Legislature(1995 - 1996)

10/16/1995 09:00 AM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
               HOUSE JUDICIARY STANDING COMMITTEE                              
                        October 16, 1995                                       
                           9:00 a.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Brian Porter, Chairman                                         
 Representative Joe Green, Vice Chairman                                       
 Representative David Finkelstein                                              
 Representative Con Bunde                                                      
 Representative Bettye Davis                                                   
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Al Vezey                                                       
 Representative Cynthia Toohey                                                 
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 HOUSE JOINT RESOLUTION NO. 2                                                  
 Proposing amendments to the Constitution of the State of Alaska               
 relating to redistricting and to the length of a regular session,             
 and establishing a unicameral legislature; and providing for an               
 effective date for each amendment.                                            
                                                                               
      -  HEARD AND HELD                                                        
                                                                               
 HOUSE BILL NO. 308                                                            
 "An Act relating to the Uniform Probate Code, including nonprobate            
 transfers, guardianships, trusts, and multiple-party accounts;                
 relating to the Uniform Simultaneous Death Act; amending Alaska               
 Rule of Probate Procedure 5; and providing for an effective date."            
      - HEARD AND HELD                                                         
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HJR  2                                                               
 SHORT TITLE: UNICAMERAL LEGISLATURE/SESSION LIMIT                             
 SPONSOR(S): REPRESENTATIVE(S) GREEN,Navarre                                   
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 01/06/95        16    (H)   PREFILE RELEASED                                  
 01/16/95        16    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/16/95        16    (H)   STA, JUD, FIN                                     
 04/27/95              (H)   STA AT  8:00 AM CAPITOL 102                       
 04/27/95              (H)   MINUTE(STA)                                       
 04/27/95              (H)   MINUTE(STA)                                       
 04/28/95      1611    (H)   STA RPT  1DP 4NR                                  
 04/28/95      1612    (H)   DP: GREEN                                         
 04/28/95      1612    (H)   NR: JAMES, ROBINSON, OGAN, WILLIS                 
 04/28/95      1612    (H)   3 FNS (2-GOV, LAA)                                
 04/28/95      1612    (H)   ZERO FISCAL NOTE (LAW)                            
 10/16/95              (H)   JUD AT  9:00 AM JUNEAU LIO                        
                                                                               
 BILL:  HB 308                                                               
 SHORT TITLE: UNIFORM PROBATE CODE REVISIONS                                   
 SPONSOR(S): REPRESENTATIVE(S) PARNELL                                         
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 04/13/95      1318    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/13/95      1318    (H)   JUDICIARY                                         
 10/16/95              (H)   JUD AT  9:00 AM JUNEAU LIO                        
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 BEN BROWN, Researcher for                                                     
    Representative Cynthia Toohey                                              
 Alaska State Legislature                                                      
 Capitol Building, Room 104                                                    
 Juneau, Alaska  99801-1182                                                    
 Telephone:  (907) 465-4919                                                    
 POSITION STATEMENT:  Commented on HJR 2                                       
                                                                               
 JEFF LOGAN, Legislative Assistant                                             
    to Representative Joe Green                                                
 Alaska State Legislature                                                      
 Capitol Building, Room 24                                                     
 Juneau, Alaska  99801-1182                                                    
 Telephone:  (907) 465-4931                                                    
 POSITION STATEMENT:  Testified on HJR 2                                       
                                                                               
 REPRESENTATIVE SEAN PARNELL                                                   
 Alaska State Legislature                                                      
 Capitol Building, Room 515                                                    
 Juneau, Alaska  99801-1182                                                    
 Telephone:  (907) 465-2995                                                    
 POSITION STATEMENT:  Sponsor of HB 308                                        
                                                                               
 BOB MANLY, Esq.                                                               
 324 East Cook                                                                 
 Anchorage, Alaska  99501                                                      
 Telephone:  (907) 263-8251                                                    
 POSITION STATEMENT:  Testified on HB 308                                      
                                                                               
 L. S. (JERRY) KURTZ, JR., Esq.;                                               
 Alaska Commissioner                                                           
 National Conference of Commissioners on                                       
   Uniform State Laws                                                          
 1050 Beech Lane                                                               
 Anchorage, Alaska  99501                                                      
 Telephone:  (907) 258-6051                                                    
 POSITION STATEMENT:  Testified on HB 308                                      
                                                                               
 DEBORAH RANDALL, Attorney                                                     
 Davis and Goerig                                                              
 405 West 36th Avenue, Suite 200                                               
 Anchorage, Alaska 99503-5872                                                  
 Telephone:  (907) 271-5071                                                    
 POSITION STATEMENT:  Testified on HB 308                                      
                                                                               
 DICK THWAITES                                                                 
 500 "L" Street, Suite 301                                                     
 Anchorage, Alaska 99501                                                       
 Telephone:  (907) 277-1595                                                    
 POSITION STATEMENT:  Testified on HB 308                                      
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 95-59, SIDE A                                                            
 Number 001                                                                    
                                                                               
 NOTE:  The meeting was in progress when this tape begins.                     
                                                                               
 HJR 2 - UNICAMERAL LEGISLATURE/SESSION LIMIT                                
                                                                               
 REPRESENTATIVE JOE GREEN:  ....in committee when we reconvene in              
 Juneau.  Ya, there will be fiscal notes.  That will be addressed.             
                                                                               
 REPRESENTATIVE BETTYE DAVIS:  I (indisc.) discussion.                         
                                                                               
 CHAIRMAN BRIAN PORTER:  Representative Finkelstein.                           
                                                                               
 Number 004                                                                    
                                                                               
 REPRESENTATIVE DAVID FINKELSTEIN:  Thank you, Mr. Chairman.  I                
 don't -- I think it's completely appropriate to put in the fiscal             
 note for some sort of a new location or, you know, rebuilding and             
 things.  It is theoretically possible to fit 60 people into that              
 room with a little bit of reconfiguration (indisc.).  We probably             
 wouldn't want to really teleconference with our own body -- I mean,           
 I think when the public makes its decision of the cost of this is             
 going to be a relatively slight factor.  I just don't think -- if             
 you're for a unicameral legislature -- if you're for a shorter                
 session, the cost of a one-time reconfiguration, while significant,           
 is much less than the money saved from, you know, having one body.            
 I mean, it's a comedy the way our budget is now.  The House and               
 Senate budgets are identical every year.  They have 20 members, we            
 have 40.  You know, the system doesn't encourage control of                   
 spending.  Basically -- and if they spend less and manage to save             
 some money, all they've done is make the case for a reduction next            
 year, so it never occurs.  I - we've probably never seen as bad a             
 system as the way that particular budget has been configured.                 
                                                                               
 CHAIRMAN PORTER:  What is their response to that?  They have the              
 same amount of constituents.                                                  
                                                                               
 REPRESENTATIVE FINKELSTEIN:  Ya, it should be a little bit higher.            
 They certainly have as much travel as all 40 of (indisc.-laughter)            
 as 20 members.  But whether -- ya, but whether it's -- I just think           
 we ought to be real straightforward on that one piece of it and put           
 in some appropriate expense because I think the public won't mind.            
                                                                               
 Number 022                                                                    
                                                                               
 CHAIRMAN PORTER:  Well, we have not given this consideration - a              
 lot of consideration which obviously it needs.  My first thought              
 was just the opposite - I don't think we would want to try to shove           
 60 people into the House.  I don't think...                                   
                                                                               
 REPRESENTATIVE B. DAVIS:  It wouldn't work.                                   
                                                                               
 CHAIRMAN PORTER:  I don't think it would fit.  So, there would have           
 to be some other consideration and how that would work, I don't               
 know.  It might be that we'd have to take another floor and you               
 know, move offices off the fourth floor or something back to the              
 court house and put a whole big one floor room or something like              
 that.  In any event, there's an awful lot of thought that needs to            
 go into that and that one was just an idea for something we could             
 do.  Representative Bunde.                                                    
                                                                               
 Number 031                                                                    
                                                                               
 REPRESENTATIVE CON BUNDE:  You know the notion that you'd actually            
 have a gallery where people could attend the session.                         
                                                                               
 CHAIRMAN PORTER:  Ya.                                                         
                                                                               
 REPRESENTATIVE BUNDE:  The -- with 60 member districts, have you              
 looked into - have you speculated how large would a district be now           
 in comparison to what we have now?                                            
                                                                               
 REPRESENTATIVE GREEN:  It effectively - numerically, would be half            
 as big as the current House - current House district.                         
                                                                               
 REPRESENTATIVE FINKELSTEIN:  It would be two-thirds.                          
                                                                               
 REPRESENTATIVE GREEN:  Two-thirds, okay.                                      
                                                                               
 REPRESENTATIVE BUNDE:  Two-thirds.  Ya, it wouldn't be half.  Two-            
 thirds, so you're talking about or perhaps 6,000 registered voters            
 per district - something like that?                                           
                                                                               
 REPRESENTATIVE GREEN:  Probably, in that range.                               
                                                                               
 REPRESENTATIVE BUNDE:  Ya, and so as we mentioned earlier....                 
                                                                               
 REPRESENTATIVE GREEN:  Ten thousand total.                                    
                                                                               
 REPRESENTATIVE BUNDE:  It's conceivable that you could then reach             
 that many people on a personal level -- within sound bite level.              
                                                                               
 CHAIRMAN PORTER:  There would still be some difficulties in the               
 rural areas....                                                               
                                                                               
 REPRESENTATIVE BUNDE:  In the -- well....                                     
                                                                               
 CHAIRMAN PORTER:  They would be reduced by a third (indisc.).                 
                                                                               
 REPRESENTATIVE BUNDE:  Ya, though I think the personal contact is             
 even more important perhaps in the rural areas than....                       
                                                                               
 CHAIRMAN PORTER:  We - we have some - some input from                         
 Representative Toohey's office.                                               
                                                                               
 Number 042                                                                    
                                                                               
 BEN BROWN, RESEARCHER FOR REPRESENTATIVE CYNTHIA TOOHEY, ALASKA               
 STATE LEGISLATURE:  You've actually -- Representative Davis'                  
 question got to the heart of it, but I just noticed looking at the            
 fiscal note from the LAA, it didn't incorporate any of the savings            
 from going to one body and as Representative Green had mentioned,             
 that was -- I didn't know that Nebraska's motivation had been                 
 depression or public financing.  But you figure with pages and                
 photocopiers and just everything, I think, you know, as -- as scary           
 as the initial capital costs of building a new chamber on the                 
 fourth floor or whatever you would do would be the long running               
 operating savings are gonna to make this a very beneficial fiscal             
 effect in the long run and I know Representative Toohey would -               
 would want to know just how much money it was going to save down              
 the road and that's why I wanted to mention that.  So, she would              
 look forward to seeing something from LAA that reflected those                
 costs as well, I'm sure.                                                      
                                                                               
 CHAIRMAN PORTER:  The savings -- the additional savings and the               
 cost.                                                                         
                                                                               
 REPRESENTATIVE GREEN:  Yes....                                                
                                                                               
 Number 052                                                                    
                                                                               
 JEFF LOGAN, LEGISLATIVE ASSISTANT TO REPRESENTATIVE JOE GREEN,                
 ALASKA STATE LEGISLATURE:  Mr. Chairman, I just...                            
                                                                               
 CHAIRMAN PORTER:  Jeff.                                                       
                                                                               
 MR. LOGAN:  I want to bring to the member's attention that one                
 fiscal note that we do have from LAA calculates $1.1 million a year           
 savings.  The experience in Nebraska was the first year they went             
 to be a unicameral system, they cut their total operating expenses            
 in half.                                                                      
                                                                               
 CHAIRMAN PORTER:  Did they reduce the number of people they have              
 or...?                                                                        
                                                                               
 MR. LOGAN:  They did reduce the total number...                               
                                                                               
 REPRESENTATIVE GREEN:  I don't know the number, but they did reduce           
 it...                                                                         
                                                                               
 MR. LOGAN:  Slightly, ya.                                                     
                                                                               
