Legislature(2007 - 2008)CAPITOL 120

04/04/2007 01:00 PM JUDICIARY


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 196 HANDLING MATTERS AFTER A PERSON'S DEATH TELECONFERENCED
Heard & Held
*+ HB 197 TRUSTS TELECONFERENCED
Moved Out of Committee
*+ HB 201 UNIFORM ACT: PROPERTY INTEREST DISCLAIMER TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE JUDICIARY STANDING COMMITTEE                                                                             
                         April 4, 2007                                                                                          
                           1:05 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Jay Ramras, Chair                                                                                                
Representative John Coghill                                                                                                     
Representative Bob Lynn                                                                                                         
Representative Ralph Samuels                                                                                                    
Representative Max Gruenberg                                                                                                    
Representative Lindsey Holmes                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Nancy Dahlstrom, Vice Chair                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 196                                                                                                              
"An  Act relating  to the  handling of  matters after  a person's                                                               
death."                                                                                                                         
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 197                                                                                                              
"An  Act  relating to  the  issuance  of shares  of  professional                                                               
corporations to a  trust, to trusts, to trustees,  to the removal                                                               
of  a trustee,  to the  compensation of  a trustee  and a  person                                                               
employed by  a trustee, to  a trustee's accepting or  rejecting a                                                               
trusteeship, to co-  trustees, to a vacancy in  a trusteeship, to                                                               
the resignation  of a trustee,  to delivery of trust  property by                                                               
former  trustees, to  the reimbursement  of trustee  expenses, to                                                               
the certification  of a trust,  to the suitability of  a trustee,                                                               
to the place  of administration of a trust, to  a trustee's power                                                               
to  appoint  property  to  another  trust, to  a  change  of  the                                                               
percentage of trust  property to be considered  principal, to the                                                               
determination of the value of a  trust, and to a settlor's intent                                                               
when transferring  property in trust;  amending Rules 54  and 82,                                                               
Alaska Rules of  Civil Procedure; and providing  for an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - MOVED HB 197 OUT OF COMMITTEE                                                                                            
                                                                                                                                
HOUSE BILL NO. 201                                                                                                              
"An Act relating to the  Uniform Disclaimer of Property Interests                                                               
Act,  to the  disclaimer  of property  rights  under the  Uniform                                                               
Probate  Code,  and  to  child  support;  and  providing  for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 196                                                                                                                  
SHORT TITLE: HANDLING MATTERS AFTER A PERSON'S DEATH                                                                            
SPONSOR(S): JUDICIARY                                                                                                           
                                                                                                                                
03/14/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/07       (H)       JUD                                                                                                    
04/04/07       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
                                                                                                                                
BILL: HB 197                                                                                                                  
SHORT TITLE: TRUSTS                                                                                                             
SPONSOR(S): JUDICIARY                                                                                                           
                                                                                                                                
03/14/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/07       (H)       JUD, FIN                                                                                               
04/04/07       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
                                                                                                                                
BILL: HB 201                                                                                                                  
SHORT TITLE: UNIFORM ACT: PROPERTY INTEREST DISCLAIMER                                                                          
SPONSOR(S): REPRESENTATIVE(S) LEDOUX                                                                                            
                                                                                                                                
03/14/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/14/07       (H)       JUD, FIN                                                                                               
04/04/07       (H)       JUD AT 1:00 PM CAPITOL 120                                                                             
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JANE W. PIERSON, Staff                                                                                                          
to Representative Jay Ramras                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Presented HB 196 on behalf  of the sponsor,                                                               
the  House  Judiciary Standing  Committee;  presented  HB 197  on                                                               
behalf of the sponsor, the House Judiciary Standing Committee.                                                                  
                                                                                                                                
DAVID G. SHAFTEL, Attorney at Law                                                                                               
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     Provided   comments  and   responded  to                                                               
questions  during discussion  of  HB 196;  provided comments  and                                                               
responded  to questions  during  discussion of  HB 197;  provided                                                               
comments and responded to questions during discussion of HB 201.                                                                
                                                                                                                                
RICHARD S. THWAITES, JR., Attorney at Law                                                                                       
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:     Provided   comments  and   responded  to                                                               
questions  during discussion  of  HB 196;  provided comments  and                                                               
responded to  questions during discussion  of HB 197;  provided a                                                               
comment during discussion of HB 201.                                                                                            
                                                                                                                                
MARY ELLEN BEARDSLEY, Assistant Attorney General                                                                                
Commercial/Fair Business Section                                                                                                
Civil Division (Anchorage)                                                                                                      
Department of Law (DOL)                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Responded to  a question regarding  HB 196;                                                               
responded to questions regarding HB 201.                                                                                        
                                                                                                                                
DOUGLAS J. BLATTMACHR, President and CEO                                                                                        
Alaska Trust Company                                                                                                            
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Provided comments  during  discussion  of                                                               
HB 197.                                                                                                                         
                                                                                                                                
STEPHEN E. GREER, Attorney at Law                                                                                               
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Provided  a  comment  regarding  HB  196;                                                               
provided  a  comment during  discussion  of  HB 197;  provided  a                                                               
comment during discussion of HB 201.                                                                                            
                                                                                                                                
REPRESENTATIVE GABRIELLE LeDOUX                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Sponsor of HB 201.                                                                                         
                                                                                                                                
SONYA HYMER, Staff                                                                                                              
to Representative Gabrielle LeDoux                                                                                              
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Presented HB 201 on behalf  of the sponsor,                                                               
Representative LeDoux.                                                                                                          
                                                                                                                                
