Legislature(1997 - 1998)

05/07/1997 08:37 AM JUD

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

Document Name Date/Time Subjects