 UNIDENTIFIED SPEAKER:  Excuse me, Mr. Chairman.  That's the number            
 of employees, not the number of legislators.                                  
                                                                               
 CHAIRMAN PORTER:  (Indisc.) number of elected legislators.                    
                                                                               
 MR. LOGAN:  Their ballot question allowed the legislature to set              
 their level between 30 and 50 members and they started out with 43.           
 Right now, they're at 49.  Another point, Mr. Chairman that I might           
 bring up that no one else has but we'll be considering this, is the           
 drafters, just this morning after talking several times with                  
 Representative Green and them on this, is they think maybe an odd             
 number -- the Bradner bill in 1975 had 59 -- either an odd number             
 or allow the Lieutenant Governor to break ties because with 60,               
 there's - you know - one body there.  So that will be something               
 we'll be looking at and bring back to the committee, if there's a             
 need for that - session hearing.                                              
                                                                               
 UNIDENTIFIED SPEAKER:  Anybody who's in Alaska (indisc.) odd                  
 legislators.                                                                  
                                                                               
 CHAIRMAN PORTER:  At least we digress too far.  If there is nothing           
 further, for the information of the committee, we do have the                 
 second bill up for consideration at 1:30 so we'll have time to                
 repair to our offices and get our acts together and go have lunch             
 and see you at 1:30 p.m.                                                      
                                                                               
 TAPE 95-60, SIDE A                                                            
 Number 001                                                                    
                                                                               
 CHAIRMAN PORTER called the meeting back to order at 1:45 p.m.  He             
 announced that members present were Representatives Finkelstein,              
 Porter, Green, Bunde and B. Davis.                                            
                                                                               
 HB 308 - UNIFORM PROBATE CODE REVISIONS                                      
                                                                              
 CHAIRMAN PORTER:  We have for consideration this afternoon, a very            
 straightforward little piece of legislation (laughter) -- 94 pages            
 of HB 308, "An Act relating to the Uniform Probate Code," which I             
 hope has no connection to the one that we heard this morning, the             
 Unicameral legislation.  We have present, the sponsor of this piece           
 of legislation, Representative Parnell.  Welcome Sean, would you              
 like to introduce your bill.                                                  
                                                                               
 Number 011                                                                    
                                                                               
 REPRESENTATIVE SEAN PARNELL, Sponsor of HB 308:  Mr. Chairman, I              
 won't even take up a lot of the committee's time to do that.  I               
 just want to say that please don't be daunted by the 90 pages                 
 because a lot of it is just re-enactment of current law.                      
 Everything I was going to say is actually going to be covered by              
 Bob Manly.  I appreciate having a much friendlier audience than I             
 had at lunch time.                                                            
                                                                               
 CHAIRMAN PORTER:  First then to testify before the committee, to              
 tell us about the bill, is Bob Manly.  Welcome Bob.                           
                                                                               
 Number 018                                                                    
                                                                               
 BOB MANLY, ESQ.:  Thank you.  Right now in Alaska, we've got the              
 Uniform Probate Code governing probate procedure, intestacy - what            
 happens if you don't have a will and another -- and most of those             
 kind of related matters.  We've got the 19 -- one of the 1960 --              
 either the 1967 or the 1969 version of the Uniform Probate Code               
 right near -- right now.  It was enacted in about 1972 and it                 
 served us real well.  Basically, the Uniform Probate Code and well,           
 while our bill is thick, this is the whole thing with the                     
 commentary.  It developed simply because the old probate system was           
 too cumbersome, too expensive and it just didn't work.  I mean                
 that's why Norm Dacey(ph) made a whole lot of money selling "How to           
 Avoid Probate at any Costs," and all these form books.  And                   
 basically, the Uniform Probate Code simplifies it and reduces the             
 possibility of litigation in the probate process.  The                        
 modifications you have in front of you right now are the 1990                 
 update to the Uniform Probate Code and basically it's based on the            
 experience with the old Uniform Probate Code and just largely some            
 tune-ups, some minor changes to reflect changing social views,                
 changing families and also to expand the Uniform Probate Code                 
 procedural directives to cover a number of nonprobate assets, such            
 as joint bank accounts, a little more coverage on life insurance              
 and revocable trusts.  Basically, a lot of the bill is sort of back           
 stopping.  In other words, if nobody wrote it down in the will or             
 the trust, this contingency that happens, well how do you cover it?           
 Rather than go to the court and get a different answer each time              
 and slowly develop case law, it's going to be set out here for                
 people to take a look at.  There's some changes in the intestacy              
 law, how property passes if you don't have a will.  It broadens               
 what's known as the "augmented estate", the prohibitions against              
 disinheriting your surviving spouse.  And it applies some default             
 rules, like I said, to trusts and insurance policies.                         
                                                                               
 Number 044                                                                    
                                                                               
 MR. MANLY:  Now the state Bar Association probate section reviewed            
 the 1990 updates for about a year.  I mean, quite literally, we               
 have a monthly meeting and every month, someone was assigned a                
 part, we reviewed it, discussed it and suggested some modifications           
 to the Uniform Act to conform to the Alaska experience and current            
 Alaska bond (indisc.) the legislature has done in the past.  Now,             
 as a matter of Bar policy, the section can't speak as a group.  So,           
 my testimony and any other testimony you get from members are                 
 strictly as individuals, but we did discuss it as a group and the             
 consensus of the group was the bill that you have in front of you.            
 We've got more than a dozen layers sitting down there and anytime             
 we can get anything close to - to agreement, we're doing real well.           
 So, there's a always a few people that say, "Well no, it should be            
 this way, that way."  But by and large, the group felt that what's            
 before you is the - the best way to proceed.                                  
                                                                               
 Number 057                                                                    
                                                                               
 MR. MANLY:  I want to mention you know the question of uniformity.            
 Anytime you have a uniform law in front you - proposed - there's              
 always a certain amount of pressure to "well, let's keep it                   
 uniform.  Let's do what everyone else has done," which makes a lot            
 of sense particularly in the commercial contest like the Uniform              
 Commercial Code or banks are going across state lines.  It makes a            
 lot less sense in the probate area.  I mean, people either die in             
 Alaska or they don't die in Alaska.  It's not like you've got an              
 interstate commerce.  You know, occasionally there's - there's                
 overlap where it's of concern, but really the bill, I think, needs            
 to be and in fact does in its present form tailor itself to the               
 Alaska concerns.                                                              
                                                                               
 Number 065                                                                    
                                                                               
 MR. MANLY:  Now I want to just highlight for you some of the                  
 modifications from the uniform bill, so you'll know exactly what's            
 going on.  One of them - the uniform bill proposes an age of                  
 majority at age 18.  In other words, money can be passed to                   
 children totally an out-route right at age 18.  Current law in                
 Alaska is age 19.  It has been for quite awhile and the Supreme               
 Court recently passed a rule confirming that.  Again, it's a policy           
 decision, but when is a child responsible enough to receive a major           
 deposit of money?  I mean I know at age 18 if I would have gotten             
 a lump of money I would have bought a purple medal-flecked camaro             
 instead of a college education.  And maybe 19 isn't that much                 
 better but at least current law is 19 and that's what the bill does           
 provide right now.  The other big change from the Uniform Act is              
 with regard to the augmented estate or the elective share.  And               
 basically this is the provision which prevents you from                       
 disinheriting your spouse.  Basically, as a matter of social policy           
 in the prior -- in the present Uniform Probate Code, you're limited           
 to the extent you can exclude a surviving spouse in your will or              
 otherwise.  And basically, a surviving spouse must get at least               
 one-third of the augmented estate and the...                                  
                                                                               
 CHAIRMAN PORTER:  That's the current code?                                    
                                                                               
 MR. MANLY:  That's current code, that's current law and - and it              
 remains the same in this bill.  One-third of the augmented estate -           
 and the augmented estate includes the probate estate, life                    
 insurance passing to the surviving spouse, gifts to the surviving             
 spouse, gifts in certain circumstances to third parties, revocable            
 trusts, joint bank accounts with third parties; basically there's             
 an attempt to include everything a person owns in ownership                   
 interest when they passed away and require that the surviving                 
 spouse get at least one-third of that.  You can certainly give your           
 surviving spouse more, as most people do, but that limits your                
 ability to disinherit.  What this bill does -- ya, I'm sorry.                 
                                                                               
 REPRESENTATIVE GREEN:  Can I just ask one question.  Now you say              
 that it's currently that way and this bill maintains it that way?             
                                                                               
 MR. MANLY:  That's correct.                                                   
                                                                               
 REPRESENTATIVE GREEN:  Does it change in...                                   
                                                                               
 CHAIRMAN PORTER:  The Uniform Code is - is something different....            
                                                                               
 MR. MANLY:  The proposed Uniform Code is something different and              
 the - the bill in front of you does change the augmented estate in            
 some procedural aspects in terms of how you value certain trust               
 assets and what's included.  Right now the big hole in the                    
 augmented estate is life insurance where a third party is the                 
 beneficiary.  So in other words, if I wanted to disinherit my wife,           
 what I'd do is run out and buy a big cash value life insurance                
 policy and name someone else - you know, my brother - as the                  
 beneficiary and use up all my money to buy that life insurance                
 policy.  Then I'd know when I passed away, it would go - most of my           
 assets would go to my brother instead of my spouse.  So, it - it              
 kind of plugs a hole - the current bill and the Uniform Act plugs             
 a hole here and that's in front of you, where the current bill in             
 front of you retains the one-third share.  And what the Uniform Act           
 does, is it puts up a vesting schedule.  So in other words, if                
 someone is married for a very short period of time, the surviving             
 spouse is entitled to very little.  If they're married for 10 years           
 or actually 11 years, then it goes up to the one-third share.  And            
 finally, if you're married for 15 years or more, it goes up to the            
 50 percent share.  So it's sort of like a buy-in and that's one               
 reason I personally don't like it.  My view is you're either                  
 married or you're not married and this new -- or the Uniform Act              
 would treat a less wealthy spouse sort of like an employee, a loyal           
 employee buying into the process.  And at least the drafters                  
 described this as sort of the partnership theory of marriage and I            
 really think of it more as the employee theory of marriage.  In any           
 case, there's some controversy on this.  There was certainly                  
 significant controversy within the group of lawyers that reviewed             
 it and we thought the best thing to do is leave it the same - leave           
 it that one-third versus the buy-in the same as opposed to try to             
 introduce a controversial aspect of it because I really don't think           
 out of all this long bill, there's any other significantly                    
 controversial items.                                                          
                                                                               
 CHAIRMAN PORTER:  Just to be clear for the record that this would             
 only apply in those cases where there was not a will or prenuptial            
 or something like that in any event.                                          
                                                                               
 MR. MANLY:  It would only apply for those not a prenuptial.  If you           
 had a will, you could certainly give the spouse more but you                  
 couldn't give her less.  And I'm gonna say her just out of reflex             
 because women live longer.  I mean that's almost -- by and large,             
 that's almost the - the universal experience.                                 
                                                                               
 CHAIRMAN PORTER:  Discriminatory as that is.  Representative Green.           
                                                                               
 Number 131                                                                    
                                                                               
 REPRESENTATIVE GREEN:  Thank you, Mr. Chairman.  For my edification           
 then, if this is a community property state and there is a divorce,           
 the spouse gets half but if that spouse -- one person dies, they              
 could actually contract for less than half?                                   
                                                                               
 MR. MANLY:  This -- just starting out with sort of a technical                
 point - actually this is a non-community property state.                      
                                                                               
 REPRESENTATIVE GREEN:  Oh, I thought it was.                                  
                                                                               