LYNN E. LEVENGOOD, Commissioner                                                                                                 
National  Conference  of  Commissioners  on  Uniform  State  Laws                                                               
(NCCUSL)                                                                                                                        
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT:    Provided  comments  and  responded  to  a                                                               
question during discussion of HB 201.                                                                                           
                                                                                                                                
DEBORAH BEHR, Chief Assistant Attorney General                                                                                  
Legislation & Regulations Section                                                                                               
Civil Division (Juneau)                                                                                                         
Department of Law (DOL);                                                                                                        
Commissioner                                                                                                                    
National  Conference  of  Commissioners  on  Uniform  State  Laws                                                               
(NCCUSL)                                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Responded to comments  during discussion of                                                               
HB 201.                                                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR JAY  RAMRAS called the  House Judiciary  Standing Committee                                                             
meeting to  order at 1:05:36  PM.  Representatives  Lynn, Holmes,                                                             
Coghill, Samuels, and  Ramras were present at the  call to order.                                                               
Representative Gruenberg arrived as  the meeting was in progress.                                                               
Representative Dahlstrom was excused.                                                                                           
                                                                                                                                
HB 196 - HANDLING MATTERS AFTER A PERSON'S DEATH                                                                              
                                                                                                                                
1:06:12 PM                                                                                                                    
                                                                                                                                
CHAIR RAMRAS announced that the  first order of business would be                                                               
HOUSE BILL NO.  196, "An Act relating to the  handling of matters                                                               
after a person's death."                                                                                                        
                                                                                                                                
1:07:23 PM                                                                                                                    
                                                                                                                                
JANE  W.  PIERSON, Staff  to  Representative  Jay Ramras,  Alaska                                                               
State  Legislature, explained  on behalf  of the  House Judiciary                                                               
Standing Committee, sponsor  of HB 196, that  this legislation is                                                               
one of three  bills written with the intention  of keeping Alaska                                                               
competitive in the trust market.   House Bill 196 provides that a                                                               
will's  penalty clause  for contesting  the  will or  instituting                                                               
other  proceedings   applies  even  if  probable   cause  exists;                                                               
currently any such  clause in a will is unenforceable.   The bill                                                               
also amends AS 13.16.680(a) such  that the statement that must be                                                               
contained  in the  affidavit used  by a  decedent's successor  to                                                               
collect  personal property  from  another  person shall  indicate                                                               
that the value of the entire  estate does not consist of personal                                                               
property valued  at [more] than  $25,000 excluding  vehicles that                                                               
do not exceed a total value of $100,000.                                                                                        
                                                                                                                                
MS. PIERSON  explained that HB  196 also adds new  subsections to                                                               
AS 13.33.101.   Proposed subsection  (d) pertains to  non probate                                                               
transfers after  a person's death;  this subsection  will protect                                                               
an  individual's  life  insurance contract  and  retirement  plan                                                               
debts  from the  claims of  creditors.   Proposed subsection  (e)                                                               
describes situations  in which  proposed subsection  (d) applies.                                                               
Proposed subsection  (f) stipulates that subsection  (d) does not                                                               
limit the  rights of the  owner of  a life insurance  contract to                                                               
pledge or assign the benefits  of that contract as collateral for                                                               
his/her debts.  Proposed subsection  (g) defines the terms, "life                                                               
insurance contract"  and "retirement  plan" as  they apply  to AS                                                               
13.33.101.     Section  5  of  the   bill  contains  transitional                                                               
provisions regarding applicability.                                                                                             
                                                                                                                                
REPRESENTATIVE SAMUELS sought  clarification regarding Section 1,                                                               
which would  allow a  will to contain  a provision  penalizing an                                                               
interested  party  for contesting  the  will  even with  probable                                                               
cause.                                                                                                                          
                                                                                                                                
1:12:12 PM                                                                                                                    
                                                                                                                                
DAVID  G. SHAFTEL,  Attorney at  Law, explained  that there  is a                                                               
similar statutory provision pertaining  to trusts; these types of                                                               
clauses are common and are  designed to ensure that beneficiaries                                                               
don't  challenge a  will, particularly  just for  the purpose  of                                                               
placing themselves in a bargaining  position - such persons won't                                                               
be able  to raise a  challenge by  filing a lawsuit  without also                                                               
running the  risk of forfeiting the  proceeds of the will.   Many                                                               
people feel  that when they write  a will or a  trust, they don't                                                               
want  the beneficiaries  to challenge  the  will or  trust.   The                                                               
problem  with  including  the   aforementioned  type  of  penalty                                                               
provision in a will is that  current statute says that if one has                                                               
probable cause, then  any penalty clause included in  the will is                                                               
unenforceable.    He  opined  that  this  loophole  creates  more                                                               
litigation.  He then mentioned  that if [a potential beneficiary]                                                               
entices  someone to  write his/her  will in  a certain  way, that                                                               
could  constitute duress  or  undue influence,  and  such a  will                                                               
could still be challenged even under the bill.                                                                                  
                                                                                                                                
[Chair Ramras turned the gavel over to Representative Coghill.]                                                                 
                                                                                                                                
MR. SHAFTEL,  in response to  a question,  said that if  a family                                                               
member  drafts a  will and  then benefits  from that  will, there                                                               
will be  a strong presumption that  the will is invalid  and that                                                               
the  family member  committed fraud  or exerted  undue influence.                                                               
He posited  that Section 1  will protect a person's  will against                                                               
frivolous challenges.   In response  to a question,  he suggested                                                               
that [Section 1] will bring  wills on par with trusts; currently,                                                               
a  similar penalty  provision could  be included  in a  trust and                                                               
that trust  could not  then be  challenged regardless  of whether                                                               
there is probable cause.                                                                                                        
                                                                                                                                
