Legislature(1997 - 1998)
05/07/1997 08:37 AM House JUD
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
May 7, 1997
8:37 a.m.
MEMBERS PRESENT
Representative Joe Green, Chairman
Representative Con Bunde, Vice Chairman
Representative Brian Porter
Representative Norman Rokeberg
Representative Jeannette James
Representative Eric Croft
Representative Ethan Berkowitz
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 199
"An Act relating to the property, transactions, and obligations of
spouses; relating to the augmented estate; amending Rule 301,
Alaska Rules of Evidence; and providing for an effective date."
- MOVED CSHB 199(JUD) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 3(JUD)
"An Act authorizing prosecution and trial in the district court of
municipal curfew violations, and providing for punishment of minors
upon conviction for violation of a curfew ordinance."
- MOVED CSSB 3(JUD) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 119(L&C)
"An Act relating to fraternal benefit societies; and providing for
an effective date."
- MOVED CSSB 119(L&C) OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 199
SHORT TITLE: COMMUNITY PROPERTY
SPONSOR(S): REPRESENTATIVE(S) RYAN, Therriault
JRN-DATE JRN-PG ACTION
03/18/97 736 (H) READ THE FIRST TIME - REFERRAL(S)
03/18/97 737 (H) L&C, JUDICIARY
04/18/97 (H) L&C AT 3:15 PM CAPITOL 17
04/18/97 (H) MINUTE(L&C)
04/21/97 1211 (H) L&C RPT 3DP 1NR
04/21/97 1211 (H) DP: RYAN, HUDSON, COWDERY; NR: BRICE
04/21/97 1212 (H) 2 ZERO FISCAL NOTES (COURT, DCED)
04/23/97 (H) JUD AT 1:00 PM CAPITOL 120
04/23/97 (H) MINUTE(JUD)
04/25/97 (H) JUD AT 8:30 AM CAPITOL 120
04/25/97 (H) MINUTE(JUD)
05/01/97 (H) JUD AT 1:00 PM CAPITOL 120
05/01/97 (H) MINUTE(JUD)
05/06/97 (H) JUD AT 2:15 PM CAPITOL 120
05/06/97 (H) MINUTE(JUD)
05/07/97 (H) JUD AT 8:30 AM CAPITOL 120
BILL: SB 3
SHORT TITLE: MINOR'S CURFEW VIOLATIONS
SPONSOR(S): SENATOR(S) PEARCE, Donley
JRN-DATE JRN-PG ACTION
01/03/97 14 (S) PREFILE RELEASED 1/3/97
01/13/97 14 (S) READ THE FIRST TIME - REFERRAL(S)
01/13/97 14 (S) HES,JUD
02/21/97 (S) HES AT 9:00 AM BUTROVICH ROOM 205
02/21/97 (S) MINUTE(HES)
02/21/97 446 (S) HES RPT 2DP 2NR 1AM
02/21/97 446 (S) DP:WILKEN,WARD;NR:ELLIS,GREEN;
AM:LEMAN
02/21/97 446 (S) FISCAL NOTE (COURT)
02/21/97 446 (S) ZERO FN (DPS)
02/21/97 446 (S) INDETERMINATE FNS (ADM, DHSS)
02/21/97 446 (S) FIN REFERRAL ADDED FOLLOWING
JUDICIARY
03/07/97 (S) JUD AT 1:30 PM BELTZ ROOM 211
03/07/97 (S) MINUTE(JUD)
03/10/97 652 (S) JUD RPT CS 3DP 1NR NEW TITLE
03/10/97 652 (S) DP: PEARCE, MILLER, PARNELL;
NR: ELLIS
03/14/97 739 (S) PREVIOUS INDETERMINATE FN APPLIES
(DHSS)
03/21/97 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/21/97 (S) MINUTE(FIN)
03/21/97 (S) MINUTE(FIN)
03/25/97 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/25/97 (S) MINUTE(FIN)
03/25/97 (S) MINUTE(FIN)
03/25/97 850 (S) FIN RPT 4DP 2NR JUD CS
03/25/97 850 (S) DP: PEARCE, SHARP, PARNELL, TORGERSON
03/25/97 850 (S) NR: PHILLIPS, ADAMS
03/25/97 850 (S) PREVIOUS FN (COURT)
03/25/97 850 (S) PREVIOUS INDETERMINATE FNS(ADM, DHSS)
03/25/97 850 (S) PREVIOUS ZERO FN (DPS)
04/09/97 (S) RLS AT 11:16 AM FAHRENKAMP RM 203
04/14/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
04/14/97 (S) MINUTE(RLS)
04/15/97 1144 (S) RULES TO CALENDAR 4/15/97
04/15/97 1144 (S) READ THE SECOND TIME
04/15/97 1145 (S) JUD CS ADOPTED UNAN CONSENT
04/15/97 1145 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/15/97 1145 (S) READ THE THIRD TIME CSSB 3(JUD)
04/15/97 1145 (S) PASSED Y15 N2 E3
04/15/97 1145 (S) DUNCAN NOTICE OF RECONSIDERATION
04/16/97 1227 (S) RECONSIDERATION NOT TAKEN UP
04/16/97 1228 (S) TRANSMITTED TO (H)
04/17/97 1131 (H) READ THE FIRST TIME - REFERRAL(S)
04/17/97 1131 (H) JUDICIARY
04/25/97 (H) JUD AT 1:00 PM CAPITOL 120
04/25/97 (H) MINUTE(JUD)
05/01/97 (H) JUD AT 1:00 PM CAPITOL 120
05/01/97 (H) MINUTE(JUD)
05/06/97 (H) JUD AT 2:15 PM CAPITOL 120
05/06/97 (H) MINUTE(JUD)
05/06/97 1577 (H) FIN REFERRAL ADDED
BILL: SB 119