 MR. MANLY:  Ya, no - no, we are not a community property state;               
 it's a separate property state.  But in terms of divorce, basically           
 the rule is the allocation of assets is whatever the judge you're             
 in front of thinks is fair and often times that ends up as 50/50.             
 But you can before marriage, or even after marriage, contract                 
 around that with a prenuptial or postnuptial agreement and say,               
 "No, you know, we're going to agree ahead of time to some other               
 allocation," and you can certainly contract around this statute               
 that says you must give the spouse at least one-third of the                  
 augmented estate.  So you can change it but you've got to think               
 about it ahead of time and you've got to agree.  Jumping back to              
 another difference between the bill in front of you and the Uniform           
 Probate Code, 1990 version, is the formalities of wills.  Under the           
 bill in front of you, the formalities for a will are the same as              
 they are now.  A will must be either entirely in your own                     
 handwriting or the substand of portions in your own handwriting,              
 signed by you and dated by you - that would be a holographic will.            
 Or in the alternative that if it's typewritten or written by                  
 somebody else, it must be witnessed by two persons.  Now those                
 witnesses can be beneficiaries, but it must be two people who saw             
 you sign or saw you acknowledge your signature.  The 1990 UPC                 
 provision would reduce the formalities.  The 1990 version would say           
 that if it can be established in court that you intended it to be             
 a will or that you intended to pass your property in this fashion,            
 then that proof will substitute as a will.  The advantage of such             
 a proposal is that in some cases you're going to get people's                 
 wishes carried out who didn't get around to making out a will or              
 making out a whole formal will or who made some procedural mistake.           
 The disadvantage is you're going to have a lot more litigation.               
 You're going to have will contests.  Right now, it's pretty clear,            
 either it's a will or it's not a will.  It doesn't do any good to             
 say, "He always told me he was gonna leave me the farm."  Under the           
 1990 version, which is not in front of you, the -- it would be                
 possible to do that.  All you'd have to do is go in and have a                
 court case and prove by clear and convincing evidence that that's             
 what the intent was.  I've talked with the probate masters in                 
 Anchorage and Fairbanks and both of them are concerned that it                
 would really lead to an upsurge of litigation and that's why a                
 majority of the committee didn't like that 1990 proposal and so               
 that's why we're suggesting we stay with the current Alaska law on            
 that point.  Another minor technical deviation relates to Probate             
 Rule 5.  Under the 1990 version, if you deposit a will with the               
 court for safekeeping and then die, the will is released to whoever           
 you named as your personal representative, which is just the fancy            
 new unisex name for administrator/administratrix - that kind of               
 stuff.  The experience at least in Fairbanks was that when they               
 released - the court system - somebody died, the court system                 
 released these wills, people kept losing them.  The will never made           
 it back to the probate court.  So the Probate Rules Committee                 
 decided that now wills are no longer released to the personal                 
 representative; rather, they're transferred directly to the probate           
 court so you don't have that problem.  And the 1990 version of the            
 Uniform Probate Code didn't cover that and so our proposed                    
 modification - the bill in front of you right now - would conform             
 to our current probate rules which don't - doesn't release that               
 will.  The last....                                                           
                                                                               
 CHAIRMAN PORTER:  Could I -- Before you leave that one, could I ask           
 a question?                                                                   
                                                                               
 MR. MANLY:  Sure.                                                             
                                                                               
 CHAIRMAN PORTER:  Recognizing the goal of this is to eliminate                
 procedural steps and less time, less money, and those kinds of                
 things, why isn't that increasing it to send it through a probate             
 court rather than directly to the executor.                                   
                                                                               
 MR. MANLY:  Well, if you - once the executor-direct gets it, the              
 executor in order to make it effective must go to the probate court           
 and be formally appointed as the personal representative.                     
                                                                               
 CHAIRMAN PORTER:  Oh, that's the way the law is?                              
                                                                               
 MR. MANLY:  Ya, ya.  The will itself does not good; rather what you           
 must do is present to the court, along with the will, basically an            
 affidavit saying I'm the person named here; I don't know of any               
 other named will; I don't know of anyone who should be personal               
 representative instead of me; please appoint me.  Then the court              
 appoints you without a hearing, without anything else, and you                
 could go forth and administer the estate and need have no more                
 contact with the court until everything is done; at which point you           
 can either file an affidavit with the court saying, "I'm done.  If            
 anybody wants to sue me they have to sue me within six months," or            
 you can actually present to the court a detailed inventory.  But              
 it's a real minimal intrusion, but just the will itself doesn't do            
 anybody any good.                                                             
                                                                               
 CHAIRMAN PORTER:  An executor receiving the will now has to have an           
 (indisc.) interaction with the probate court in any event.                    
                                                                               
 MR. MANLY:  Right, in any event.  The last sort of deviation from             
 the 1990 version and the bill in front of you is on ademption.  And           
 what ademption means is if I give someone my diamond ring and my              
 diamond ring before I die gets stolen by a burglar, what happens?             
 Current Alaska law which is retained in this bill in front of you             
 is that the person who was to get the diamond ring gets nothing               
 because it is adeemed by extinction - it no longer exists.                    
 Similarly, if I give you my pink cadillac and I sell my pink                  
 cadillac before I die and buy a Masarati, the person who got the              
 pink cadillac in the will gets nothing because the pink cadillac is           
 gone.  Again, the 1990 version of the Uniform Probate Code would              
 have changed that and I think it's in an attempt to make what they            
 hope or think people's intent might have been, carried out.  They             
 would say that if I gave you the diamond ring in my will and it was           
 stolen by a burglar, well instead of the ring you get $50,000 in              
 cash because that's what it was worth at the time it was stolen.              
 Similarly, if I gave you my pink cadillac and bought a replacement            
 car, it was a replacement car and so you get that.  And at least              
 the majority of the committee - in fact I think this was one of the           
 few areas where we were unanimous - thought that in most cases if             
 my client wants to give a diamond ring to a daughter and a gold               
 watch to a son and the diamond ring isn't gone anymore, it's the              
 object they're giving; not the value.  It's a policy decision to a            
 certain extent but at least the committee thought we were better              
 off under current law which would extinguish those kind of gifts.             
                                                                               
 MR. MANLY:  There are some other, I guess, changes from current law           
 that I think are of significance - probably half a dozen here.                
 Would you like me to sort of highlight those at this point?                   
                                                                               
 CHAIRMAN PORTER:  Representative Bunde.                                       
                                                                               
 REPRESENTATIVE BUNDE:  Before we go on - if I could just to                   
 clarify.  The bill's position on age of majority is...                        
                                                                               
 MR. MANLY:  Nineteen.                                                         
                                                                               
 REPRESENTATIVE BUNDE:  Nineteen as opposed to the eighteen in                 
 the...                                                                        
                                                                               
 MR. MANLY:  Correct.                                                          
                                                                               
 REPRESENTATIVE BUNDE:  Thank you.                                             
                                                                               
 CHAIRMAN PORTER:  I think there's only one other person to testify.           
 And I think it would be helpful to me I will readily admit, having            
 some familiarity with Uniform Code provisions, that I haven't read            
 this and looked forward to being briefed before I dove in.  I                 
 haven't and I would appreciate the information.                               
                                                                               
 MR. MANLY:  Okay, great.  One of the, I think, significant changes            
 you ought to pay attention to that I think is a policy change is              
 the change in the intestacy law - what happens if you don't have a            
 will?  And I've always viewed intestacy as a combined sort of a               
 decision by the legislature, trying to figure out what a person               
 would have wanted to do if they would have gone to the trouble of             
 getting a will and, to a certain extent, what they should have                
 done.  So, it's a combined policy decision there.  And what the May           
 1990 Act has done, which is incorporated into the bill in front of            
 you, is try to take into a little closer consideration sort of the            
 changed nature of a family where we have many more second marriages           
 and the like and many more childless couples.  And right now, if a            
 spouse passes away with no children of that relationship and no               
 children of a prior relationship by that deceased spouse and also             
 leaves a parent, the surviving spouse gets half and the parent gets           
 half.  The change -- or the bill in front of you would change that            
 a little bit and if the -- and what would happen instead is the               
 surviving spouse would get the first $200,000 of an estate and                
 three-quarters of the rest and the parents would only get that one-           
 quarter above $200,000.  So it significantly reduces the share of             
 parents in a married situation where there are no children and the            
 parents survived.  Again, a policy decision.  Right now, under                
 current law, if a spouse passes - or a spouse passes away, leaves             
 a surviving spouse with children - only the children of that                  
 relationship, no children of a prior marriage or the like - the               
 surviving spouse gets the first $50,000 plus half of the rest and             
 the kids split down the rest.  Under the bill in front of you, the            
 surviving spouse with children of that marriage relationship but no           
 other children, would get 100 percent.  In other words, the change            
 is the surviving spouse is relied on to take care of his or her own           
 children and there's no immediate split off to those children,                
 whether they're adult or minors or whatever.                                  
                                                                               
 CHAIRMAN PORTER:  Representative Bunde.                                       
                                                                               
 REPRESENTATIVE BUNDE:  That brings a question to mind as you talked           
 about these his, mine and our kids situation.  The surviving                  
 spouse, but there are children of a previous marriage of the                  
 deceased spouse, are they addressed in this because it sounds to me           
 that 100 percent goes to issue of that marriage, not of previous              
 marriages.                                                                    
                                                                               
 CHAIRMAN PORTER:  That's the next one, right?                                 
                                                                               
 MR. MANLY:  Okay, ya that is the next one and it gets a little                
 complicated.  Right now, under current law, if husband passes                 
 aways, wife survives, husband has children of a prior marriage and            
 this marriage, then the spouse gets half and all the kids split the           
 remaining half.  You don't have that first $50,000 going to the               
 surviving spouse.  An even more complicated change in the bill in             
 front of you, which conforms to the 1990 revisions, if there's                
 children by this marriage and the surviving spouse has kids by a              
 prior marriage - not the deceased spouse, but the surviving spouse            
 has kids by that prior marriage then the surviving spouse gets                
 $150,000 plus half of the rest and then that remaining half after             
 the $150,000 is split among all the kids.  However...                         
                                                                               
 CHAIRMAN PORTER:  All the kids?  Even including her kids?                     
                                                                               
 MR. MANLY:  Yes, including her kids.                                          
                                                                               
 CHAIRMAN PORTER:  Including her kids?                                         
                                                                               
 MR. MANLY:  Ya, all kids are treated - divided up equal and if the            
 deceased spouse had children by a prior relationship and the                  
 surviving spouse and the deceased spouse had children by the same             
 relationship, so you have a mixed family the other way with the               
 deceased spouses children also surviving, then the surviving spouse           
 gets $100,000 plus half the rest and half the rest, beyond the                
 $100,000 is split out.  Again, it just take -- it's a little more             
 complex but it takes into account a little bit of those kind of               
 changes and at least the probate group with some experience in the            
 area, seemed - they seemed to think that it was a reasonable                  
 compromise in - in terms of what people probably would want or                
 should want.  Other than that, the intestacy laws are unchanged.              
 If you don't have kids, it goes down to grand kids; if you've got             
 no lineal descendants, it goes back on up to parents then out to              
 brothers, sisters, down to nieces and nephews, back up to                     
 grandparents, out to second cousins many, many times removed.  But            
 if you don't have anybody within the class of descendants of your             
 grandparents, then it goes to the state of Alaska.  It escheats.              
 Now I've already talked about the elective share which is a                   
 significant modification.  Another modification that's of some                
 significance is the expansion of the 120 hour survival rule.  Right           
 now if I leave my wife everything in my will - in order to take,              
 unless I say otherwise in my will - I can say that she has to                 
 survive for six months; I can say she has to survive for 30                   
 seconds.  But if I don't say anything, she must survive for 120               
 hours - five days - just to try to cover this situation where we're           
 both in a car accident, she lingers a little longer than I do.  But           
 right now under current law, that applies only to probate assets              
 governed by your will.  It doesn't apply to joint bank account.  It           
 doesn't apply to your jointly held stock.  It doesn't apply to your           
 jointly held house - tenants by the entirety.  And that's where               
 most peoples' wealth are.  (Indisc.) doesn't apply to life                    
 insurance designation, beneficiary designations.                              
                                                                               
 CHAIRMAN PORTER:  Representative Finkelstein:                                 
                                                                               
 REPRESENTATIVE FINKELSTEIN:  Mr. Chair.  I'm a little confused.               
 Your house isn't a probate asset - is not a probate asset?                    
                                                                               