[Representative Coghill returned the gavel to Chair Ramras.]                                                                    
                                                                                                                                
1:20:30 PM                                                                                                                    
                                                                                                                                
RICHARD  S. THWAITES,  JR.,  Attorney at  Law,  offered that  the                                                               
issue  [of a  potential beneficiary  exerting undue  influence on                                                               
someone who  is creating a  will] has been complicated  in recent                                                               
years  by  elder  law  and  disability  law;  many  [estate  law]                                                               
practitioners, because  of "special needs trusts,"  often find it                                                               
necessary  to  include language  in  a  will that  disinherits  a                                                               
particular potential beneficiary  from the main part  of the will                                                               
in  order  for   the  special  needs  trust   to  remain  intact.                                                               
Practitioners view  such "disinheritance"  language as a  kind of                                                               
penalty  clause,  and  Section  1 would  allow  practitioners  to                                                               
safely  create  such special  needs  trusts,  particularly for  a                                                               
disabled family member or a minor.   There has been an increasing                                                               
need for  such a statutory provision  as will and trust  areas of                                                               
the law evolve.                                                                                                                 
                                                                                                                                
MR.   SHAFTEL,   in  response   to   a   question,  offered   his                                                               
understanding that  there are not specific  statutes that address                                                               
exerting  undue influence  on someone  creating a  will; instead,                                                               
case  law  addresses  that  point.   In  response  to  a  further                                                               
question, he  said he  doesn't know of  any litigation  in Alaska                                                               
regarding  exerting   undue  influence.    Penalty   clauses  for                                                               
contesting a will are meant to  preclude one from bringing a non-                                                               
meritorious claim in  an effort to obtain leverage;  if one truly                                                               
has  a meritorious  claim -  for example,  a claim  of duress  or                                                               
undue influence  or incapacity -  the will  or trust will  be set                                                               
aside.                                                                                                                          
                                                                                                                                
MR. THWAITES offered that [AS  13.12.501] says, "An individual 18                                                               
or more years of age who is of  sound mind may make a will.", and                                                               
that  the  accompanying  notes  speak  to  the  issues  of  undue                                                               
influence,  old   age,  debility,  sickness,   and  presumptions.                                                               
Furthermore, under  AS 13.12.504, which pertains  to self proving                                                               
wills, witnesses to  the execution of the will  are required, via                                                               
an affidavit, to  swear to the fact that they  witnessed the will                                                               
in the presence  and hearing of the person signing  the will, and                                                               
that to the  best of the witnesses' knowledge  the person signing                                                               
the will at the  time was 18 years of age or  older, was of sound                                                               
mind, and was under no constraint or undue influence.                                                                           
                                                                                                                                
1:27:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOLMES questioned  whether  such  a clause  would                                                               
cause  a person  to not  bring even  a meritorious  claim forward                                                               
simply because of the risk of losing his/her inheritance.                                                                       
                                                                                                                                
MR. SHAFTEL  acknowledged that possibility, but  pointed out that                                                               
the decision of  whether to include such a clause  rests with the                                                               
client.  He offered his belief  that if there really is something                                                               
wrong,  a potential  beneficiary will  go ahead  and contest  the                                                               
will.  In response to a  question, he explained that the group of                                                               
attorneys, when  they recommended  adding a similar  provision to                                                               
Alaska's  trust law,  simply overlooked  having such  a provision                                                               
added to  Alaska's laws regarding  wills; the addition of  such a                                                               
provision should have been made to both laws at the same time.                                                                  
                                                                                                                                
REPRESENTATIVE  GRUENBERG asked  what  the  interplay is  between                                                               
"these statutes" and the normal  penalties for frivolous lawsuits                                                               
as provided for under the Alaska Rules of Civil Procedure.                                                                      
                                                                                                                                
MR. SHAFTEL opined that probate  litigation is more vulnerable to                                                               
abuse and delay.  Furthermore,  the person challenging a will may                                                               
not be  able to pay the  prevailing party's attorney fees  and so                                                               
those  court  rules may  not  really  act  as  a deterrent.    He                                                               
surmised  that  that  is  why  almost  every  state  has  similar                                                               
statutory language regarding such penalty clauses.                                                                              
                                                                                                                                
REPRESENTATIVE  SAMUELS [referring  to proposed  AS 13.33.101(d)]                                                               
questioned whether  this provision  could be  used to  hide money                                                               
from creditors.                                                                                                                 
                                                                                                                                
MR.  THWAITES [instead  offered the  following comment  regarding                                                               
proposed AS 13.16.680(a):]  The  monetary limits included therein                                                               
were carried through in the  probate code without any adjustments                                                               
to date, and were meant to be applied to smaller estates.                                                                       
                                                                                                                                
REPRESENTATIVE GRUENBERG [referring  to proposed AS 13.33.101(d)]                                                               
asked  whether that  provision could  be used  to immunize  one's                                                               
self from  child support claims; for  example, if one put  all of                                                               
one's assets into a life insurance or annuity policy.                                                                           
                                                                                                                                
MR. THWAITES  offered his understanding  that child  support "has                                                               
something referred to as a  'super lien,'" wherein money owed for                                                               
child support would not be available to other creditors.                                                                        
                                                                                                                                
