Legislature(2007 - 2008)BELTZ 211
04/01/2008 09:00 AM STATE AFFAIRS
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* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 196-HANDLING MATTERS AFTER A PERSON'S DEATH 10:08:48 AM CHAIR MCGUIRE announced the consideration of HB 196. [Before the committee was CSHB 196(JUD).] The committee took a brief at ease at 10:09:06 AM. 10:10:11 AM REPRESENTATIVE JAY RAMRAS, Alaska State Legislature, said HB 196 is an excellent update on wills and related material. It is a little esoteric. Concerns of Senator Bunde were taken care of in the Senate Labor and Commerce committee. The issue of anatomical gifts is related, and he is prepared to roll HB 420 into HB 196. 10:12:30 AM JANE PIERSON, Staff to Representative Ramras, said HB 196 clarifies and updates Alaska statute governing estates. It provides a penalty clause for contesting a will or instituting other proceedings even if probable cause exists. This will align wills with revocable trusts, which are often used in wills. It amends AS13.16.680 (a) to change the statement in an affidavit to be used by a decedent's successor to collect personal property in a small estate. It was changed in the previous committee with an amendment by Senator Bunde. It will raise the limit from $15,000 to $100,000 for personal property. It will also count for $100,000 in vehicles. The bill also lays out protections for benefits paid under life insurance and retirement plans, so debtors cannot get into that money. 10:14:39 AM CHAIR MCGUIRE said Version K includes anatomical gifts. She declared a conflict because she has a bill on the Senate side. SENATOR BUNDE moved to adopt the committee substitute (CS), labeled 25-LS0447\K, as the working document. Hearing no objections, Version K was before the committee. CHAIR MCGUIRE said her father is on the Life Alaska board and advocates organ and tissue donations. 10:15:46 AM STEVE GREER, Attorney, Anchorage, said Section 1 of HB 196 conforms to current trust laws. Sections 2 and 3, which are the subjects of the labor and commerce amendment, raise the amount whereby it is not necessary to go through a probate process. Currently if someone dies with more than $15,000, it has to go through probate, and that was entirely too low. It is $50,000 in Oregon with a provision for real estate. Washington has a provision dealing solely with personal property, and that is $100,000. There is concern that by raising it to $100,000, it could be abused by beneficiaries. For example, a bad brother goes into a bank with the affidavit and gets the money to himself. But that affidavit procedure cannot occur until at least 30 days after death, and someone could be appointed as a personal representative by then and render the affidavit procedure moot. A person can go back to the court and get a personal representative appointed and get an order to turn the money over. But if the money is gone, it is gone. It was felt that it was a bit high, and $50,000 is an amount that everyone can live with, although no one really objects to the higher amount. Section 4 is very important, and he gave an example of a person with a business calamity who had life insurance for a spouse and child. Currently, if the money is paid directly it would be exempt from creditor claims, but if the money is paid to a minor child in trust, there is no provision protecting those proceeds. So Section 4 fills that void in law. 10:19:43 AM SENATOR FRENCH said Section 1 makes Alaska consistent with trusts, but it is reversing a long-standing provision. MR. GREER said Section 1 is really a penalty clause. For example, if "a decedent wanted to leave property solely to one child to the exclusion of the other child … but they're leaving the child who isn't to receive as much, let's say a sum of $25,000. What this does, if the decedent chose to include a incontestability clause, which says that if the person who is to receive the lesser amount -- and this was the choice of the decedent -- were to contest this thing, and if they were to lose … then they are being put to the test because they very well may lose the $25,000 amount that they would otherwise receive. On the other hand, if it turns out that the will was done fraudulently or under duress, and the will is thrown out, then, of course, this clause doesn't apply at all." California has a similar provision. This was part of Alaska's uniform probate code that was enacted in the early 1980s, and there have been many, many changes made in the code by other states. "We have decided this year that … we should bring this in line with our present trust statutes, which have been brought current with other states." 10:22:08 AM SENATOR FRENCH asked why it wouldn't apply. The bill says it will apply even if probable cause exists. "If I institute proceedings because I think there's been fraud, and a judge finds there's probable cause to support my belief that there's been fraud," it says the penalty provision is enforceable. MR. GREER said in that case, the will would be thrown out, and the incontestability clause would have no force at all. Probable cause and winning the case are two different standards. A person who contested and lost would be penalized for having brought that cause of action. It is meant to prevent needless and miscellaneous litigation that sometimes occurs when people don't get what they think they are entitled to. SENATOR FRENCH said he still has great concerns. It seems to prevent people from having an opportunity to have their claims heard, and it makes them walk away when there is probable cause to believe there is something wrong with the will. 10:24:24 AM MR. GREER said he does his estate planning through revocable trusts and not wills. "I would like to avoid the whole probate process to begin with." He is part of a group trying to keep Alaska's laws current with other states. The group wanted to make will laws conform to trust laws. He understands Senator French's point and can't dispute it. But there is a protective provision. It does put the aggrieved party to the test. If they have a strong case and prevail, the will gets thrown out. It is meant to prevent cases brought about for harassment or to try to hold the estate hostage. CHAIR MCGUIRE said it is a difficult issue, and she noted the business of attracting individuals who want enforceability in wills. It is likely that they want the provisions to be as enforceable as possible. Mr. Greer would like to draw more business to Alaska and stay competitive with other states. But if you were the person who didn't get what you thought you should, you wouldn't like this provision. 10:26:52 AM SENATOR BUNDE said it is a turf battle. The final wishes of the deceased should have precedence. Someone in a dysfunctional family should be able to write someone out of a will. SENATOR BUNDE moved to report the Senate committee substitute to HB 196, labeled 25-LS0447\K, from committee with individual recommendations and attached fiscal note(s). There being no objection, SCS CSHB 196 (STA) passed out of committee.