 MR. MANLY:  Well, most married people - I'd say 99 percent of                 
 people own their house as tenants by the entireties.  So in other             
 words, if husband passes away - bang - everything goes to the wife            
 automatically, outside of probate.  No muss, no fuss.  People own             
 things that way because it's simple, easy and convenient and that's           
 what they want.                                                               
                                                                               
 REPRESENTATIVE FINKELSTEIN:  And in - in regard to bank accounts,             
 it's the same if they're joint accounts?                                      
                                                                               
 MR. MANLY:  Correct, if they're joint accounts.  But there's no               
 survival requirement.  And most of the lawyers in this room have              
 had one or two cases where husband and wife - no kids - are driving           
 along or flying along and there's a simultaneous death.  But it               
 really isn't a simultaneous death; it's a near simultaneous death.            
 The pathologist comes in says, "Well, she died first because she              
 didn't bleed all over the windshield and obviously her neck broke,            
 but he lived for at least one heartbeat longer cause there's blood            
 all over the windshield."  The reason that's important - that                 
 depends - depending on who died first, that's who -- that's who's             
 heirs get the house.  So husband, wife, no kids - wife dies first -           
 house goes to the husband - house goes to husband's family; his               
 parents or whatever.  So, you ended up with a fair amount of                  
 litigation with pathologists trying to tell you who died first.               
 And this is going to eliminate it and, I think, carry out people's            
 intent.  You know, you usually intend that well if somebody -- you            
 want them to live more than 120 hours.  And all of these things you           
 can modify by the terms of the agreement or contract.  For example,           
 your life insurance policy - you can say you know, "I don't care              
 about the 120 hour survival rule," or you can say, "I want my wife            
 to survive me by six months before she gets anything under this               
 life insurance policy."  But the default rule now instead of                  
 instantaneous, gives you that 120 hours.  And I think that's going            
 to reduce litigation.  Another good thing that you're doing with              
 this is expanding the disclaimer provisions.  If someone passes               
 away and you're set to inherit something, sometimes you really                
 don't want it.  Sometimes for tax reasons it's a lot better to send           
 it on down to your kids if your parents pass away and avoid a state           
 taxation at your generation level and things like that.  And right            
 now the Alaska statutory law allows disclaimer of probate property            
 but doesn't address nonprobate property.  For example, the house.             
 Husband and wife tenants by the entireties.  The statute expands              
 disclaimers to cover nonprobate property so you can disclaim  or              
 surviving spouse can clearly and legally disclaim his or her                  
 interest in that house if that's the right thing to do tax wise or            
 for other personal reasons.                                                   
                                                                               
 CHAIRMAN PORTER:  Representative Green.                                       
                                                                               
 REPRESENTATIVE GREEN:  Now would that mean that that would be a               
 separate action - overt action - that the spouse would have to                
 take?                                                                         
                                                                               
 MR. MANLY:  Yes.                                                              
                                                                               
 REPRESENTATIVE GREEN:  Or is it automatic?                                    
                                                                               
 MR. MANLY:  No.  He or she would have to take an overt action.                
 They would have to write a statement that they were disclaiming               
 this interest in the house.  They would have to record it with the            
 recorders office.  They would have to do so within nine months                
 after the spouse passes away.  So there's a time limit.                       
                                                                               
 REPRESENTATIVE GREEN:  Okay.                                                  
                                                                               
 MR. MANLY:  And we've always had that nine month time limit; it's             
 just now expanded to cover nonprobate property.  Last thing I want            
 to mention is automatic revocation by divorce.  Right now, if you             
 have a will and you're divorced, that automatically revokes the               
 will as to any reference to your ex-spouse, but that does not do              
 anything - our current law doesn't do anything for life insurance             
 beneficiary designations, pension and profit sharing designations             
 or joint bank accounts.  And I've had any number of cases I've seen           
 where husband and wife get divorced - a relatively amicable                   
 settlement - they each go their own ways - husband or wife                    
 remarries but he or she forgets to change the beneficiary on the              
 life insurance designation - that spouse passes away and bang the             
 life insurance goes to the old wife instead of the new wife.  Yes,            
 people are genuinely unhappy and justifiably so in those                      
 circumstances.  And again, you can say the people should have                 
 remembered to do that, but it's easy to forget that kind of stuff             
 in going along with your daily business.  And this just expands               
 sort of what I was mentioning - the backstop coverage.  You know,             
 things that people don't think about.  And again, it reduces                  
 litigation between the ex-spouse and current spouse as to those               
 life insurance proceeds.                                                      
                                                                               
 CHAIRMAN PORTER:  This wouldn't affect an intentional agreement in            
 the divorce?                                                                  
 MR. MANLY:  No - no.  This can definitely be superseded in the                
 divorce or by contract or by subsequent redesignation of that ex-             
 spouse.  And that's really the -- there's -- there are some other             
 technical changes in here but these are at least the ones that I              
 view as sort of the high points.  I think it's an excellent bill -            
 I think it's something that you should pass out and should be                 
 enacted into law.                                                             
                                                                               
 CHAIRMAN PORTER:  Thank you, Bob.  Are there any questions?                   
 Representative Bunde.                                                         
                                                                               
 Number 406                                                                    
                                                                               
 REPRESENTATIVE BUNDE:  You - you had mentioned that -- thank you --           
 that you were speaking as an individual and your subsection of the            
 Bar Association.                                                              
                                                                               
 MR. MANLY:  Correct.                                                          
                                                                               
 REPRESENTATIVE BUNDE:  ....speak for the Bar Association?  Will the           
 Bar Association as a whole be taking a position?                              
                                                                               
 MR. MANLY:  No.  The Board of Governors takes the view that we are            
 a nonprofit entity and they forbid anyone from taking a position on           
 behalf of the Bar, unless the entire Board of Governors enact it -            
 take that position.  And as far as I know, the Board of Governors             
 has never taken a position on any legislation, except their own               
 sunset and their view is that they're afraid they'd have to give              
 small rebates of your dues back if you opposed a particular view              
 they took because of their nonprofit status.  I'm not sure why                
 sunset is exempt from that view but that's what they've told me.              
                                                                               
 CHAIRMAN PORTER:  Representative Green.                                       
                                                                               
 Number 421                                                                    
                                                                               
 REPRESENTATIVE GREEN:  Thank you, Mr. Chairman.  You've indicated             
 that this should reduce litigation.  Is there any merit, do you               
 feel that these changes are changes that should be known to people            
 who prepare wills or especially these will kits that are still so             
 popular.  For example, you brought out in this automatic revocation           
 that probably isn't covered in their will kit.                                
                                                                               
 MR. MANLY:  Well, right now we do have automatic revocations for              
 wills, so that is the current law.  And the only thing we're doing            
 is by this proposal is expanding that automatic revocation to life            
 insurance and sort of your nonprobate assets - your things that               
 aren't governed by the will.  Certainly, I guess the effective date           
 is - proposed effective date is January 1, 1996.  Am I mistaken on            
 that?  That couldn't be.                                                      
                                                                               
 CHAIRMAN PORTER:  January 1, 1997.                                            
 MR. MANLY:  97 - I'm sorry.  I think that gives a reasonable amount           
 of time for people to become aware of the will and aware of the               
 changes and it probably doesn't have any really traps for people in           
 most cases, because really, you're helping people with things that            
 they didn't consider rather than the other way around.                        
                                                                               
 Number 441                                                                    
                                                                               
 REPRESENTATIVE GREEN:  Okay, that's what I was getting at.  So the            
 whole of what you're saying - or what I'm hearing you say then is             
 you're patching all these holes so if there is an omission, it                
 theoretically at least, would be to the benefit of that person who            
 either made a will and forgot or didn't make a will at all.                   
                                                                               
 MR. MANLY:  That's correct.                                                   
                                                                               
 CHAIRMAN PORTER:  At least it answers the question.                           
                                                                               
 REPRESENTATIVE GREEN:  Ya.                                                    
                                                                               
 CHAIRMAN PORTER:  Bob, could you for me -- you've mentioned a                 
 couple of times in just here in this last explanation -- could you            
 explain for me the difference between probate and nonprobate                  
 property?                                                                     
                                                                               
 MR. MANLY:  Sure.  I guess the answer or the conclusion (indisc.-             
 coughing) question or something like that -- I'm not sure the                 
 correct tautology there, but in any case probate assets are                   
 governed by your will; nonprobate assets are governed by some other           
 legal contract.  For example, life insurance.  If you name an                 
 individual beneficiary, that's governed by the life insurance                 
 contract - where the money goes - not by your will, so it's                   
 generally considered a nonprobate asset.  You could make it a                 
 probate asset by saying, "I give this life insurance money to my              
 probate estate."  But in the absence of that, it's a nonprobate               
 asset.  Likewise, a joint bank account.  If it passes all to the              
 survivor automatically by virtue of your contract with the bank,              
 then it's a nonprobate asset.  If it's a sole-named bank account,             
 then it would pass in accordance with your will.                              
                                                                               
 CHAIRMAN PORTER:  Would it be a correct over-simplification to say            
 that nonprobate assets are things not mentioned in the will and               
 probate assets are mentioned in will?                                         
                                                                               
 MR. MANLY:  Nope, that doesn't work because sometime -- usually in            
 a will you have what's known as a residuary clause - everything I             
 forgot to mention goes so and so.  And just the mention or non-               
 mention of an asset in the will doesn't control.  For example, if             
 I have a joint bank account with you and I say in my will that I              
 want it to go to someone else, my will does not govern for the most           
 part; it's gonna be the contract between you, me and the bank.  So,           
 it's not whether you mention it in your will; it's rather whether             
 if you mention it in your will, your will controls where it goes.             
                                                                               
 CHAIRMAN PORTER:  Is there any general rule of thumb on                       
 contradictions between contracts and the will?                                
                                                                               
 MR. MANLY:  The general rule is that if the outside contract                  
 governs the asset, then that's going to supersede the will.                   
                                                                               
 CHAIRMAN PORTER:  Even though the will is made out (indisc.-                  
 coughing).                                                                    
                                                                               
 MR. MANLY:  Right.  Because for example, I have a life insurance              
 policy and I fill out my wife as the beneficiary.  I subsequently             
 make out a will and say, "No, my brother should be the                        
 beneficiary."  As my contract is with the life insurance contract,            
 I've told them, "Give the money to my wife."  As a matter of law,             
 I can't change the deal without letting them know in the form that            
 they say I have to let them know, which is the beneficiary                    
 designation.                                                                  
                                                                               
 CHAIRMAN PORTER:  Any other questions of Bob?                                 
                                                                               
 REPRESENTATIVE BUNDE:  ...will by tritest abrogate that contract...           
                                                                               
 CHAIRMAN PORTER: I just -- you know, the other thing is you have to           
 die to be able to benefit.                                                    
                                                                               
 REPRESENTATIVE GREEN:  Ya, you're dead right.                                 
                                                                               
 MR. MANLY:  One clarification, if I may.  If you don't mention a              
 probate asset in your will, it's governed by the laws of intestacy            
 that we've just talked about - the first $200,000 of the spouse               
 under these circumstances.  And so a probate asset is governed by             
 your will if you have one; but if you don't have one, then it's               
 governed by the laws of intestacy.  And you can always have sort of           
 incomplete rules saying, "I give my house to Fred," but you don't             
 say anything else - well the bank account goes, if it's not a joint           
 bank account, in accordance with the laws of intestacy.                       
                                                                               
 CHAIRMAN PORTER:  Bob, thank you.                                             
                                                                               
 MR. MANLY:  Thank you.  I think my esteemed colleagues from the               
 rest of the committee are going to correct me or disagree as they             
 see fit because we are all testifying individually.                           
                                                                               
 CHAIRMAN PORTER:  I would be disappointed if there weren't....  The           
 next person I see would be Jerry.  Did - did you want to testify,             
 Jerry?                                                                        
                                                                               
 Number 487                                                                    
                                                                               
 L. S. (JERRY) KURTZ, JR., ESQ. and ALASKA COMMISSIONER, NATIONAL              
 CONFERENCE OF COMMISSIONERS ON UNIFORM STATE LAWS:  Yes, I would              
 like to testify but I suggest any other members of the probate                
 committee wanted to first testify.                                            
                                                                               