REPRESENTATIVE  GRUENBERG expressed  concern about  child support                                                               
and taxes owed.                                                                                                                 
                                                                                                                                
CHAIR  RAMRAS offered  his  belief that  "this"  only applies  to                                                               
small estates,  and all other  estates would be subject  to child                                                               
support claims.   In response to a comment, he  remarked that the                                                               
bill may not cover every potential situation.                                                                                   
                                                                                                                                
REPRESENTATIVE  HOLMES offered  her  understanding  that if  back                                                               
child support  is due, then a  super lien will take  into account                                                               
that  important  exception.   She  suggested  that the  committee                                                               
receive more  guidance on  that issue,  but acknowledged  that it                                                               
might already be addressed in some other fashion.                                                                               
                                                                                                                                
1:43:01 PM                                                                                                                    
                                                                                                                                
MARY    ELLEN    BEARDSLEY,     Assistant    Attorney    General,                                                               
Commercial/Fair  Business  Section, Civil  Division  (Anchorage),                                                               
Department of  Law (DOL),  relayed that  she would  research that                                                               
issue  further, adding  that she  would  like to  have the  issue                                                               
addressed if in fact there is a need to do so.                                                                                  
                                                                                                                                
MR.  SHAFTEL remarked  that proposed  AS 13.16.680(a)  will alter                                                               
existing statute,  which currently  contains a  $15,000 exemption                                                               
allowing the  avoidance of a  probate procedure; under  the bill,                                                               
the amount would be raised to $25,000.                                                                                          
                                                                                                                                
CHAIR  RAMRAS  acknowledged  that  point, but  relayed  that  the                                                               
committee  is seeking  to remedy  a possible  oversight regarding                                                               
child support claims.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GRUENBERG said  he  isn't sure  that proposed  AS                                                               
13.33.101(d)  only applies  to small  estates.   Referring to  AS                                                               
13.16.680(a), he  questioned whether  it would permit  people who                                                               
owe child support  to simply purchase personal  property in order                                                               
to avoid paying child support.                                                                                                  
                                                                                                                                
MS. BEARDSLEY said she will  provide the committee with an answer                                                               
to the issue of child support claims within a day.                                                                              
                                                                                                                                
REPRESENTATIVE GRUENBERG suggested that if  the bill is held over                                                               
in  order to  address  the  issue of  child  support claims,  the                                                               
committee could move quickly on it the next time it is heard.                                                                   
                                                                                                                                
CHAIR  RAMRAS, in  response to  a  comment, remarked  that if  an                                                               
amendment  is needed  to address  that  issue, it  would be  more                                                               
appropriate  to  consider  it in  the  House  Judiciary  Standing                                                               
Committee  rather  than  in  either   the  House  Rules  Standing                                                               
Committee or on the House floor.                                                                                                
                                                                                                                                
CHAIR  RAMRAS, after  ascertaining  that no  one  else wished  to                                                               
testify, closed public testimony on  HB 196, and relayed that the                                                               
bill would be held over.                                                                                                        
                                                                                                                                
[STEPHEN E. GREER, Attorney at  Law, later in the meeting, during                                                               
discussion of  another bill, remarked  that HB  196, particularly                                                               
the  provision   pertaining  to   life  insurance   benefits  and                                                               
retirement plans, "is meant to protect the little guy."]                                                                        
                                                                                                                                
[HB 196 was held over.]                                                                                                         
                                                                                                                                
HB 197 - TRUSTS                                                                                                               
                                                                                                                                
1:50:22 PM                                                                                                                    
                                                                                                                                
CHAIR RAMRAS announced  that the next order of  business would be                                                               
HOUSE BILL  NO. 197, "An Act  relating to the issuance  of shares                                                               
of professional corporations to a  trust, to trusts, to trustees,                                                               
to the  removal of a  trustee, to  the compensation of  a trustee                                                               
and a person  employed by a trustee, to a  trustee's accepting or                                                               
rejecting  a trusteeship,  to co-  trustees,  to a  vacancy in  a                                                               
trusteeship,  to the  resignation of  a trustee,  to delivery  of                                                               
trust  property  by  former trustees,  to  the  reimbursement  of                                                               
trustee  expenses,  to  the  certification of  a  trust,  to  the                                                               
suitability of  a trustee,  to the place  of administration  of a                                                               
trust,  to  a trustee's  power  to  appoint property  to  another                                                               
trust, to  a change  of the  percentage of  trust property  to be                                                               
considered  principal, to  the determination  of the  value of  a                                                               
trust, and  to a settlor's  intent when transferring  property in                                                               
trust;  amending  Rules   54  and  82,  Alaska   Rules  of  Civil                                                               
Procedure; and providing for an effective date."                                                                                
                                                                                                                                
1:51:46 PM                                                                                                                    
                                                                                                                                
JANE  W.  PIERSON, Staff  to  Representative  Jay Ramras,  Alaska                                                               
State  Legislature,  offered on  behalf  of  the House  Judiciary                                                               
Standing Committee, sponsor of HB  197, that a "trust" is defined                                                               
[in part in Black's Law Dictionary] as:                                                                                       
                                                                                                                                
     ...  a  property  interest  held  by  one  person  (the                                                                    
     trustee) at  the request of  another (the  settlor) for                                                                    
     the  benefit of  a third  party (the  beneficiary). ...                                                                    
     "[A]  trust  involves  three elements,  namely,  (1)  a                                                                    
     trustee, who  holds the trust  property and  is subject                                                                    
     to equitable duties to deal  with it for the benefit of                                                                    
     another; (2)  a beneficiary,  to whom the  trustee owes                                                                    
     equitable duties  to deal with  the trust  property for                                                                    
     his benefit; (3)  trust property, which is  held by the                                                                    
     trustee for the beneficiary."                                                                                              
                                                                                                                                