SHORT TITLE: FRATERNAL BENEFIT SOCIETIES
SPONSOR(S): LABOR & COMMERCE
JRN-DATE JRN-PG ACTION
03/06/97 593 (S) READ THE FIRST TIME - REFERRAL(S)
03/06/97 593 (S) L&C, JUD
03/13/97 (S) L&C AT 1:30 PM FAHRENKAMP RM 203
03/13/97 (S) MINUTE(L&C)
03/14/97 740 (S) L&C RPT CS 3DP 2NR SAME TITLE
03/14/97 740 (S) DP: LEMAN, KELLY, MILLER
03/14/97 740 (S) NR: MACKIE, HOFFMAN
03/14/97 740 (S) ZERO FISCAL NOTE TO SB & CS (DCED)
04/04/97 (S) JUD AT 1:30 PM BELTZ ROOM 211
04/04/97 (S) MINUTE(JUD)
04/09/97 (S) JUD AT 1:30 PM BELTZ ROOM 211
04/09/97 (S) MINUTE(JUD)
04/10/97 (S) JUD AT 3:30 PM BELTZ ROOM 211
04/11/97 1100 (S) JUD RPT 3DP 1NR (L&C)CS
04/11/97 1100 (S) DP: TAYLOR, MILLER, ELLIS;
NR: PARNELL
04/11/97 1100 (S) PREVIOUS ZERO FN (DCED)
04/14/97 (S) RLS AT 10:45 AM FAHRENKAMP RM 203
04/14/97 (S) MINUTE(RLS)
04/14/97 1126 (S) RULES TO CALENDAR 4/14/97
04/14/97 1131 (S) READ THE SECOND TIME
04/14/97 1131 (S) L&C CS ADOPTED UNAN CONSENT
04/14/97 1131 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/14/97 1131 (S) READ THE THIRD TIME CSSB 119(L&C)
04/14/97 1131 (S) PASSED Y14 N3 E3
04/14/97 1132 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
04/14/97 1132 (S) LINCOLN NOTICE OF RECONSIDERATION
04/15/97 1150 (S) RECONSIDERATION NOT TAKEN UP
04/15/97 1151 (S) TRANSMITTED TO (H)
04/16/97 1110 (H) READ THE FIRST TIME - REFERRAL(S)
04/16/97 1110 (H) JUDICIARY
05/02/97 (H) JUD AT 1:00 PM CAPITOL 120
05/02/97 (H) MINUTE(JUD)
WITNESS REGISTER
REPRESENTATIVE JOE RYAN
Alaska State Legislature
Capitol Building, Room 420
Juneau, Alaska 99801
Telephone: (907) 465-3875
POSITION STATEMENT: Sponsor of HB 199.
CHARLIE MILLER
National Fraternal Congress of America
P.O. Box 102286
Anchorage, Alaska 99510
(No telephone number provided)
POSITION STATEMENT: Testified in favor of CSSB 119(L&C).
ACTION NARRATIVE
TAPE 97-80, SIDE A
Number 0001
CHAIRMAN JOE GREEN called the House Judiciary Standing Committee
meeting to order at 8:37 a.m. Members present at the call to order
were Representatives Green, Bunde, Porter, Croft and Berkowitz.
Representatives Rokeberg and James arrived at 8:38 a.m. and 8:45
a.m., respectively.
HB 199 - COMMUNITY PROPERTY
Number 0036
CHAIRMAN GREEN announced the first order of business would be House
Bill No. 199, "An Act relating to the property, transactions, and
obligations of spouses; relating to the augmented estate; amending
Rule 301, Alaska Rules of Evidence; and providing for an effective
date." He noted that testimony had been taken previously.
Number 0054
REPRESENTATIVE JOE RYAN, sponsor, stated, "I think we have tried to
address the majority of the concerns the committee had about the
bill." He referred to the Oklahoma Session Laws of 1939 and a
court case from the U.S. District Court, Northern District of
Oklahoma, which is a decision for a taxpayer; he said Oklahoma had
an elective law similar to this, passed in 1939. Some people named
McCollum had nominated some of their property as community
property. The law was subsequently repealed. The husband died.
And the Internal Revenue Service (IRS) would not allow the step-up
in basis. "So, it was taken to court, and the court affirmed that
the property was community property, that the step-up in basis was
appropriate, and it made a decision for the taxpayer,"
Representative Ryan explained. He said he'd brought this up to
show that there is case law and that it has worked in other
jurisdictions; he believes it will work just as well here.
REPRESENTATIVE RYAN indicated the bill offers the opportunity to
the citizens of Alaska and others who would benefit from it. He
fully supports the amendments to be offered by Representative
Croft, which he hopes will allay the concerns expressed by the
"family law folks," to make sure that no one is hoodwinked or
misinformed and that there is no problem. Representative Ryan
concluded, "We think this is a marvelous opportunity for people to
take advantage of the federal law and to bring money into the
country and for Alaskans."