 CHAIRMAN PORTER:  The only other person that I have signed up but             
 I don't know if there's anybody here that wishes to testify that              
 has not signed up - there is one.  Okay.  There are two.  Well,               
 I'll tell you what I'll defer to you guys to see what order you'd             
 like to...  That will allow me time to get this to you guys so that           
 you....  Welcome Jerry.                                                       
                                                                               
 Number 496                                                                    
                                                                               
 JERRY KURTZ:  Thank you.  I am here representing the Alaska                   
 Commissioners appointed by the state to the National Conference of            
 Commissioners on Uniform State Laws, which is where this animal               
 you're looking at came from.  The first thing I'd like to do is               
 thank Bob Manly for making an extremely good presentation - far               
 better than I could.  Of the members on the Uniform Law Commission            
 from Alaska, I'm the closest thing there is to a probate attorney.            
 The rest of them have handled either no probate matters or relative           
 few over the years.  I retired from active law practice in 1991,              
 and have my nose back in it on a very limited basis.  I can safely            
 say I've looked at one probate since 1991.  That involved Montana             
 and Alaska and we were very grateful that both states had the                 
 Uniform Probate Code.  I'd like to -- and the point is that this              
 Bar Committee has spent a lot of time on it, includes some good               
 attorneys and includes attorneys like Mr. Manly who are heavily               
 immersed in the probate field and have the kind of perspective that           
 I do not have on what's going on in Alaska at the present time.               
 The second thing I'd like to point out is that when this Uniform              
 Probate Code was first enacted in Alaska in 1972, there was                   
 considerable opposition amongst part of the Bar for the very                  
 reasons that I've heard committee members mention - it was a long             
 Code and it was complicated and it meant a whole lot of people had            
 to read something new.  But it was passed despite that and it has             
 been an unqualified success.  It's very hard.  I don't think I've             
 heard an attorney criticize the adoption of the Code for at least             
 20 years.  The thing has worked beyond our fondest dreams and what            
 we have before you for the most part an attempt to make it work               
 better and a lot of those changes are changes that have been made             
 to reflect not only the changes in family structure, but                      
 particularly the changes in nonprobate assets.  The percentage of             
 wealth that's held in nonprobate assets - retirement funds, mutual            
 funds, stock funds, automobiles, things in houses, things that                
 typically are held in joint tenancy behind a husband and wife so              
 that they automatically go to the survivor without any                        
 infearced(ph.) Probate Code - the percentage of items in the                  
 typical person's estate has increased sharply over the last 30 to             
 40 years.  And the best way to think about this is to look back at            
 - at what your parents had when they - they passed away or what               
 they have at this point and most of the assets that we talk                   
 commonly about today - the IRAs, the mutual funds - were unheard of           
 in those days or were only possessed by a very few people.  So the            
 nonprobate aspects of the bill are, in many respects, just a                  
 catching up and they're, in my opinion, a vast improvement over the           
 existing ones where frequently there was some difficulty in                   
 determining exactly what fell under those sections.  This will help           
 prevent litigation, it will help financial institutions which                 
 frequently hold money or stock funds or other similar securities-             
 based properties that are transferred to somebody as a result of              
 the death of the owner or the people.                                         
                                                                               
 Number 499                                                                    
                                                                               
 MR. KURTZ:  I'd like to - to - to briefly touch on two things that            
 Bob did say that I might disagree with a tiny bit to satisfy your             
 desire that we get some attorney disagreeing because we never agree           
 completely on everything.  But I want to preface it by saying that            
 there's an attorney in this room and I have not talked to an                  
 attorney about this bill in the past years in Alaska or even on the           
 Uniform Law Conference, who doesn't think that by and large these             
 items contained in HB 38 are a substantial improvement over what we           
 have now.  The question was raised of why should the will not be              
 given to the executor named in the will (indisc.) in court.  In a             
 surprising number of cases, the will initially never gets into                
 probate.  A lot of Alaskans die and they leave a will and whoever's           
 named as executor can pick up that will when it's stored at the               
 court and then they discover after they go along a little ways and            
 maybe talk to an attorney and poke around and see what assets were            
 there, that there really isn't anything in the way of assets - that           
 they're all nonprobate assets or virtually all of them - so they              
 don't need to probate the will.  And so they just quit and may                
 throw the will in the wastebasket when they're cleaning out their             
 files or something else.  And then some time later on - a year or             
 two or three or maybe even four years later - an asset comes out of           
 no where that nobody was expecting that really is part of the will            
 - a piece of property is found...                                             
                                                                               
 TAPE 95-60, SIDE B                                                            
 Number 001                                                                    
                                                                               
 MR. KURTZ:  ...and nobody realized he owned it, and nobody can find           
 the will.  And I think particularly in this state, this is reason             
 enough, we do have a record of having a fair number of lost wills             
 up here.  This is reason enough - once somebody puts one in the               
 court to have the court preserve it, that it stay there.  It                  
 doesn't hamper the executor and it really doesn't add any                     
 substantial expense.  And that's just re-enforcement for what Bob             
 said about why we should not change that existing provision in the            
 Alaska law.  The question of the elective share provision has been            
 discussed a great deal around the country.  Alaska's present bill,            
 308, chooses to keep our elective share provision exactly as it is            
 now - substantially as it is now and I have very mixed feelings               
 about that.  The members of the probate committee obviously aren't            
 unanimous; the members of the Uniform Law Commission members from             
 Alaska aren't unanimous.  At least one of them thinks we should go            
 with the Uniform National Act; the rest of us are sort of spread              
 all over the place.  I think legislators often tend, when things              
 are in doubt, not to disturb existing law that has worked and as a            
 group of commissioners we aren't going to take any position on the            
 issue and we think that the bill would be an excellent improvement            
 for Alaska law exactly the way it is or if you choose to go to the            
 uniform version which does have some theoretical appeal - and maybe           
 we'd be better - I still have not solidly made up my mind - that's            
 fine.  But either way the important thing is that the bill should             
 pass.  I think what I'm saying is if you can't decide or if there             
 is considerable controversy over it, please pass the bill anyway              
 because you aren't changing that facet of Alaska law if you pass it           
 the way it is.                                                                
                                                                               
 Number 024                                                                    
                                                                               
 MR. KURTZ:  Now the only other real threat of opposition to this              
 bill was mentioned by Bob and that's the question of whether the              
 insurance industry will come in and oppose the bill on the grounds            
 that the augmented estate, which is a fancy term to define what               
 falls under the Probate Act for purposes of determining who gets              
 what, that insurance proceeds will now be included in that                    
 augmented estate.  And in Alaska, to date as far as we can figure             
 out and I have talked to several insurance agents about it, members           
 of the probate committee have also talked to some, there's no                 
 opposition to it.  But I do have a letter in my file that I've had            
 for some time from the American Council of Life Insurance and it's            
 very strongly opposed to the change.  I mention that only because -           
 because it has been brought up and I don't want the committee to -            
 to be surprised if it should come up later.  It's a national                  
 organization.  The main reason -- the main thing that seems to be             
 aimed at is the situation Bob mentioned where somebody perhaps has            
 a wife they're not getting a long well with, he has either a                  
 girlfriend or a brother or somebody else he would rather leave                
 money to - under present law in Alaska, you can go out and                    
 (indisc.) pull cash out of your estate and buy a great large life             
 insurance policy and have that go to that person and it will not be           
 part of the augmented estate as it's defined in present Alaska law            
 and split up.  This bill would change that and I think the change             
 is a good provision and I think everybody else who's testified so             
 far agrees.                                                                   
                                                                               
 CHAIRMAN PORTER:  I have a specific question on that and then I               
 guess a general question about the expense of probate.  But in the            
 fact situation you just presented, this bill becoming law would               
 make that life insurance policy that I bought to favor my brother             
 instead of my wife part of my estate if I die.                                
                                                                               
 MR. KURTZ:  That's right.                                                     
 CHAIRMAN PORTER:  How - but getting back to the discussion about              
 the contract having precedence over the will - what would happen?             
 This is an exception to that rule - in this case the will provision           
 would....                                                                     
                                                                               
 MR. KURTZ:  Would supersede the contract.                                     
                                                                               
 CHAIRMAN PORTER:  Supersede the contract.                                     
                                                                               
 MR. KURTZ:  For the sole purpose of determining the elective share            
 (indisc.) the elective share of the surviving spouse under the                
 augmented estate provision.                                                   
                                                                               
 CHAIRMAN PORTER:  If - if I had directed 100 percent of that policy           
 to my brother, under this law then my wife would retain a third of            
 it or...                                                                      
                                                                               
 MR. KURTZ:  She would if she chose to do so.  But she wouldn't just           
 retain a third of that asset.  You'd have to look at all of the               
 assets of the estate and....                                                  
                                                                               
 CHAIRMAN PORTER:  ...come into the mix.                                       
                                                                               
 MR. KURTZ:  That's right.  And - and it's interesting that we very            
 seldom - or at least I've never been (indisc.).  I cannot recall              
 the (indisc.) of my law firm is.  It's very seldom that this                  
 augmented estate even comes into play.  Now it may come into play             
 behind the scenes at times but to see those litigated outs very               
 unusual.                                                                      
                                                                               
 CHAIRMAN PORTER:  Well, that - that brings me to my broader                   
 question.  What is the expense of probate?  In other words, does              
 the value of the - this life insurance policy that results or                 
 accrues to someone by my death - is it diminished somewhat by some            
 administrative probate cost because of this law now putting it into           
 that?                                                                         
                                                                               
 MR. KURTZ:  No, it's not.  It's - the augmented estate defines what           
 percentage people will take, but the insurance policy money still             
 doesn't go through the probate proceeding.  In fact, I'm glad you             
 brought that question up because in 1972, a great deal of the                 
 opposition to the adoption of the model act was caused by the                 
 impact it had on attorney's fees, which when I came to Alaska - I             
 guess I'm naive - when I came to Alaska and practicing law in the             
 early 60s, I was astonished to find that attorney's fees were based           
 upon the percentage of the value of the estate.  It had nothing to            
 do with how much work you did or how complicated the estate was.              
 The person got their affairs in pretty good order before they died            
 - executed a good will - found his heirs paying the same attorney's           
 fees as the one who just left everything completely hanging and               
 screwed up.  And partially as a result of the adoption of the                 
 Uniform Probate Code and anti-trust proceedings brought in various            
 estates against bar associations, that's changed and today your               
 probate fees are almost invariably based what it takes to untangle            
 the estate and the court cost fees are based upon a sliding scale             
 of what goes through the estate and the insurance policy still                
 isn't going through the estate.  What you have is a contract saying           
 how it would be distributed.                                                  
                                                                               
 Number 087                                                                    
                                                                               
 CHAIRMAN PORTER:  Well, these nonprobate assets that now are                  
 brought into the mix, so to speak, a percentage of that value is              
 not taken by the probate process?                                             
                                                                               
 MR. KURTZ:  It's not being transferred automatically.  They don't             
 become part of the probate estate except for purposes for                     
 calculating a share of the estate.                                            
                                                                               
 CHAIRMAN PORTER:  What is then the basis for the expense of                   
 probate?                                                                      
                                                                               
 MR. KURTZ:  Typically, it's time and materials the attorney spends            
 on the thing and the amount of fees - and I'll defer back to the              
 Probate Committee on this because I haven't looked at it since 1981           
 - but it's a percentage of assets that actually pass through the              
 estate.  Now what the augmented estate can cause - let me take a              
 fairly easy hypo - let's suppose you die with $500,000 of assets              
 that go through the estate and you have that $1 million insurance             
 policy you bought for your girlfriend that's outside of the estate            
 and you're also still married and your wife says, "I'm entitled to            
 a third of the augmented estate."  The augmented estate, including            
 the insurance policy, would be $500,000 plus a million - it's a               
 million, five.  So she is entitled to $500,000 of that but that's             
 what she - she can get that much out of the estate without touching           
 the insurance policy - I'm ignoring federal taxes which is a whole            
 other story we don't want to talk about.  But what the augmented              
 estate does is define how much money we're looking at or how much             
 value we're looking for determining the spouse's share but it does            
 not control what property actually goes through the court                     
 proceeding and is subject of court fees.                                      
                                                                               
