
HB114 Sectional Analysis.pdf SL&C 1/30/2018 1:00:00 PM
HB 114
HB114 Sponsor Statement.pdf SL&C 1/30/2018 1:00:00 PM
HB 114
HB114 ver D.PDF SL&C 1/30/2018 1:00:00 PM
HB 114
HB 114-DOLWD-MI-01-26-18.pdf SL&C 1/30/2018 1:00:00 PM
HB 114
HB121-DOLWD-OSH-1-26-18.pdf SL&C 1/30/2018 1:00:00 PM
HB 121
HB 121 - ver O 2.27.17.PDF SL&C 1/30/2018 1:00:00 PM
HB 121
HB 121 - Sponsor Statement 3.6.17.pdf SL&C 1/30/2018 1:00:00 PM
HB 121
HB 121 - Sectional Analysis 3.6.17.pdf SL&C 1/30/2018 1:00:00 PM
HB 121
HB 121 - Support Document - Federal memo to state plans 02.23.17.pdf SL&C 1/30/2018 1:00:00 PM
HB 121
HB 121 - Additional Document - Sponsor's Reply to House Judiciary Committee Questions 3.10.17.pdf SL&C 1/30/2018 1:00:00 PM
HB 121
HB 121 - Supporting Document-OSHA Fact Sheet 3.6.17.pdf SL&C 1/30/2018 1:00:00 PM
HB 121
HB124 Explanation of changes from ver A to ver U 1.18.18.pdf SL&C 1/30/2018 1:00:00 PM
HB 124
HB124 Sponsor Statement 1.18.18.pdf SL&C 1/30/2018 1:00:00 PM
HB 124
HB124 Sectional Analysis ver U 1.18.18.pdf SL&C 1/30/2018 1:00:00 PM
HB 124
HB124CS(FIN)-DCCED-CBPL-01-26-18.pdf SL&C 1/30/2018 1:00:00 PM
HB 124
HB124 Support Documents - Letters of Support 4.11.17.pdf SL&C 1/30/2018 1:00:00 PM
HB 124
HB124 ver. U 5.11.17.pdf SL&C 1/30/2018 1:00:00 PM
HB 124
HB 86 ver A.PDF SL&C 1/30/2018 1:00:00 PM
HB 86
HB 86 - Sponsor Statement.pdf SL&C 1/30/2018 1:00:00 PM
HB 86
HB 86 - Fiscal Note EED-ACPE.pdf SL&C 1/30/2018 1:00:00 PM
HB 86
HB 86 Supporting Document - Letter of Support.PDF SL&C 1/30/2018 1:00:00 PM
HB 86
HB 86 - Background - Questions Memo HLNC.pdf SL&C 1/30/2018 1:00:00 PM
HB 86
HB 86 - Background - ACPE Loan Default Consequences.pdf SL&C 1/30/2018 1:00:00 PM
HB 86
HB 86 - Background - NY Times Student Loans.pdf SL&C 1/30/2018 1:00:00 PM
HB 86
HB 86 Senator Costello Senate Labor and Commerce Committee Follow-up.pdf SL&C 1/30/2018 1:00:00 PM
HB 86
ASMA Letter of Support SB 126.pdf SL&C 1/30/2018 1:00:00 PM
SB 126