Number 0262
CHAIRMAN GREEN asked whether Representative Ryan had a response to
oral and written testimony from family law attorneys and divorce
attorneys that having such a trust could create a problem if a
marriage dissolved.
Number 0298
REPRESENTATIVE RYAN replied that the original legislation was based
on the Wisconsin model, which calls for a 50/50 split. One of
Representative Croft's amendments has language in "upper case
bold" that will tell people before signing one of these voluntary
agreements that they should make sure that they get counseling and
are fully knowledgeable about what is going on. They'd swapped the
Wisconsin model for the state of Washington model, which says the
court has the discretion to make a distribution as it sees fit if
it finds that one partner was misinformed or hoodwinked. He
suggested that should address anybody's problem. He noted that
"any property not nominated as community property stays individual
property, and that's the discretion of the court."
Number 0434
REPRESENTATIVE ETHAN BERKOWITZ asked whether there was anyone from
the family law section listening.
CHAIRMAN GREEN replied that he didn't know; they'd closed
testimony.
REPRESENTATIVE RYAN stated, "I have no problem with that. ... I
don't want to see anyone taken advantage of. I've talked to a
number of women and asked them what their concerns were. Most of
them like the idea of being able to take advantage of the step-up
in basis, but some have said, `Well, you know, the husband tells
you to sign something, you go ahead and do it.' And I said, `With
... these amendments, would you think that would address things
fairly?' And they seemed to feel that that's an appropriate thing.
And I support those amendments."
Number 0487
CHAIRMAN GREEN said he believed one concern offered was the
question of what would happen if somebody encumbered the trust,
unbeknownst to the other. He noted that the judge would still have
discretion.
REPRESENTATIVE RYAN explained, "Well, if you have a 50/50
ownership, which is under community property law, someone can only
encumber what they have, their half. I can't go and encumber your
property. Or I could try; I could sign a quitclaim deed and
everything, but I don't think anybody's going to stand for it. ...
But I can encumber my property. I have every legal right to do
that. What I own, I own. ... This law here talks about what you
nominate as community property. Everything else stays individual.
... Gifts, bequests, inheritances and so forth stay with the
individual to whom they come, and ... in the case of a divorce,
that would be adjudicated by the court as to what a reasonable
disposition of the property is in the case of the divorce."
REPRESENTATIVE RYAN said, "... we feel there's not going to be a
lot of this divorce, because, first place, a married couple have
assets with unrealized gain would -- to take advantage of the
federal provision, these people, who have lived together for a long
time and intend on staying married until such time as they die --
if there were younger folks who had something nominated in
community property, there probably wouldn't be much of a gain,
because you have to hold that asset for a period of time to get
that unrealized gain. So, ... it's aimed primarily at people that
perhaps years ago bought a house for $10,000 and now it's worth a
couple hundred. And so, they can take advantage of ... getting
capital gains."
CHAIRMAN GREEN noted that many people divorce after 20 or 25 years.
REPRESENTATIVE RYAN again suggested the amendments adequately
address the concerns.
Number 0657
REPRESENTATIVE BRIAN PORTER apologized for missing the portion of
the testimony that dealt with family law practice concerns. He
stated, "But in reading some of it, one of the issues was that the
court could find now that a prenuptial was unconscionable at the
time of the divorce. But with this, they would have to find that
it was unconscionable at the time it was consummated, I mean the
trust or the community property establishment. Was there some
testimony about the significant difference of those two, what could
make it not unconscionable in the beginning but unconscionable at
the time of a divorce?"
REPRESENTATIVE RYAN replied that "in the statute, it says that this
is a good-faith agreement entered into by both parties." He noted
that the parties can also opt out; it is purely elective. Basic
property in Alaska will remain individual property.
REPRESENTATIVE PORTER clarified that he was asking the committee.
Number 0731
REPRESENTATIVE ERIC CROFT stated, "The way that can work is you
have two pieces of property, both worth $200,000, stock and a
house. And you say, `If we get divorced, you keep the stock and
I'll keep the house.' And in the meantime, either the market
crashes and the stock or the -- so, the thing says, `Well, it's
fair enough when you did it, but now it's zero to one party and the
other has gone up to $300,000, and we're just not going to do that.
... It was an agreement, but we're not going to leave one party
destitute.'"
REPRESENTATIVE PORTER said if both of those assets were in a
community property trust, they couldn't do that; it would be 50/50
each.
CHAIRMAN GREEN said that was the kind of thing to which he was
alluding. They hadn't really discussed it.
Number 0787
REPRESENTATIVE PORTER said obviously, where there is a way to
manipulate, somebody will to try. However, he couldn't see the big
bugaboo that everybody was trying to allude to. He stated,
"There's got to be some recognition of equal rights and equal
responsibilities, while still trying to protect (indisc.)."
Number 0793
REPRESENTATIVE BERKOWITZ explained that this bill targets estate
planning, not family law per se. The problem is that they are
finding unintended consequences to some of the language as far as
family law is concerned. He stated, "And to the extent ... we can
back out of that quandary by saying this is solely an estate
planning device -- I don't ... have any proposed language to do so,
other than just standing here and saying so and having everyone
nod, which indicates that that's the committee's understanding and
intent, and if ever comes a time where a court needs to interpret
... the application of this legislation, they would know full-well
that we intend it solely for estate planning."