MS.  PIERSON said  the  goal of  HB  197 is  to  make Alaska  the                                                               
premier place for trust and  estates, adding that it is important                                                               
that Alaska stay  competitive with other states that  do not have                                                               
a personal  income tax.  The  trust industry is important  to the                                                               
state of Alaska  in that it provides  employment for accountants,                                                               
attorneys, insurance  agents, bankers,  and their  support staff;                                                               
for  example, there  is between  $30 million  and $70  million on                                                               
deposit  with  Alaska  banks through  the  Alaska  Trust  Company                                                               
alone.   Furthermore,  there  are  [approximately] 1,000  clients                                                               
with  trusts  in Alaska,  having  chosen  Alaska because  of  its                                                               
unique trust laws.  Since 1997,  Alaska has passed over 15 pieces                                                               
of legislation  designed to keep Alaska's  trust industry vibrant                                                               
and competitive.                                                                                                                
                                                                                                                                
MS.  PIERSON   explained  that   under  HB   197,  shares   in  a                                                               
professional  corporation may  be  held by  the  trustees of  the                                                               
[professional  corporation's] revocable  trust.    The bill  also                                                               
expands the  coverage of AS  13.36.157, which allows  the trustee                                                               
of a  trust to  transfer trust  assets to  a similar  trust; this                                                               
expansion will  only occur  if the trust  has an  Alaskan trustee                                                               
and the  trust has its  primary administration in Alaska.   House                                                               
Bill  197 allows  the Alaska  trustee  of a  charitable trust  to                                                               
change the  percentage of  the value  of the  trust that  will be                                                               
considered income  whenever the  trustee determines that  the new                                                               
percentage is necessary  and prudent.  The bill  clarifies that a                                                               
settlor's  express intention  to  protect trust  assets from  the                                                               
beneficiary's potential  future creditors  is not evidence  of an                                                               
intent  to defraud.    House Bill  197  [adds necessary  default]                                                               
provisions  relating  to   trustees,  provisions  pertaining  to:                                                               
compensation,  accepting or  declining trusteeship,  co-trustees,                                                               
vacancy, resignation,  removal, delivery of property  by a former                                                               
trustee,  reimbursement of  expenses,  and  certification of  the                                                               
trust.                                                                                                                          
                                                                                                                                
1:54:19 PM                                                                                                                    
                                                                                                                                
DOUGLAS J.  BLATTMACHR, President and CEO,  Alaska Trust Company,                                                               
reiterated  portions   of  Ms.   Pierson's  explanation   of  the                                                               
provisions of HB 197.                                                                                                           
                                                                                                                                
1:56:28 PM                                                                                                                    
                                                                                                                                
STEPHEN  E. GREER,  Attorney at  Law,  offered his  understanding                                                               
that  HB  197  has  been thoroughly  vetted  by  Alaska's  estate                                                               
planning  attorneys.    He  then  provided  a  comment  regarding                                                               
HB 196.                                                                                                                         
                                                                                                                                
2:00:29 PM                                                                                                                    
                                                                                                                                
DAVID  G.  SHAFTEL, Attorney  at  Law,  offered his  belief  that                                                               
HB 197 will  address what he characterized  as a big void  in the                                                               
law dealing with trustees; currently  there are not default rules                                                               
outlined in  statute, and  the aforementioned  default provisions                                                               
will  help protect  those who  might not  have a  thorough estate                                                               
plan.                                                                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG  referred to proposed AS  13.36.157, and                                                               
asked  whether [a  trustee] could  use that  provision to  set up                                                               
another trust in order to escape  a creditor who is attempting to                                                               
get at the assets of a particular trust.                                                                                        
                                                                                                                                
MR.  SHAFTEL  opined   that  doing  so  would   be  considered  a                                                               
fraudulent  transfer and  therefore  such a  trust  would be  set                                                               
aside.                                                                                                                          
                                                                                                                                
REPRESENTATIVE   GRUENBERG  referred   to   the  Alaska   Uniform                                                               
Transfers  to Minors  Act, and  questioned whether  HB 197  would                                                               
allow a  custodial trust  to be  set up such  that it  needn't be                                                               
terminated even  when the  beneficiary reached the  age of  25 if                                                               
the  beneficiary is  still not  capable of  handling the  trust's                                                               
assets; if  the bill doesn't  allow such flexibility,  perhaps an                                                               
amendment   to  address   that  sort   of  situation   should  be                                                               
forthcoming.   He disclosed  that he is  having to  consider just                                                               
such a situation as it pertains to his son.                                                                                     
                                                                                                                                
2:04:32 PM                                                                                                                    
                                                                                                                                
RICHARD S. THWAITES, JR., Attorney  at Law, relayed that he would                                                               
have concerns with such an  amendment because of Internal Revenue                                                               
Service  (IRS) gifting  restrictions.   He suggested,  therefore,                                                               
that  the committee  review any  such amendment  carefully before                                                               
modifying the bill in that fashion.                                                                                             
                                                                                                                                
REPRESENTATIVE GRUENBERG agreed to do so.                                                                                       
                                                                                                                                
MR. SHAFTEL  remarked that  that is  a controversial  and complex                                                               
area of the  law, and therefore it may take  some time to develop                                                               
a solution.                                                                                                                     
                                                                                                                                