 CHAIRMAN PORTER:  And there isn't a fee to the state for for                  
 probating a will, there's not a fee to the state?                             
                                                                               
 MR. KURTZ:  There is a fee for the estate and it's based upon the             
 percentage of....                                                             
                                                                               
 CHAIRMAN PORTER:  Is that the motivation that you're talking about            
 for someone losing the will and not taking it down to probate?                
                                                                               
 MR. KURTZ:  No, losing the will - an awful lot of people are made             
 executors of wills who really are not very business like and they             
 take care of the will in the same fashion they take care of their             
 charge accounts and what have you - they're in a drawer some place            
 and they have a lot of stuff in it - and when they realize they're            
 executor, they start a new file in the drawer and they go through             
 and determine there are no assets that need to be probated because            
 everything's in joint tenancy - the car is, the motor home, the               
 mutual fund has a pay to ex on my death clause and so on - and they           
 conclude there's nothing to do and even if there is, throw the                
 thing away.  Or they move on and it gets lost in the clean out of             
 their house or their apartment.                                               
                                                                               
 CHAIRMAN PORTER:  Even though current law says that they should               
 take that will down and file it with the probate court?                       
                                                                               
 MR. KURTZ:  Well, they have to file it with the probate court if              
 they're going to probate it, but they may not need to probate it.             
                                                                               
 CHAIRMAN PORTER:  I'm missing something here.                                 
                                                                               
 MR. KURTZ:  If there are no assets that you have to have probate              
 for, then you don't need to probate.  There's no law that....                 
                                                                               
 CHAIRMAN PORTER:  But now you do under this bill?                             
                                                                               
 MR. KURTZ:  No.                                                               
                                                                               
 CHAIRMAN PORTER:  You just have to file it with...                            
                                                                               
 MR. KURTZ:  Ya.                                                               
                                                                               
 CHAIRMAN PORTER:  Okay.  There's a difference.                                
                                                                               
 MR. KURTZ:  Ya.                                                               
                                                                               
 CHAIRMAN PORTER:  Representative Green.                                       
                                                                               
 Number 129                                                                    
                                                                               
 REPRESENTATIVE GREEN:  Thank you.  Kind of piggybacking on the                
 Chairman's question earlier.  In your example of this five hundred            
 and million dollar life insurance policy, the bottom line was that            
 in fact the spouse only got one-third - she only got the $500,000             
 that she would automatically have gotten anyway.                              
                                                                               
 MR. KURTZ:  Well in present law, that would the case and under the            
 case it would still be the same.                                              
                                                                               
 REPRESENTATIVE GREEN:  Now would IRAs and other things also fall in           
 the same category with insurance?                                             
                                                                               
 MR. KURTZ:  Yes.                                                              
                                                                               
 REPRESENTATIVE GREEN:  And that also would still be (indisc.).                
 MR. KURTZ responded affirmatively.                                            
                                                                               
 MR. KURTZ:  That's probably a good point for me to - to cease.  I             
 would like to mention one other thing and Bob emphasized it, but              
 you can hardly emphasize too often.  The simultaneous death                   
 provision is extremely important in terms of federal taxes.  A lot            
 of people, particularly again in Alaska, don't feel that they're              
 wealthy people and they probably aren't, but they may have property           
 that is valuable enough that it gets them into the federal estate             
 tax situation.  And if you have a family when you add up everything           
 has $600,000 or $800,000 worth of assets or a million dollars,                
 it's not unusual in this state at all to find that they have about            
 $50,000 liquid assets they could put their hands on or 25 or 10.              
 If the - there isn't a simultaneous or 120 hour survival rule and             
 that thing gets with two chunks of federal income tax, it could be            
 a lot tougher on the family or the surviving children than it would           
 be otherwise.  I don't think any of us up here are under the                  
 objection to try and keep money in Alaska and away from the federal           
 government, if it's possible.  Are there any other questions?  I'll           
 try to answer them.                                                           
                                                                               
 CHAIRMAN PORTER:  Jerry, I see none.  Thank you very much.                    
                                                                               
 Number 156                                                                    
                                                                               
 REPRESENTATIVE B. DAVIS:  Excuse me, what - what is your last name?           
                                                                               
 MR. KURTZ:  Kurtz - K U R T Z.                                                
                                                                               
 REPRESENTATIVE B. DAVIS:  Okay.                                               
                                                                               
 UNIDENTIFIED SPEAKER:  Excuse me Jerry, just before you leave.  On            
 that last final point, under federal law if one spouse survives the           
 other by just minutes, there still is the estate tax or is there              
 some minimum survival time?                                                   
                                                                               
 MR. KURTZ:  I think I'll refer you to Manly because I'm not sure              
 whether there is a minimum survival time.  I don't think there is             
 under federal law.  State law, what you're in effect you're doing             
 is saying they died simultaneously if they die within 120 hours of            
 each.  That can help.  It's very common for clauses to be put in              
 wills saying that if you die within 30 days or 60 days or 90 days             
 of each other that (indisc.) the wills of the concern                         
 simultaneously.                                                               
                                                                               
 UNIDENTIFIED SPEAKER:  Okay, thank you.                                       
                                                                               
 CHAIRMAN PORTER:  I would just for the record indicate that Mary              
 Ellen Beardsley from the Department of Law is here.  If we have any           
 questions that the attorneys that are testifying can't answer, we             
 can always go to Mary Ellen in order to be responsive.  Next I have           
 Deborah Randall.                                                              
 Number 171                                                                    
                                                                               
 DEBORAH RANDALL, ATTORNEY, DAVIS AND GOERIG:  Good afternoon.  My             
 name is Deborah Randall.  I'm an attorney with Davis and Goerig.              
 We're an estate planning firm and I've been practicing for about              
 eight years.  I don't really have that much to add to Bob Manly's             
 comments.  He did an absolutely fabulous job for you guys of                  
 outlining the high points of the bill.  I guess I am the vociferous           
 minority of the Probate Committee and my challenge to you is that             
 the bill as it stands is a very good bill, but I think it could be            
 even a better bill.  And the reason I say that is for the very                
 reasons that Bob pointed out some of the things were changed in               
 this version of the bill that came out last year, House bill 307              
 which is now House bill 308, which was changed based on some input            
 from one of the members of the Probate Committee and some of the              
 objections were with regard to the elective share which Bob talked            
 about and being that that is such a controversial subject there,              
 the thought was we should maybe move that out of this bill because            
 we don't want the whole bill to die.  But I am definitely in favor            
 that.  I think it's wonderful and I would encourage if you ever               
 have the time, I'm sure you're very busy, but this what I have as             
 the uniform public co-article two which was put out by the Uniform            
 Laws Committee which gives comment to all of these sections and it            
 goes through a detailed approach as to why the uniform law                    
 commissioners have felt that this was a good thing to do.  It's the           
 vesting schedule marriage which Bob is opposed to and several                 
 members of our committee.  However, I from a practicing point of              
 view, have seen it where you have a client that comes in that for             
 whatever reasons has not done a prenuptial agreement and is maybe             
 into a second marriage, has children from a prior marriage and for            
 their own reasons can't go through a divorce, you know, because               
 that's very expensive, but yet wants to do something for the                  
 children from the prior marriage.  Based on the way the law is if             
 you've been married for one year, one day, one week, you're                   
 entitled to one-third of that person's estate.  And so, you know I            
 have seen concrete examples of where that has really gone afoul of            
 what the person - the testator wanted.  And it's for that reason              
 that I felt that when I saw this first come out I was very much in            
 favor of it.  People say I'm cold hearted, that it takes the love             
 out of marriage, but remember this is talking about situations                
 where you want to disinherit a spouse.  It's not talking about the            
 provisions where you're leaving everything to your spouse and                 
 taking care of the spouse.  So it might not come up a lot, but when           
 it does come up in my experience I think this new vesting schedule            
 could be really good.  The other thing that I would definitely --             
 what was pulled out of this bill in which Bob commented on were the           
 provisions that we're going to relax the formalities for will                 
 execution.  Based on Peter Bordigan's(ph.) letter to the -- I guess           
 with Sean Parnell's office, they've totally deleted those sections            
 out.  Basically what they were trying to do in here was lessen the            
 formalities, and you have to understand statute of wills is                   
 centuries old.  The whole idea, you know I'm sure when you think              
 about it in your mind you think of this solemn occasion where you             
 have to have two witnesses and the quilled pen and you have to make           
 sure that you sign in the testator's presence.  And the idea there            
 was so that you would avoid people coming up and making wills for             
 people like they do on all the soaps, you know, when they want to             
 disinherit somebody they conger up a will and get false signatures.           
 That's what the statute of wills was there to do.  What this new              
 revised law says is "Okay, we've got that," but what if somebody              
 does not totally comply with the letter of the law.  Are we going             
 to throw out their intent?  And what they tried to do here is say,            
 "No, we are going to look at the testator's intent.  What did the             
 testator want to do?"  And our job is to try to carry out what a              
 testator wanted.  And so what they did here is they said, "Lets               
 lighten it up a little bit."  Bob's comment was that they're afraid           
 that this is gonna increase more litigation.  Well the commentary             
 in here, and they've taken this from other jurisdictions - I                  
 believe it was Australia - it's not one of the states, but that               
 they were not getting increased, you know, battles over this.  They           
 we're not getting increased fighting which I'm surprised he would             
 say it because there lawyers -- that's good for us.  I mean the               
 more fights, the more money we get.  But the experience of this               
 committee was contrary to that.  It did not increase litigation.              
 So as one of them now I was really sad to see that provision taken            
 out because what I'd like to see this new revision do is to take              
 the probate code and modernize it.  Lets move into the 90s.  You              
 know we were back in the 70s, lets move into the 90s.  So when I              
 say to you that this is a very good law, I do believe that.  This             
 is wonderful.  It's very complicated.  I think you guys are                   
 fabulous to be able to wade through this.  I can't even wade                  
 through it and I practice this day in and day out.  But this                  
 commentary - this commentary is absolutely wonderful.  I use it               
 almost as a bible because it does explain what revisions were made.           
 Bob has highlighted the major ones which are definitely a bonus.              
 So the only thing that I would say to you is that, you know, the              
 considerations are always there.  What can you put in a bill and              
 what can you not put in a bill get it to pass.  My challenge is               
 just the maybe the bill as it is could be made even better without            
 totally jeopardizing the bill.  And in that regard, I would suggest           
 strongly looking at the two code sections that were taken out that            
 had to do with the formalities of a will.  Lets see those were                
 exactly 13.12.502 and 13.12.503.                                              
                                                                               
 CHAIRMAN PORTER:  Representative Finkelstein.                                 
                                                                               
 Number 241                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN:  Thank you Mr. Chairman.  I really                
 appreciate your testimony.  And I can see on this last point how it           
 may not necessarily result in more litigation because you, and tell           
 me if this generalization is incorrect, if you do get more people             
 into the category of improved will, the wills are going to be                 
 generally simpler documents than having to go into the whole                  
 probate code.  I'd assume those people, if you can qualify a will,            
 which they tend to be relatively straight forward allocation of               
 assets, you don't have to go into searching for the third cousin              
 and, you know, all the other things that are out there that aren't            
 going to be as straight forward in the will so I assume that's part           
 of the reason that you wouldn't have this much court costs if you             
 succeed in qualifying more wills if the wills are simpler than the            
 rest of the system.                                                           
                                                                               