Number 0867
REPRESENTATIVE JEANNETTE JAMES indicated she doesn't understand the
fears and that this goes towards more fairness than less. She
briefly discussed her own marriage and both partners' commitment to
it, with everything jointly owned. She indicated she believes
marriage partners who decide to go separate ways should share
assets equally; anything else is for the lawyers to argue about,
although she has little confidence in either lawyers or the courts.
"I support this bill as it's written; I think it's a good piece of
legislation," she concluded.
Number 0941
CHAIRMAN GREEN asked whether she had read the "WMPA" article from
Wisconsin.
REPRESENTATIVE JAMES said no.
Number 0948
REPRESENTATIVE CON BUNDE suggested, "Just to Representative
Berkowitz's point, perhaps we ought to say, `For the record, we
feel that this concerns estate planning and not family law.' And
if, then, there are further court discussions as they examine our
transcript, `For the record' should be a flag ... that stands out."
Number 0980
REPRESENTATIVE NORMAN ROKEBERG suggested that saying what they
intend is all well and good, but he isn't sure that is what the
statute does. He said, "It gives the right of a married couple to
elect to enter into a community property regime and leaves it there
in event of a divorce, unless there's a mutuality of agreement to
elect out. So, the fact that the -- by the construction of the
bill, as I take it, is that it does place this body of type of
domestic relations arrangement on our statute book and would allow
anybody who chose to do it, for whatever reason, to do it. And I
understand that that's the purpose of the sponsor, to do that for
estate planning purposes. ... Please tell me if I'm wrong here, ...
for the record."
Number 1027
CHAIRMAN GREEN replied, "I think that probably is exactly what
would happen. If one party opted out, the other one didn't, it
stays in the trust, unless, I would presume, ... there's some sort
of ... economic burden; they've got this trust, they've lost
everything else. ... I mean, we're looking at things because we
want to make sure we're covered or that we elect knowingly not to
cover. But if you have an estate and you're crazy in love, and so,
you put, say, half of that in a trust and the other half you've
kept out, but 25 years hence, the rest of this is fine sand that's
lost and this is the only thing you have left, and comes a divorce,
is there a `contentious' there? Now, that's obviously a specific,
small piece of the action. But do you feel that there is adequate
protection for both spouses in that situation?"
Number 1080
REPRESENTATIVE RYAN responded, "If it's 50/50, Mr. Chairman ..."
CHAIRMAN GREEN said, "If it went in 50/50, and it has to do that."
REPRESENTATIVE RYAN continued, "... and it says ... under community
property there is a 50/50 division, I can't see how either spouse
can be ... left short, because the man's going to get 50 percent,
the woman's going to get 50 percent, the property was earned during
the time of the marriage, they both by law have a right, the same
right to it, and then if the judge ...."
CHAIRMAN GREEN said, "If it's a community property state, which
we're not, it would have to be through the trust."
REPRESENTATIVE RYAN said, "Under this bill, you don't have to go
into a trust to do it."
CHAIRMAN GREEN said, "Well, or contract out, but it's not a ...."
REPRESENTATIVE RYAN stated, "Your agreement is a basic, binding
thing. Now, if the contention is raised in court that somehow,
`We're broke on everything else, and this is the only asset we
have, and somehow I was hoodwinked when we put this in, and I
deserve more than 50 percent,' I would think that's up to the
attorneys and the court to litigate. And under the amendment that
Representative Croft has, it gives the court that discretion. So,
... it would seem to allay any concern that anyone could have as
far as family law is concerned. You can't ask for anything better
than that."
Number 1146
CHAIRMAN GREEN called an at-ease at 8:53 a.m. He called the
meeting back to order at 8:58 a.m. and noted that all members were
present.
Number 1198
REPRESENTATIVE CROFT offered Amendment 1, which read:
Page 2, line 19, following (d):
Delete all material.
Insert "When distributing property identified as
community property under a community property agreement or
trust under 34.75, unless the parties have provided in the
agreement or trust for another disposition of the community
property, the court shall make such disposition of the
community property as shall appear just and equitable after
considering all relevant factors including, but not limited to
(1) the nature and extent of the community
property;
(2) the nature and extent of the separate property;
(3) the duration of the marriage; and
(4) the economic circumstances of each spouse at
the time the division of property is to become effective,
including the desirability of awarding the family home or
right to live therein for reasonable periods to a spouse with
whom the children reside the majority of the time."
Number 1208
REPRESENTATIVE PORTER objected for the purpose of discussion.
REPRESENTATIVE CROFT explained, "This addresses the concern about
it having to be a 50/50 split. Right now in family law, we have an
equitable distribution of property, that you consider a number of
factors. And there was some concern that one of the things people
would not understand is that they're giving up a complete right to
an equitable distribution at that time. This says unless the
agreement provides otherwise, you divide the property on a fair
basis that the court determines. The factors listed are very
similar to, though not quite identical to, ... the factors that we
equitably divide in the other areas. That's a little bit of a
discrepancy that worried me, but it's, `but not limited to'. I
think the court would do both."
REPRESENTATIVE CROFT continued, "The reason we liked this language
is it came straight from a community property state, and therefore
in any discussion with the IRS, we want to be sure we're firmly in
community property. So, by the fact that both of the lists of
factors, under Alaska's current marital property and under this
one, say, `not limited to,' here -- consider these type of things
but consider whatever else is fair. I think they both can mesh."