REPRESENTATIVE   GRUENBERG   remarked   that  he   may   consider                                                               
addressing that point via separate legislation.                                                                                 
                                                                                                                                
MR. THWAITES  explained that Alaska  allows the  establishment of                                                               
what  he  termed "holographic  wills"  -  such wills  essentially                                                               
allow someone  to leave  all of his/her  assets in  trust, adding                                                               
that HB  197 "goes a  huge distance towards stretching  over that                                                               
gap."                                                                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG  surmised, then,  that HB 197  will help                                                               
people effectuate "that desire."                                                                                                
                                                                                                                                
MR. THWAITES concurred.                                                                                                         
                                                                                                                                
CHAIR  RAMRAS, after  ascertaining  that no  one  else wished  to                                                               
testify, closed public testimony on HB 197.                                                                                     
                                                                                                                                
REPRESENTATIVE  GRUENBERG  indicated  that   he  might  have  the                                                               
interested   parties   talk   to   each   other   regarding   the                                                               
aforementioned possible amendment.                                                                                              
                                                                                                                                
CHAIR  RAMRAS   indicated  that  if  such   an  amendment  proves                                                               
necessary, he would be willing to help with it.                                                                                 
                                                                                                                                
2:08:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN moved to report  HB 197 out of committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There  being no  objection, HB  197 was  reported from  the House                                                               
Judiciary Standing Committee.                                                                                                   
                                                                                                                                
The committee took an at-ease from 2:09 p.m. to 2:10 p.m.                                                                       
                                                                                                                                
HB 201 - UNIFORM ACT: PROPERTY INTEREST DISCLAIMER                                                                            
                                                                                                                                
2:10:51 PM                                                                                                                    
                                                                                                                                
CHAIR RAMRAS announced that the  final order of business would be                                                               
HOUSE BILL  NO. 201, "An  Act relating to the  Uniform Disclaimer                                                               
of Property Interests  Act, to the disclaimer  of property rights                                                               
under  the  Uniform  Probate  Code, and  to  child  support;  and                                                               
providing for an effective date."   [Included in members' packets                                                               
was a proposed committee substitute  (CS) for HB 201, Version 25-                                                               
LS0615\E, Bannister, 3/31/07.]                                                                                                  
                                                                                                                                
2:10:57 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GABRIELLE   LeDOUX,  Alaska   State  Legislature,                                                               
sponsor, said that  HB 201 would enact the  Uniform Disclaimer of                                                               
Property Interests  Act, and that  her staff would  be presenting                                                               
the bill.                                                                                                                       
                                                                                                                                
2:11:34 PM                                                                                                                    
                                                                                                                                
SONYA  HYMER, Staff  to Representative  Gabrielle LeDoux,  Alaska                                                               
State   Legislature,   relayed   on  behalf   of   the   sponsor,                                                               
Representative  LeDoux,  that  HB  201 would  enact  the  Uniform                                                               
Disclaimer of Property Interests Act,  which has been approved by                                                               
the   American  Bar   Association   and  enacted   in  13   other                                                               
[jurisdictions] to  date, and  that Representative  LeDoux agreed                                                               
to sponsor the bill at the  request of the National Conference of                                                               
Commissioners on Uniform  State Laws (NCCUSL).   Remarking that a                                                               
disclaimer extinguishes an  interest as if it  never existed, Ms.                                                               
Hymer explained  that HB 201 sets  up a clear procedure  by which                                                               
beneficiaries  of interests  received via  inheritance, will,  or                                                               
trust can disclaim those interests  as if they had never existed.                                                               
For example,  if a  person leaves  the family  farm to  his three                                                               
adult children,  but two of them  don't live on the  farm anymore                                                               
and want to leave their interests  in the farm to the third adult                                                               
child  who is  still  living and  working on  the  farm, the  two                                                               
children  could disclaim  their interests  and thereby  leave the                                                               
farm in its entirety to the third child.                                                                                        
                                                                                                                                
MS. HYMER  said that the  NCCUSL drafted the original  version of                                                               
the bill, and that members'  packets include a sectional analysis                                                               
written by  the NCCUSL.  In  response to a question,  she offered                                                               
her  understanding that  once someone  accepts  the property,  it                                                               
cannot then be disclaimed.                                                                                                      
                                                                                                                                
2:14:09 PM                                                                                                                    
                                                                                                                                
MARY    ELLEN    BEARDSLEY,     Assistant    Attorney    General,                                                               
Commercial/Fair  Business  Section, Civil  Division  (Anchorage),                                                               
Department of Law  (DOL), added that if  all beneficiaries submit                                                               
a  disclaimer,  the  property could  ultimately  escheat  to  the                                                               
state, though such rarely happens.                                                                                              
                                                                                                                                
2:15:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  COGHILL moved  to  adopt  the proposed  committee                                                               
substitute  (CS)  for  HB 201,  Version  25-LS0615\E,  Bannister,                                                               
3/31/07, as the work draft.                                                                                                     
                                                                                                                                
REPRESENTATIVE GRUENBERG objected for the purpose of discussion.                                                                
                                                                                                                                
MS.  HYMER   explained  that  the   original  bill   contained  a                                                               
transitional  provision  that was  meant  to  address the  bill's                                                               
proposed repeal  of the existing  disclaimer law -  AS 13.12.801.                                                               
However,  that  transitional  provision  was later  found  to  be                                                               
unnecessary -  because the  proposed repeal  is addressed  in the                                                               
NCCUSL's official comments regarding  this proposed uniform Act -                                                               
and so it was removed from Version E.                                                                                           
                                                                                                                                
