Legislature(2007 - 2008)BELTZ 211

04/01/2008 09:00 AM STATE AFFAIRS

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved SB 227 Out of Committee
Scheduled But Not Heard
Moved SCS CSHB 196(STA) Out of Committee
Moved SSSB 198 Out of Committee
Moved HB 92 Out of Committee
Moved CSHB 351(JUD) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
         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.                                                                          

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