REPRESENTATIVE CROFT continued, "I guess there's still the concern
that people can opt out with this, opt to a 50/50. ... That concern
is not a big one ... because it says, `unless the ... parties have
provided in the agreement or trust for another disposition.' So,
they can say, `We don't want equitable at the time; we want 50/50.'
But now, that would have to be in there explicitly, rather than a
product of community property that people may not understand. So,
the agreement they're signing would then have to say, `And you
understand: This is half and half.' I think if parties do that,
absent some sort of fraud or misrepresentation, then they can take
the consequences."
REPRESENTATIVE CROFT continued, "And I think they could now. ...
That's been a point that hadn't come out. We could now make an
agreement, my wife and I, that certain classes of property would be
marital, certain would not, that at break-up, ... if we had a
divorce, that that would be divided in a certain way. And I think
the rules in this bill ... would generally apply, absent some sort
of fraud or misrepresentation. That's a contractual matter. We've
agreed to that, and the court will do that. The rest it will
divide equitably. ... If this so throws things out of whack that
it's just unconscionable ..., even at the time, then maybe a court
can step in. But barring those sorts of things, they would say,
`Well, you agreed to it; you knew what you were doing (indisc.).'
... This solves, I think, Maryann Foley's concern, on her
memorandum, page 1, and there was a letter from Jill Dean, also
expressing it, a couple of other people that I haven't tagged yet,
spotlighted this provision, that they were worried it wouldn't
allow an equitable distribution. And so, this amendment would put
it back."
Number 1372
REPRESENTATIVE PORTER removed his objection.
REPRESENTATIVE ROKEBERG asked whether Representative Ryan had run
this by the estate planning people to see whether adoption of this
amendment would jeopardize the community property presumption in
the bill.
REPRESENTATIVE RYAN said he'd run it by them and, in fact, "most of
these people supplied the language." He referred to page 2, line
24, which says, "unless the parties have provided in the agreement
or trust for another disposition of the community property." He
said there is flexibility already in there, and this should give
about the ultimate amount of flexibility, so that nobody is going
to have a problem. And if it is unconscionable, the courts won't
allow it anyway, just as they don't allow fraudulent transfers.
Number 1457
REPRESENTATIVE BERKOWITZ asked whether anything in the bill
prevents parties from including a provision along the lines of,
"This agreement is null and void in the contingency of divorce or
separation."
REPRESENTATIVE RYAN said no.
REPRESENTATIVE BERKOWITZ asked, "In which case, division of marital
assets is to be calculated according to existing family law
provisions?"
REPRESENTATIVE RYAN replied, "If the agreement were null and void,
yes, you'd be back to -- the basis of property in Alaska is
individual property. We're not changing that at all. ... This is
strictly an elective procedure."
Number 1500
REPRESENTATIVE JAMES asked Representative Croft whether all
community property states do this.
REPRESENTATIVE CROFT replied, "From what we can find, no. Some say
50/50 is 50/50 .... I went to law school in California, which ...
is a community property state. My recollection is that they had an
`out' somewhere, but I didn't go back and research it, that it was
`presumption of 50/50 but' kind of thing: You can divide it if
certain things are met, if it looks really bad, you can change
50/50. But I didn't go back to California statutes."
REPRESENTATIVE CROFT continued, "This was the clearest equitable
distribution that could be found in a community property state. We
have a similar set-up. ... We divide equitably, but we presume
50/50 is equitable unless you show otherwise. So, we're sort of
almost there anyway on our ...."
Number 1545
REPRESENTATIVE RYAN noted that this language came from the state of
Washington.
Number 1549
REPRESENTATIVE ROKEBERG said, "The indication of 50/50 is in the
deleted language under this amendment. So, is that still
satisfactory?" [There was no discernible response.] Representative
Rokeberg then said, "Okay."
CHAIRMAN GREEN asked whether there was an objection. Hearing none,
he announced that Amendment 1 was adopted.
Number 1573
REPRESENTATIVE CROFT offered Amendment 2, which read:
Page 4, line 22:
Delete "34.75.090(b)"
Insert "34.75.090(c)"
Page 9, following line 31:
Insert a new subsection to read:
"(b) A community property agreement must contain
the following language in capital letters at the beginning of
the agreement:
THE CONSEQUENCES OF THIS AGREEMENT MAY BE VERY EXTENSIVE,
INCLUDING, BUT NOT LIMITED TO, YOUR RIGHTS WITH RESPECT
TO CREDITORS AND OTHER THIRD PARTIES, AND YOUR RIGHTS
WITH YOUR SPOUSE BOTH DURING THE COURSE OF YOUR MARRIAGE
AND AT THE TIME OF A DIVORCE. ACCORDINGLY, THIS
AGREEMENT SHOULD ONLY BE SIGNED AFTER CAREFUL
CONSIDERATION. IF YOU HAVE ANY QUESTIONS ABOUT THIS
AGREEMENT, YOU SHOULD SEEK COMPETENT ADVICE."
Reletter the following subsections accordingly.