 Number 252                                                                    
                                                                               
 MS. RANDALL:  Well and the thing is that the standard is still                
 clear and convincing evidence.  I mean if you have not met with the           
 formalities of the will execution, at least in the 502, you still             
 have to go into the court and show by clear and convincing evidence           
 that you tried to comply.  I mean I'm talking about situations                
 where maybe a witness - they were back in Dillingham or whatever,             
 and they could only get one witness and our law required two                  
 witnesses.  Are you going to throw out a will because you didn't              
 have your two witnesses?  I think that's what that section is                 
 trying to do.  Now 503 takes it further.  503 says, you know, if              
 it's -- it just says, "Although a document arriving was not                   
 executed in compliance, the document or value is treated as if it             
 has been executed and compliance."  And again, it's clear and                 
 convincing evidence.  So you still have a high standard to meet and           
 I think what they're saying in their commentary is because of that            
 clear and convincing standard, it's not going to be easy for fraud            
 to appear for people (indisc.) make up wills and increased                    
 litigation because you still have to show by clear and convincing             
 evidence that that's what the testator wanted.                                
                                                                               
 Number 266                                                                    
                                                                               
 CHAIRMAN PORTER:  I don't know, I can just create in my own mind a            
 whole lot of scenarios that would lead to litigation, particularly            
 any time there was an heir in the will who wasn't the heir in the             
 stated intent by some other witnesses.  We've been talking about              
 these girlfriends.  I guess if someone decided that they were gonna           
 leave their estate to their girlfriend and the adult children would           
 take exception to that and this gentleman dies, there is the will             
 leaving everything to the girlfriend.  If I understand the law now,           
 that's a pretty straight forward transfer notwithstanding the hurt            
 feelings of the children.  But if the children wanted to get                  
 together and say, "We heard the old man say just a week before he             
 died that it was his intent to change that because she had ticked             
 him off," - I mean isn't that litigation?                                     
                                                                               
 Number 281                                                                    
                                                                               
 MS. RANDALL:  Well, you know, in my experience you're gonna get               
 litigation.  I mean people will be in litigation for a variety of             
 reasons.  I mean for executing a will, you're supposed to have -              
 you know be of sound mind disposing memory.  Well that's one of the           
 very first challenges that somebody is going to make, "Well they              
 were crazy as loon when they wrote this will," so even though if              
 you don't have a leg to stand on I've still seen people come in and           
 try to challenge a will.                                                      
                                                                               
 Number 286                                                                    
                                                                               
 CHAIRMAN PORTER:  I have some experience trying to prove intent,              
 you know in a criminal lawsuit and that's tough.  That just adds to           
 what you are very correctly saying.  There is always room for                 
 litigation.                                                                   
                                                                               
 MS. RANDALL:  And there is always a spectrum too.  I mean certainly           
 you can talk at an extreme example where you probably do have some            
 fraud and some collusion and some wrong doing.  But then at the               
 other end of the spectrum you have a person who is in a hospital              
 who is trying to get a will done and because there weren't enough             
 witnesses right before they died, they have one witness and you're            
 gonna say, "Because you did not comply with the formalities of                
 execution, we're gonna throw it out."  So yes, you have a spectrum.           
 I just would suggest that maybe you read the commentary, the                  
 uniform commissioners did address that issue of whether it would              
 increase litigation and their finding was that there was nothing to           
 substantiate that based on prior jurisdictions that have adopted              
 this law.  So what we're doing here is we're speculating what might           
 happen which indeed might happen if you have the right facts and              
 circumstances, but in my experience what I've seen to come into my            
 office is more of the category I'm talking about where you have               
 somebody who is trying to comply with the letter of the law but               
 just can't do it for whatever reason.  And then we, as lawyers,               
 have a real uphill battle to try to get that will admitted and we             
 may or may not.  What this would do for us is help us.                        
                                                                               
 Number 303                                                                    
                                                                               
 CHAIRMAN PORTER:  I guess what I'm asking you isn't there some                
 middle ground between the general statement of whatever he intended           
 and I don't know if that's what this language is, but that's what             
 described to be as being.  Some middle ground between that and                
 specifically what you're referring to as would relate to an intent            
 to meet the criteria but some physical explainable inability to do            
 so shouldn't (indisc.).                                                       
                                                                               
 MS. RANDALL:  And you can always make that argument to the court              
 which is what we do.  But this does -- again this is a clear and              
 convincing standard which is where you're protection is built in.             
 I mean I have to be able to come in and by, you know, using                   
 whatever evidence I have, and 502 allows me to bring in extrinsic             
 evidence to establish for the testator's intent was.  I still have            
 the clear and convincing standard to me which is a very high                  
 standard and if I'm gonna get a lot of people opposing me, yes the            
 litigation is gonna go up and the expense is gonna go up and that's           
 happened to a daily basis.  If somebody wants to contest a will,              
 they can do that now today.  So I just felt that this was a very              
 progressive addition.  I like to see it just based on my own                  
 experience and I was very sad to see the committee take a - adopt             
 a position to remove that totally so....                                      
                                                                               
 CHAIRMAN PORTER:  David.                                                      
                                                                               
 Number 319                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN:  Thank you Mr. Chairman.  On the other            
 issue in terms of when the spouse qualifies for the various                   
 thresholds of percents, what does that override?  If you've got a             
 case where they've been in one year and they meet such a percent of           
 -- does that override prenuptial agreements?  Are we only talking             
 about a circumstance where these are assets and probates.                     
                                                                               
 MS. RANDALL:  Absolutely (indisc.) talk before.  I mean what I                
 would - and Bob was telling you prior to the (indisc.) in here, if            
 I had a prenuptial agreement in the case I'm thinking of I wouldn't           
 have this problem because in a prenuptial agreement you can set               
 forth your rise by contract.  In the case I had, I had somebody who           
 was in a second marriage, had not done a prenuptial agreement,                
 wanted to disinherit his spouse, did not want to get a divorce and            
 yet he'd been married for like two or three years and his spouse is           
 automatically entitled to one-third.  He did eventually die and you           
 know what happened.  I mean the children from the prior marriage              
 just blew through the roof and they're stuck.  It's one-third.  Now           
 under this vesting schedule which treats it like a partnership, it            
 takes out the love, the romance of marriage, you know it's more of            
 a, as they say, partnership approach to marriage.  I think it fits            
 in with a circumstance like this for a client like that.  He could            
 say, "Yes, you've been married three years, you're entitled to                
 whatever it's 10 percent - 12 percent, but not automatically one-             
 third."                                                                       
                                                                               
 CHAIRMAN PORTER:  David.                                                      
                                                                               
 REPRESENTATIVE FINKELSTEIN:  What portion of -- how often does this           
 provision occur?  It's got to be a place where there is not a                 
 prenuptial agreement and it's got to be a place where the                     
 provisions of the will either -- well it actually only applies if             
 there is no will.  It isn't a matter because these just the                   
 minimums that a will has to meet.  Isn't that correct?                        
                                                                               
 Number 344                                                                    
                                                                               
 MS. RANDALL:  The elective share is an election the spouse takes              
 which is contrary to what the will says or what the elective share            
 is.  Now you realize the way we interpret the elective - I mean the           
 - excuse me - the intestate share spouses are gonna get a half in             
 some circumstances or the whole estate in others.  So the only time           
 this augmented state usually comes up in my experience is in a                
 situation where a person actually did a will and actually did                 
 specifically disinherit the spouse.                                           
                                                                               
 REPRESENTATIVE FINKELSTEIN:  So how often does it occur where a               
 will is in violation of these minimums?  I mean it sounds to me               
 like it doesn't come up very often.                                           
                                                                               
 Number 353                                                                    
                                                                               
 MS. RANDALL:  Well in my office right now, just speaking today I've           
 got three of these issues with the elective share pending right now           
 and I work probably about 15 to 20 probates.  So it is not a lot              
 that they're there.  They're definitely there and I'll tell you               
 it's usually in second marriages.  It's not the first marriage.               
 It's the second marriage and you have kids from the previous                  
 marriage.  That's when the situation comes up.  So it does come up.           
 It does happen.  People do not always put their ducks in order.               
 Unfortunately when they come into you, you know they haven't done             
 the prenuptial.  It's too late to do the prenuptial.  So all that             
 this law does is say, "We can make the law better."  Based on our             
 experience and experience, you know, this was the uniform law                 
 commissioners that looked at this issue, I can't take any credit              
 for this, but just based on my experience I thought it was a good             
 thing.  I like things that move the law forward which is what I               
 think this whole Article 2  does.  I would just saying I think we             
 could make it even better.                                                    
                                                                               
 CHAIRMAN PORTER:  If that portion of the suggested Uniform Code               
 were in law and two people go married, both for the first time, and           
 one spouse died within a year and there was no will at all....                
                                                                               
 Number 373                                                                    
                                                                               
 MS. RANDALL:  Then you don't have to worry about it because it                
 would be covered by the intestate law, which in that case when                
 there is no children, I believe they get 100 percent or if it's               
 parents I guess it's 200,000 and then the parents get three-                  
 quarters, or the parents get one-quarter.  So it would go to the              
 intestate law which is much more generous.                                    
                                                                               
 CHAIRMAN PORTER:  This provision would (indisc.).                             
                                                                               
 MS. RANDALL:  No.  This is really a provision where a spouse has to           
 make an election for this.  This is something, like again, it                 
 doesn't automatically happen.  You have to make an election for               
 this and it usually happens when you've been disinherit (indisc.)             
 will and you - the spouse says, "Wait a minute, I can get more                
 under my elective share."  So...                                              
                                                                               
 Number 384                                                                    
 CHAIRMAN PORTER:  There is an awful lot of room for comment outside           
 of the law.                                                                   
                                                                               
 MS. RANDALL:  Right, it is a very controversial subject.  In our              
 probate committee alone we've spent probably several sessions                 
 talking about this so...  Thank you.                                          
                                                                               
 CHAIRMAN PORTER:  Any questions?  Thank you Deborah.  And last but            
 not least, an old friend Dick Thwaites.                                       
                                                                               
 Number 390                                                                    
                                                                               
 DICK THWAITES:  I'm Dick Thwaites.  I've been in and around the               
 estate planning community I guess since the early 70s, have chaired           
 the probate committee, currently the elder law section of the Bar.            
 In my discussion here I really wanted to relate to you that in all            
 of these forms, Anchorage's State Planning Council, all of these              
 areas - we've discussed this particular bill and as you can see               
 between Bob and Deborah there was some controversy and so forth.              
 Without exception I think in all of these forms, the bill that you            
 have in front of you is the one that everybody can agree to.  The             
 only challenge here is that some people would like to see more than           
 this.  And while I wanted to point out to you was - I'm gonna save            
 for a little later - some clarification on the attorney fee thing,            
 but what I wanted to point out to you is that this bill merely                
 adjusts and changes article two and some other provisions of the              
 Uniform Probate Code.  As big as this is, it really isn't the whole           
 Uniform Probate Code.  What happens is the uniform commissioners,             
 as they go along, they look at different sections.  It could be a             
 year from now or two years from that you'll see another section of            
 the Uniform Probate coming up for amendment.  That's what I wanted            
 to point out.                                                                 
                                                                               
 UNIDENTIFIED SPEAKER:  Thanks for the warning.                                
                                                                               