REPRESENTATIVE GRUENBERG  opined that  requiring someone  to look                                                               
at  a   uniform  Act's  "comments"   in  order  to   determine  a                                                               
transitional effect sets a dangerous precedent.                                                                                 
                                                                                                                                
MS.  BEARDSLEY explained  that initially  the drafter  felt there                                                               
was a need for the  transitional provision but was then persuaded                                                               
otherwise.  She  referred to the language on page  8, lines 23-27                                                               
-  proposed  AS  13.70.140,  which pertains  to  "Application  to                                                               
existing relationships" - and said  that the DOL's interpretation                                                               
was  that "that  actually deals  with  this issue,  and that  the                                                               
transition  language in  Section  3 [of  the  original bill]  was                                                               
basically redundant  and unnecessary."   Therefore, Version  E no                                                               
longer contains that transitional provision.                                                                                    
                                                                                                                                
REPRESENTATIVE GRUENBERG removed his objection.                                                                                 
                                                                                                                                
CHAIR RAMRAS announced that Version E was before the committee.                                                                 
                                                                                                                                
REPRESENTATIVE GRUENBERG  referred to  proposed Article  2 [which                                                               
bars a disclaimer by anyone  in arrears in child support payments                                                               
or  involved in  a  proceeding  to establish  or  modify a  child                                                               
support  obligation], and  suggested that  the committee  include                                                               
spousal support in that provision.   He offered his understanding                                                               
that the Child Support Services  Division (CSSD) has jurisdiction                                                               
over spousal  support, and  relayed that he  would be  offering a                                                               
possible amendment to add spousal support.                                                                                      
                                                                                                                                
2:19:28 PM                                                                                                                    
                                                                                                                                
LYNN   E.  LEVENGOOD,   Commissioner,   National  Conference   of                                                               
Commissioners  on Uniform  State  Laws  (NCCUSL), explained  that                                                               
although the  proposed uniform Act  has been adopted in  13 other                                                               
jurisdictions,  Version   E  of  HB   201  was  drafted   by  the                                                               
administration and  has been approved  as written by  the NCCUSL.                                                               
Version  E contains  language that  is  very, very  close to  the                                                               
language  in  the  uniform   Act,  and  contains  Alaska-specific                                                               
provisions to which Ms. Beardsley  can speak.  Mr. Levengood said                                                               
he is  the point of contact  for the NCCUSL on  this legislation,                                                               
adding that should members have  any specific technical questions                                                               
regarding the language,  he would have to take  those issues back                                                               
to the NCCUSL to get a detailed response.                                                                                       
                                                                                                                                
REPRESENTATIVE  GRUENBERG  offered   his  understanding  that  an                                                               
amendment to  change proposed Article  2 as he's  suggested would                                                               
not affect  the language of the  uniform Act.  He  suggested also                                                               
that the  title be narrowed  such that it  read in part,  "and to                                                               
disclaimers  relating to  child and  spousal support".   He  then                                                               
asked whether  the language  on page 10,  lines 9-10,  would also                                                               
apply  if there  is "no  child  support proceeding  pending to  a                                                               
potential paternity  action."  He said  he wants to be  sure that                                                               
one couldn't  file a disclaimer  just to  avoid being named  in a                                                               
paternity suit.                                                                                                                 
                                                                                                                                
MS.  BEARDSLEY  indicated that  the  language  in Article  2  was                                                               
drafted by  the DOL  in consultation with  the CSSD,  adding that                                                               
the primary  concern of the  CSSD pertained to child  support and                                                               
[so] spousal support  was not addressed.   She ventured, however,                                                               
that whether  the language in  Article 2 applies would  depend on                                                               
whether  an action  regarding paternity  has  been initiated  and                                                               
whether a  child support determination  has been made.   She said                                                               
she would  research that issue  further and provide an  answer to                                                               
the committee.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  GRUENBERG  said  he   could  envision  people  in                                                               
pending divorces using the disclaimer  provided for via HB 201 as                                                               
part of their divorce plan just  to get out of possibly having to                                                               
pay child support.                                                                                                              
                                                                                                                                
2:27:00 PM                                                                                                                    
                                                                                                                                
DAVID  G.   SHAFTEL,  Attorney  at  Law,   explained  that  these                                                               
disclaimers are  very central  to trust  and estate  law, adding,                                                               
"We're dealing  with assets  that a  person inherits,  not assets                                                               
that  they already  own."   Therefore  if one's  father dies  and                                                               
leaves  one $10,000,  one can  disclaim  that $10,000  - but  for                                                               
federal tax purposes  it has to be disclaimed  within nine months                                                               
- and then it would be as  if one had died before his/her father.                                                               
Again, such disclaimers are very  central and important in estate                                                               
and trust  administration, and they  are used  all the time.   He                                                               
went on  to express a  concern that he  and the other  members of                                                               
the informal group of attorneys  who've been working on trust and                                                               
estate  legislation since  1997  have  not yet  had  a chance  to                                                               
review the  proposed uniform  law; he asked  that the  members of                                                               
this  informal group  be given  a chance  to review  the proposed                                                               
uniform  law in  order to  ensure that  it contains  advantageous                                                               
provisions for  Alaska and that  those provisions  are consistent                                                               
with existing law.                                                                                                              
                                                                                                                                
CHAIR RAMRAS asked how much time such a review would require.                                                                   
                                                                                                                                