Page 10, lines 3 - 4:
Delete "(b) of this section"
Insert "(c) of this section"
Page 12, following line 19:
Insert a new subsection to read:
"(b) A community property trust must contain the
following language in capital letters at the beginning of the
trust:
THE CONSEQUENCES OF THIS TRUST MAY BE VERY EXTENSIVE,
INCLUDING, BUT NOT LIMITED TO, YOUR RIGHTS WITH RESPECT
TO CREDITORS AND OTHER THIRD PARTIES, AND YOUR RIGHTS
WITH YOUR SPOUSE BOTH DURING THE COURSE OF YOUR MARRIAGE
AND AT THE TIME OF A DIVORCE. ACCORDINGLY, THIS
AGREEMENT SHOULD ONLY BE SIGNED AFTER CAREFUL
CONSIDERATION. IF YOU HAVE ANY QUESTIONS ABOUT THIS
AGREEMENT, YOU SHOULD SEEK COMPETENT ADVICE."
Reletter the following subsections accordingly.
Page 12, lines 22 - 23:
Delete "(b) of this section"
Insert "(c) of this section"
CHAIRMAN GREEN objected for the purpose of discussion.
Number 1607
REPRESENTATIVE CROFT explained that he believes this meets the
concerns of Joan Clover of the Law Offices of Gruenberg and Clover.
On page 2 of her memorandum dated April 30, 1997, it said, "I
believe that the `warning' proposed by Representative Croft's
amendment should be even more strongly worded." Representative
Croft indicated there had been some discussion in committee, and
for the amendment, they'd taken Ms. Clover's proposed wording, with
very few changes. The proposed warning in Ms. Clover's memorandum
had read: "THE CONSEQUENCES OF THIS AGREEMENT MAY BE VERY
EXTENSIVE, AFFECTING, FOR EXAMPLE, YOUR RIGHTS WITH RESPECT TO
CREDITORS AND OTHER THIRD PARTIES, AND YOUR RIGHTS WITH YOUR SPOUSE
BOTH AT THE TIME OF A DIVORCE AND DURING THE COURSE OF YOUR
INTERACT MARRIAGE. ACCORDINGLY, THIS AGREEMENT SHOULD ONLY ...."
Number 1629
CHAIRMAN GREEN suggested there is another place of warning.
REPRESENTATIVE CROFT explained, "They provide for two different
types: a community property agreement and a community property
trust. So, both would have to have that."
Number 1649
REPRESENTATIVE ROKEBERG referred to the last sentence of the
warning language. Noting that it had been a couple of weeks since
he read the bill, he asked whether there isn't a requirement in the
bill that before entering into the community property agreement,
both parties must have separate counsel or are advised to do so.
CHAIRMAN GREEN said as he recalled it, the testimony from Mr.
Blattmachr, and others who'd called in, had suggested that.
REPRESENTATIVE ROKEBERG said it was his understanding that for a
prenuptial agreement, for example, to have any force of law, "under
the state view here in Alaska now, that the presumption is that you
would have separate counsel advising both parties to that, to make
sure it would have enforceability in the courts." He expressed
concern about whether this language is strong enough. He suggested
they should presume that the parties should have questions about
the agreement.
Number 1721
REPRESENTATIVE BERKOWITZ stated, "It seems to me that you can't
even get to one of these agreements unless you have a lawyer ...."
REPRESENTATIVE ROKEBERG asked: How many lawyers? He said that is
the issue. Presumably, there should be counsel for both parties on
something as complex as this.
REPRESENTATIVE BERKOWITZ said his guess is that there might be some
ethical prohibitions about a lawyer representing both parties to
this agreement. For example, one lawyer wouldn't represent both
parties to a contract.
Number 1767
REPRESENTATIVE CROFT commented that he wasn't going to be the one
to propose that everyone must see a lawyer. He indicated it is
probably a good idea in these cases, and he would think that a
lawyer couldn't ethically advise both parties. However, he didn't
know that they needed to require it.
REPRESENTATIVE PORTER said there are all sorts of things that a
couple can do that don't require independent counsel or independent
stock brokers, such as obtaining loans or buying cars, a house,
stock and so forth.
REPRESENTATIVE ROKEBERG said in his experience with the legal
profession, he had been strongly advised that while entering into
a prenuptial agreement, this would be the case. It was the advice
he'd received, and he thinks it is most appropriate here.
Number 1845
CHAIRMAN GREEN replied that he understood what Representative
Rokeberg was saying. However, testimony indicated this is
primarily for "large-buck-type investors," not those with limited
monetary worth. He suggested with large dollar volumes, the people
involved would have adequate counsel.
Number 1871
REPRESENTATIVE BUNDE indicated he believes these concerns are
addressed by putting in that warning. He commented that to him,
"counsel" is not singular.
REPRESENTATIVE BERKOWITZ said it seems that under the ethical
requirements for being a lawyer, the lawyer would advise a couple
that he or she shouldn't represent both parties because they may
wind up on opposite sides of an agreement, and the lawyer would
advise the parties that each should have advice. However, if they
made a knowing and intelligent waiver of the right to alternative
counsel, the lawyer should say, "here's how an agreement would pan
out." If both parties agreed to have one lawyer, that would
happen. "But the lawyer would also have a requirement to be fair
in what he was saying," Representative Berkowitz stated. "He
couldn't skew it one way or the other. Or she."
Number 1939
REPRESENTATIVE ROKEBERG stated that he strongly endorses this
amendment and its intention. He'd just wanted to make that point.