 MR. THWAITES:  This particular section affects basically Article 2,           
 but their Article 1 is kind of definitions and jurisdiction of                
 things and so forth and they didn't feel that required any                    
 modification.  This is sort of the administrative core of the                 
 Uniform Probate Code and quite frankly it's a very very beneficial            
 act in that it brings up to date a lot of the things that have                
 existed since 1967 and 69 - these things came out.  And the estate            
 planning community, as a whole, all supports what you have in front           
 of you.  I don't think you'll find anyone that disagrees with this            
 change.  There are some, however, as you've noticed that might like           
 a little more change and it was with that in mind that I wanted to            
 just clarify that because there are some things out there in some             
 later sections.  In the Uniform Probate Code, for example, is the             
 section regarding guardianships and conservatorships and trusts and           
 we're not even touching those in this section.  Those are other               
 articles.  This is purely and most directly affecting just Article            
 2 of the code and it's a good article to implement and get some of            
 these changes brought forward in, but there may be some others                
 coming down the road in the future.  We don't know what the uniform           
 commissioners are gonna do, but we do support the concept of the              
 Uniform Act and almost every Uniform Act I've ever seen come along            
 has option A, B or C in it, so you end up selecting which are those           
 are appropriate for your jurisdiction.  Many of the sections, for             
 example, in this particular one there was a different section if              
 you were a community property estate than if you were a separate              
 property estate.  This bill contains the separate property                    
 provisions which are appropriate to Alaska.  And I think by in                
 large, everyone agrees that what's contained in here is the                   
 appropriate change at a minimum for this.  There are some obviously           
 who would like to see additional changes and more modifications and           
 so forth to streamline certain other aspects of the administration            
 process, but by in large everyone -- you can't get a unanimous vote           
 on it because people want more.  But by in large, everyone supports           
 what you have in front of you right here.  I mean this is a good              
 solid piece of work to accomplish.  Shifting back a little bit to             
 you question before where you were addressing some of these issues            
 with Jerry, I'd like you to know that Alaska happens to be one of             
 five states and this is based on a study of the American College              
 Trust Estates Council, Alaska is one of five states that does not             
 have a percentage fee arrangement.  In other words, in fact in                
 Alaska the first $52,000 goes to surviving spouse and family                  
 members even before any attorney's fees can be taken.  So if you              
 have an estate under $52,000, you better figure out where you're              
 gonna get paid before you go into the estate because you're not               
 allowed to make any claim against the first $52,000 in the estate.            
 Now it could be that you have separate agreement with a spouse or             
 that certain other things are out there that are important to get             
 done and in that instance where a lawyer is required, a lawyer can            
 be taken.  But it is possible, both in Fairbanks and Anchorage, to            
 represent your self procure - that is to go into probate do the               
 work on your own without an attorney.  And the probate courts are             
 sometimes very helpful in giving people the basic information they            
 need.  Usually what they do is they say the law library is right              
 over there, go look it up.  That's not maybe so helpful.  There are           
 some probate manuals and things like that and I am familiar with              
 some people who have done that.  Usually when they come into the              
 lawyer offices after they've gotten into that process and                     
 discovered that maybe the planning that they had done as a family             
 wasn't so good and there were some issues that didn't get resolved            
 and maybe a lawyer needs to help them straighten those out.  The              
 state of Alaska actually only picks up $102.50.  There is a $100              
 filing fee no matter what the size of the estate is and there is a            
 $2.50 fee to the Department of Revenue for a determination of                 
 whether there is a tax or there isn't a tax and that's it.  It's              
 the same for every estate.  Five states, Maine, Tennessee,                    
 Wisconsin, Idaho and Alaska do not have percentage fees.  This is             
 according to American college studies that were done.  That means             
 that in this state in Alaska you get (indisc.) dollar estate if you           
 did all the planning right, the whole probate cost for six months             
 or a year worth of work might be $1,500 or $2,000 depending on how            
 much work is involved.  On the other hand, you could have a                   
 $100,000 estate that might require $40,000 or $50,000 because                 
 everybody is fighting over every nickel and that just depends on              
 how the planning is done and how the family relates to one another.           
 So it's actually just paid for based on the amount of planning, the           
 amount of work and the amount of fight that arises and toward that            
 circumstance, I think Alaska has a pretty good program.  It                   
 certainly is one of the least costly states.  There are many                  
 experts who have been up here to talk to us from a community and              
 legal education standpoint who have suggested that the standard               
 living trust mechanism that is throughout the rest of the United              
 States be a state planning tool is not necessary in Alaska because            
 we don't have percentage fees.  The personal representative doesn't           
 get a fee based on the percentage.  They only get reimbursed for              
 what their expenses are and what work they do.  The lawyer only               
 gets reimbursed for what work is done and so it's basically a                 
 pretty equitable situation that if you do the work and you do the             
 planning, there might not be such extensive fees involved.  If you            
 don't, if you leave it to chance then it depends on who is gonna be           
 there at the time you pass away and who is gonna have their hand              
 out to see what's gonna happen and that's where the fight usually             
 occurs.                                                                       
                                                                               
 Number 496                                                                    
                                                                               
 REPRESENTATIVE BUNDE:  Mr. Chairman.                                          
                                                                               
 CHAIRMAN PORTER:  Representative Bunde.                                       
                                                                               
 REPRESENTATIVE BUNDE:  A bit off the subject, but I understand that           
 the Department of Revenue could give you a determination for $2.50.           
                                                                               
 MR. THWAITES:  Well, not exactly.  The Department of Revenue will             
 give you a certificate for $2.50 saying that you have presented to            
 them information saying either there is a federal estate tax return           
 due or there is not.  If you send in a report saying there is not,            
 in essence what happens is they send you a certificate back which             
 is an estate tax closing letter and the probate court won't close             
 the estate until they have that certificate back.  So if there is             
 a tax due, state of Alaska would like to know that it's received              
 it's share of the federal tax or if there is no tax due then they             
 want to know that.  I think that's the only department in state               
 government who could send a letter for under $25.  I think maybe              
 that needs to be looked at.                                                   
                                                                               
 CHAIRMAN PORTER:  That's only because they - half of those                    
 circumstances get money back from the percentage of the tax.  Dave.           
                                                                               
 REPRESENTATIVE FINKELSTEIN:  Thank you, Mr. Chairman.  Of course              
 they actually don't send the letter for $2.50, we just don't charge           
 enough I'm sure, which brings me to the question of there is a                
 bigger picture and I don't particularly understand this world at              
 all.  What is the state getting out of these from any sort of tax             
 that compensates for the court costs and other costs involved?                
 Looking at the whole picture of any other taxes, what does the                
 state get for a case going through the court system.                          
                                                                               
 Number 520                                                                    
                                                                               
 MR. THWAITES:  Well there is no tax in the court system that is               
 assessed by the state.                                                        
                                                                               
 REPRESENTATIVE FINKELSTEIN:  This just shows how little I know                
 about it.  Do we have any separate inheritance taxes or....                   
                                                                               
 MR. THWAITES:  No, the federal government has a federal estate tax            
 and in the federal estate tax they have a provision that says                 
 basically a certain percentage of the federal tax will be given as            
 a credit back against the state estate tax or inheritance tax.  Now           
 an estate tax is a tax against the estate.  An inheritance tax is             
 based on who is receiving the property.  So an inheritance looks at           
 it from the standpoint that if you're a spouse or a child, it's a             
 low rate.  If you're a stranger or some more distant relative, it's           
 a higher rate.                                                                
                                                                               
 CHAIRMAN PORTER:  Is this an IRS provision?                                   
                                                                               
 MR. THWAITES:  No, some states have inheritance tax, but here we              
 have what is referred to in the industry is a piggyback tax.  And             
 basically the piggyback tax is out of a - if there is a $2 million            
 estate and the amount of tax is payable if the estate planning was            
 done right were in the vicinity of say $300,000, the federal                  
 government says we'll allow you a credit of something like say                
 $50,000 for the state credit.  In other words, you only have to               
 send up $250,000, you send the other $50,000 to the state.                    
                                                                               
 REPRESENTATIVE FINKELSTEIN:  If there is a stated estate tax.                 
                                                                               
 MR. THWAITES:  Yes, and Alaska has adopted the piggyback tax rule             
 for the feds which means it's sort of self policing because the               
 state of Alaska, Department of Revenue, doesn't have to have a                
 division out there doing the administration.  They know that                  
 anybody whose subject to the federal tax is also subject to the               
 state and they require -- with the $2.50, they require a copy of              
 the federal form 706 to be filed, which looking down they see that            
 the state of Alaska is entitled to a certain amount and they want             
 to know where their check is.  And then you get the $2.50 closing             
 letter back after you send them the $80,000 check or whatever the             
 percentage is that belongs to the state.  It's kind of self                   
 policing because nobody is gonna do anything with the feds because            
 of the threat there I think.                                                  
                                                                               
 CHAIRMAN PORTER:  Instead of a credit then it's an actual refund.             
 Well no I guess...                                                            
                                                                               
 MR. THWAITES:  No, when you file your 706 federal return, it's                
 required to be filed at the end of nine months.  You can get an               
 extension to 15 months.  The state estate tax is due with 15                  
 months.                                                                       
                                                                               
 CHAIRMAN PORTER:  Is this piggyback provision somewhere in the                
 probate code?  Is that where it is?                                           
                                                                               
 MR. THWAITES:  Yeah, it's Department of Revenue.                              
                                                                               
 REPRESENTATIVE FINKELSTEIN:  Mr. Chairman, for our next                       
 consideration of this bill during session could we try to find out            
 what we get each year in state estate taxes?  I didn't even know it           
 existed.  It might be - do you have any idea on what...                       
                                                                               
 UNIDENTIFIED SPEAKER:  I don't think this bill would affect that              
 one way or the other.                                                         
                                                                               
 REPRESENTATIVE FINKELSTEIN:  No, prior to finding this out I was              
 thinking how can we add on some fees to recoup some of these costs.           
 There is enough money coming in to cover the costs then it may not            
 be an issue, but I think we do need to try to cover our costs where           
 necessary especially on the large settlements.                                
                                                                               
 CHAIRMAN PORTER:  Any other questions of Dick.  If not, Dick thank            
 you very much.  I have no one else signed up to testify.  Is there            
 anyone here who wishes to give testimony on HB 308 that has not?              
 Seeing none, Mr. Sponsor is  there anything else you'd like to...?            
                                                                               
 REPRESENTATIVE FINKELSTEIN:  No thanks, Mr. Chairman, I just                  
 appreciate you holding a hearing on the bill during the interim.              
 Visit it again during session.                                                
                                                                               
 CHAIRMAN PORTER:  It was helpful to me and I know to the other                
 members and we can now quite frankly read this and have a clue as             
 to what it was.                                                               
                                                                               
 REPRESENTATIVE B. DAVIS:  Mr. Chairman, I'd like to know how I                
 could get a copy of that commentary.  What would I have to do?  How           
 would I go about it?  It would be better to do it here.                       
                                                                               
 CHAIRMAN PORTER:  Representative Finkelstein.                                 
                                                                               
 REPRESENTATIVE FINKELSTEIN:  Thank you Mr. Chairman, I too will try           
 to (indisc.) and come up with more specific issues is there any.              
 The only one that hits me so far which if there is any way to get             
 a little bit material when we take this up is this issue that came            
 up in regard to the circumstance when the will is in conflict with            
 the minimums required and on that one I thinks can be real helpful            
 for me to have both the current provision is in this bill without             
 change the existing law and the proposed changes that weren't                 
 adopted just so we could have both sides of it to discuss at that             
 point because it -- I think the other -- I didn't find any that I             
 felt were particularly controversial, but I think this one is                 
 (indisc.).                                                                    
                                                                               
 CHAIRMAN PORTER:  Well in effect, that provision is not in front of           
 us.  Do you want to bring it in front of us?                                  
                                                                               
 REPRESENTATIVE FINKELSTEIN:  Yes.                                             
                                                                               
 CHAIRMAN PORTER:  Oh sure, thanks.                                            
                                                                               
 REPRESENTATIVE FINKELSTEIN:  I don't know exactly where I follow it           
 either, but I just think it isn't a particularly heartless thing to           
 take it on because while there may be some spouse that's losing out           
 somewhat, a particular percent, there is a whole bunch of other               
 people involved too which are relatives and various....                       
                                                                               
 TAPE 95-61, SIDE A                                                            
 Number 001                                                                    
                                                                               
 REPRESENTATIVE FINKELSTEIN:  It's certainly better we do it in the            
 committee than try to deal with it on the floor.  This kind of                
 bill, you know, has got terrible (indisc.) certainly encourage our            
 getting it onto the floor early because this thing can be so                  
 (indisc.), everyone has had some experience.                                  
                                                                               
 CHAIRMAN PORTER:  I'll tell you what.  I'll make you a deal David.            
 The bill is quite weighty as it is.  If you want to look into that            
 issue and propose an amendment, we can certainly look at it.  The             
 little discussion that I've had on it, it would dominate the                  
 discussion with 1/100 of what the value of the rest of the bill is            
 and I want to try to avoid that.  Is there anything else to come              
 before the committee?  If not thank you very much, we're adjourned.           
                                                                               

Document Name Date/Time Subjects