MR. SHAFTEL  suggested that it could  take a great deal  of time,                                                               
offered his  belief that current  law is sufficient for  the time                                                               
being, and opined that it would  be wise to research the proposed                                                               
uniform law further.                                                                                                            
                                                                                                                                
REPRESENTATIVE  LeDOUX offered  her understanding,  however, that                                                               
Deborah Behr  from the Department  of Law has already  vetted the                                                               
bill with numerous members of the estate bar.                                                                                   
                                                                                                                                
MR. LEVENGOOD, in response to  a question, said that the language                                                               
from  the NCCUSL  was provided  to estate  attorneys in  December                                                               
2006, and  that HB 201 was  then provided to them  in March 2007.                                                               
Mr. Levengood mentioned that the  only person to provide him with                                                               
feedback  was Mr.  Shaftel and  that feedback  was provided  only                                                               
yesterday.                                                                                                                      
                                                                                                                                
2:32:56 PM                                                                                                                    
                                                                                                                                
STEPHEN E. GREER, Attorney at Law,  said he is very active in the                                                               
estate planning section  of the Alaska Bar  Association (ABA) and                                                               
attends  their  meetings  regularly,   and  he's  not  seen  this                                                               
language come  up as a topic  of discussion.  Passage  of HB 201,                                                               
he opined, will  create a plethora of lawsuits  because the nine-                                                               
month period  is being  eliminated.  He  too recommended  that he                                                               
and the  other members  of the  aforementioned informal  group of                                                               
attorneys  be allowed  to review  the proposed  uniform law  more                                                               
thoroughly.                                                                                                                     
                                                                                                                                
RICHARD  S.  THWAITES,  JR.,  Attorney  at  Law,  added  that  he                                                               
likewise had not  had an opportunity to consider  this bill until                                                               
this  morning.   He  mentioned that  he has  been  active in  the                                                               
estate  planning community  as an  attorney and  as chair  of the                                                               
estate planning section  and the elder law section  [of the ABA],                                                               
and that  he actively  uses disclaimer provisions  in all  of the                                                               
estate  planning  he does.    Furthermore,  he remarked,  he  has                                                               
played an  active role  in the  promulgation of  Alaska's current                                                               
trust law.  In conclusion, Mr.  Thwaites said he concurs with Mr.                                                               
Shaftel.                                                                                                                        
                                                                                                                                
REPRESENTATIVE COGHILL  suggested that the committee  look at the                                                               
similarities  and dissimilarities  between  the proposed  uniform                                                               
law  and   those  that  have   been  adopted  in  the   13  other                                                               
jurisdictions, perhaps via a side-by-side comparison.                                                                           
                                                                                                                                
REPRESENTATIVE  GRUENBERG  said  he   wants  the  opportunity  to                                                               
research Article 2 of the bill further.                                                                                         
                                                                                                                                
REPRESENTATIVE LeDOUX  said she  wants to ensure  that everyone's                                                               
concerns  are  addressed before  the  legislation  is moved  from                                                               
committee.                                                                                                                      
                                                                                                                                
2:36:32 PM                                                                                                                    
                                                                                                                                
DEBORAH  BEHR, Chief  Assistant Attorney  General, Legislation  &                                                               
Regulations Section,  Civil Division (Juneau), Department  of Law                                                               
(DOL);  Commissioner,  National  Conference of  Commissioners  on                                                               
Uniform   State  Laws   (NCCUSL),  characterized   Representative                                                               
Gruenberg's ideas  as good ones, and  said she would be  happy to                                                               
assist  in the  development of  appropriate language.   She  also                                                               
mentioned that Mr. Levengood did  send out letters to individuals                                                               
in the  "trust community"  informing them of  the bill,  and that                                                               
she herself had  called individuals but received  no response and                                                               
so she'd assumed that there were  no problems with the bill.  She                                                               
surmised  that if  there are  problems  with the  bill, then  the                                                               
proponents of the proposed uniform  law will want to address them                                                               
so as to have a law that works for the state.                                                                                   
                                                                                                                                
MR. SHAFTEL,  in response to the  question of how long  a further                                                               
review of the bill might take,  suggested that in addition to the                                                               
issues that have  arisen today, other issues might  arise as well                                                               
that would  be of concern.   He remarked  that none of  the trust                                                               
and  estate law  practitioners that  have repeatedly  come before                                                               
the legislature with suggestions for  changes to current law over                                                               
the  last  10  years  appear  to have  been  notified  about  the                                                               
proposed uniform  law at  an early date,  adding that  he doesn't                                                               
see any urgency to move the  bill since existing law will suffice                                                               
until the bill is reviewed further.                                                                                             
                                                                                                                                
CHAIR RAMRAS asked Mr. Shaftel to  put his concerns with the bill                                                               
in writing so that the committee could review them.                                                                             
                                                                                                                                
REPRESENTATIVE COGHILL suggested that the committee may also                                                                    
wish to consider the question of what types of lawsuits might be                                                                
engendered by passage of the bill.                                                                                              
                                                                                                                                
CHAIR RAMRAS asked Mr. Greer to provide information on that                                                                     
issue in writing.                                                                                                               
                                                                                                                                
[Following was a brief discussion on the possibility of having                                                                  
information brought to the committee regarding other uniform                                                                    
laws that the legislature might wish to consider.]                                                                              
                                                                                                                                
[HB 201, Version E, was held over.]                                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Judiciary Standing Committee meeting was adjourned at 2:44 p.m.                                                                 

Document Name Date/Time Subjects