Number 1948
REPRESENTATIVE RYAN referred to page 9, line 28, "Community
property agreement", which continues to page 11. He stated, "The
majority of things that the people have talked about, the `what
ifs,' are addressed in here. On line 31, on page 10, it says ...
a community property agreement executed during marriage is not
enforceable if the spouse against whom enforcement is sought proves
that the agreement was unconscionable when made. So, that language
is already in the bill. The spouse against whom enforcement is
sought did not execute the agreement voluntarily. Or before
execution of the agreement, the spouse against whom enforcement is
sought was not given a fair and reasonable disclosure of the
property and financial obligations of the other spouse, did not
voluntarily sign a written consent expressly waiving the right to
disclosure of the property and financial obligations of the other
spouse beyond the disclosure provided, and so on and so on."
REPRESENTATIVE RYAN said they've covered this comprehensively. If
one party hoodwinks the other, already in here is a basis to have
those things set aside. However, he has no objection to "putting
this extra stuff in there if people will feel comfortable." He
said it adds extra protections, and everybody should be happy that
they tried to address the issues.
Number 2016
CHAIRMAN GREEN removed his objection.
REPRESENTATIVE JAMES objected, indicating the desire to vote.
CHAIRMAN GREEN requested a roll call vote. Voting for Amendment 2
were Representatives Bunde, Porter, Rokeberg, Croft, Berkowitz and
Green. Voting against it was Representative James. Therefore,
Amendment 2 was adopted, 6 to 1.
CHAIRMAN GREEN asked whether there was further discussion of the
bill.
Number 2046
REPRESENTATIVE CROFT stated, "I don't know the unconscionability
timing now, whether it's done ... at the time of the agreement or
at the time of divorce. But I've been thinking about it since
Representative Porter brought it up. It would seem to me that
there's not a big problem with doing it when made. If they throw
all of their property in to a community property agreement, they're
all in the same boat. If they throw some of it and not the rest,
the court retains the power to equitably divide the rest. ... I
can't see - and I've thought about it some - where that distinction
between `unconscionable when made' or `unconscionable at divorce'
makes a tremendous amount of difference; it may."
REPRESENTATIVE CROFT said the Oklahoma case mentioned by
Representative Ryan had reassured him some. That state had enacted
an "opt in" that was declared by the IRS to be appropriate for this
double step-up in basis.
Number 2092
CHAIRMAN GREEN indicated his only concern had been the age of that
case.
REPRESENTATIVE RYAN said it is a precedent.
Number 2103
REPRESENTATIVE ROKEBERG said the first amendment they'd adopted
provided for greater flexibility on the part of the courts. He
expressed concern that it might lead to greater confusion. He said
this bill, if adopted, is destined to create a real boom in the
legal profession in Alaska. He believes the application will be
limited, as he believes it is intended for estate planning
purposes. However, it has the potential for going beyond that. He
concluded that it has a lot of potential good. "But there's a lot
of caveats here, and I've got some concerns about it," he added.
Number 2145
REPRESENTATIVE CROFT made a motion to move HB 199, as amended, from
committee with attached fiscal notes and individual
recommendations.
CHAIRMAN GREEN asked whether there was any objection. There being
none, CSHB 199(JUD) moved from the House Judiciary Standing
Committee.
CSSB 3(JUD) - MINOR'S CURFEW VIOLATIONS
Number 2163
CHAIRMAN GREEN announced the next item of business would be CS for
Senate Bill No. 3(JUD), "An Act authorizing prosecution and trial
in the district court of municipal curfew violations, and providing
for punishment of minors upon conviction for violation of a curfew
ordinance." He noted that the committee had taken testimony
previously, and they had closed testimony.
CHAIRMAN GREEN called an at-ease to make copies of a proposed
amendment, 0-LS0078\E.1, Chenoweth, 4/28/97, to be offered by
Representative Rokeberg. [The tape is blank for approximately 4
minutes at end of Side A and beginning of Side B.]
TAPE 97-80, SIDE B
Number 0023
REPRESENTATIVE ROKEBERG indicated he hadn't offered the amendment.
CHAIRMAN GREEN acknowledged that.
Number 0030
REPRESENTATIVE BERKOWITZ made a motion to move CSSB 3(JUD) from
committee with the attached fiscal note.
CHAIRMAN GREEN asked whether there was an objection. There being
none, CSSB 3(JUD) moved from the House Judiciary Standing
Committee.
CSSB 119(L&C) - FRATERNAL BENEFIT SOCIETIES
Number 0066
CHAIRMAN GREEN announced the final item of business would be CS for
Senate Bill No. 119(L&C), "An Act relating to fraternal benefit
societies; and providing for an effective date."
Number 0074
CHARLIE MILLER, National Fraternal Congress of America, came
forward to testify. His association represents fraternal benefit
societies that are distinct from some others in that they offer
life insurance and some health insurance policies to their members
only. He stated, "They're currently regulated under Title 21.84;
the basic statute was put in in 1966. And although there has been
some amendments to the statutes, they've been piecemeal. And this
is a rewrite of those statutes. We've been working with the
Division of Insurance for several months and have resolved all the
difference of opinion on the bill; they support the bill, although
I can't officially speak for them. I think there should be a
letter in your packet that ... all their concerns have been
satisfied."
MR. MILLER continued, "In other committee hearings, there has been
no real opposition to the bill that we're aware of. The size of
the bill is because of the rewrite of the entire code. As opposed
to `piecemealing' the amendments that addressed the immediate
concerns that the fraternals have, it was recommended to go ahead
and proceed with a full rewrite because the statutes are then
brought up to date with terminology that exists in other insurance
codes in the state, and also makes the statute read basically along
the NAIC [National Association of Insurance Commissioners] models,
so that the different states don't have different terminology and
processes - which makes it difficult for multi-state operations to
operate without a lot of extra administrative detail, as in
separate forms and the like."
Number 0220
MR. MILLER stated, "The fraternal benefit societies involved in
insurance in Alaska, I think there should be a list in your packet
also. These are not locally domiciled insurers, but they are
licensed insurers in the state, and they include the Aid
Association for Lutherans, American Postal Workers, the Independent
Order of Foresters, Knights of Columbus, Lutheran Brotherhood, Sons
of Norway, and the Woodmen of the World Life Insurance Society.
They write about 7,600 life policy certificates currently, and I
think there's 280 health certificates in the state also. They're
not allowed to sell their products outside of their membership. ...
The governing bodies of these lodges are all directly elected or
indirectly elected by members; so, it's ... member-controlled, and
all of their products and services are sold only to members. There
should be another letter in your packet from the life insurance
association representative here, and they support passage of the
bill. The agents have been contacted; they have no opposition to
the bill."
MR. MILLER advised members there had been one problem on the Senate
floor, relating to an English language requirement for filing of
documents. That was cleared up, and the bill was not brought up
for reconsideration. He stated his belief that the concerns of
members had been addressed.
Number 0287
REPRESENTATIVE ROKEBERG asked whether there had been a Senate floor
amendment.
MR. MILLER said no. Three Senate members had voiced a concern
because of a reference in the Sectional Analysis to an Arizona law,
which had "created quite a ruckus down there on English language
requirements." Mr. Miller said he isn't sure why that was
referenced in the Sectional Analysis; it is not a similar issue.
He explained, "A lot of these groups are based on ethnic and/or
religious common causes, self-help groups formed during the
immigration waves in the late 1800s and 1900s. If you have a lot
of Estonian and Polish and different ethnic groups, it's just a
requirement that says ... their documents that are related to their
insurance entity, that that aspect of ... their group be filed,
just like any document has to be, with the agencies affected, in
English. And so, ... it didn't have anything to do with the
Arizona (indisc.) thing. And so, like I say, I think those
concerns have been addressed."
Number 0363
CHAIRMAN GREEN said the group discount certainly sounds like a way
to go. He asked whether, through the Division of Insurance, there
is assurance that these insurance companies are viable companies.
MR. MILLER said yes. This update actually clarifies the director's
authority in all insurance matters. He stated, "I mean, they are
regulated under the insurance statute, as any other insurance
entity is. This does clarify her control in some areas, unfair
trade practices and other areas. But no, they are under the same
oversight by the division as any other insurance entity, the
primary difference being that they do not sell outside of their
group. The reason why there's so much verbiage in the bill about
... the direct elections or indirect elections of officers and
board of directors is because they can only sell to their members.
You know, the membership elects these people. They not only run
the fraternal benefit society but the insurance aspect of that
society. They're one and the same. And so, if ... a[n] outside
company wanted to be licensed here to sell, they would have to
satisfy the same requirements as any other insuring entity in the
state."
Number 0457
REPRESENTATIVE ROKEBERG said, "Mr. Miller, these are a totally
different animal; they're not a mutual company or a stock company.
They are a fraternal benefit society company, and that's why
there's a separate chapter under the insurance statute for the
administration of it."
MR. MILLER agreed it is unique.
CHAIRMAN GREEN said he appreciates that; it is why he likes the
concept. His only concern was that people in an elderly persons'
home might be a group, or there might be a group that is an ethnic
group that doesn't speak English well. He said as long as there is
protection that the entity offering the policy is viable and passes
muster with the Division of Insurance, that is fine.
Number 0500
REPRESENTATIVE CROFT asked whether the Sons of Norway, for example,
can have their minutes in Norwegian and their proceedings in
Norwegian but must file in English.
MR. MILLER replied, "My understanding is that any minutes
pertaining to any documentation that needs to be supplied to the
oversight agency has to be -- there has to be English documents,
yes."
REPRESENTATIVE CROFT asked whether proceedings outside of the
insurance area could be in another language.
MR. MILLER said he wasn't completely sure of that. He emphasized
that the primary goal of these groups is self-help and charitable
works. The insurance aspect is larger is some groups than in
others. He stated, "But if they were to be discussing ... in the
Sons of Norway some sort of a `paint so-and-so's house as a
charitable act' or set up a work camp for kids in the summer ...,
I don't know if they'd have to speak in English during that portion
of their meeting. ... If it regards the insurance business, I am
sure that they would have to have their minutes and their documents
prepared in English."
REPRESENTATIVE BUNDE alluded to moving the bill.
Number 0580
REPRESENTATIVE ROKEBERG advised members that this bill, and its
companion House bill, had a thorough hearing in the House Labor and
Commerce Committee, "with full testimony from the division, which
was supportive of it, as well as representatives from the fraternal
organizations that went on record in support of this legislation."
Number 0636
REPRESENTATIVE PORTER suggested, "Move it."
CHAIRMAN GREEN asked whether there was any objection. Hearing
none, he indicated that CSSB 119(JUD) was moved from the House
Judiciary Standing Committee.
ADJOURNMENT
CHAIRMAN GREEN adjourned the House Judiciary Standing Committee at
9:36 a.m.
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