Legislature(1997 - 1998)
04/25/1997 08:30 AM House JUD
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
April 25, 1997
8:30 a.m.
MEMBERS PRESENT
Representative Joe Green, Chairman
Representative Con Bunde, Vice Chairman
Representative Norman Rokeberg
Representative Jeannette James
Representative Ethan Berkowitz
MEMBERS ABSENT
Representative Brian Porter
Representative Eric Croft
COMMITTEE CALENDAR
HOUSE BILL NO. 163
"An Act relating to designating gamma-Hydroxybutyrate as a schedule
IVA controlled substance; and providing for an effective date."
- MOVED OUT OF COMMITTEE
HOUSE BILL NO. 199
"An Act relating to the property, transactions, and obligations of
spouses; relating to the augmented estate; amending Rule 301,
Alaska Rules of Evidence; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 234
"An Act relating to assistance for abortions under the general
relief program; and relating to financial responsibility for the
costs of abortions."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 163
SHORT TITLE: GAMMA-HYDROXYBUTYRATE AS CONTROLLED SUBST
SPONSOR(S): REPRESENTATIVE(S) VEZEY
JRN-DATE JRN-DATE ACTION
02/27/97 509 (H) READ THE FIRST TIME - REFERRAL(S)
02/27/97 509 (H) JUDICIARY
04/23/97 (H) JUD AT 1:00 PM CAPITOL 120
04/23/97 (H) MINUTE(JUD)
04/25/97 (H) JUD AT 8:30 AM CAPITOL 120
BILL: HB 199
SHORT TITLE: COMMUNITY PROPERTY
SPONSOR(S): REPRESENTATIVE(S) RYAN, Therriault
JRN-DATE JRN-DATE ACTION
03/18/97 736 (H) READ THE FIRST TIME - REFERRAL(S)
03/18/97 737 (H) L&C, JUDICIARY
04/18/97 (H) L&C AT 3:15 PM CAPITOL 17
04/21/97 1211 (H) L&C RPT 3DP 1NR
04/21/97 1211 (H) DP: RYAN, HUDSON, COWDERY
04/21/97 1211 (H) NR: BRICE
04/21/97 1212 (H) 2 ZERO FISCAL NOTES (COURT, DCED)
04/21/97 1212 (H) REFERRED TO JUDICIARY
04/23/97 (H) JUD AT 1:00 PM CAPITOL 120
04/23/97 (H) MINUTE(JUD)
04/25/97 (H) JUD AT 8:30 AM CAPITOL 120
BILL: HB 234
SHORT TITLE: ABORTIONS UNDER GENERAL RELIEF PROGRAM
SPONSOR(S): REPRESENTATIVE(S) MARTIN, Green, Kohring, Kott, Dyson,
Sanders, Kelly
JRN-DATE JRN-DATE ACTION
04/04/97 990 (H) READ THE FIRST TIME - REFERRAL(S)
04/04/97 990 (H) JUDICIARY, FINANCE
04/07/97 1019 (H) COSPONSOR(S): DYSON
04/08/97 1030 (H) COSPONSOR(S): SANDERS
04/09/97 1047 (H) COSPONSOR(S): KELLY
04/23/97 (H) JUD AT 1:00 PM CAPITOL 120
04/23/97 (H) MINUTE(JUD)
04/25/97 (H) JUD AT 8:30 AM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE AL VEZEY
Alaska State Legislature
Capitol Building, Room 13
Juneau, Alaska 99801
Telephone: (907) 465-3719
POSITION STATEMENT: Sponsor of HB 163.
GEORGE GORRIG, Attorney at Law
405 West 36th Street, Number 203
Anchorage, Alaska 99503
Telephone: (907) 563-9926
POSITION STATEMENT: Testified in support of HB 199.
SHARON GLEASON, Attorney at Law
510 L Street, Suite 306
Anchorage, Alaska 99501
Telephone: (907) 277-6017
POSITION STATEMENT: Testified on HB 199.
REPRESENTATIVE JOE RYAN
Alaska State Legislature
Capitol Building, Room 420
Juneau, Alaska 99801
Telephone: (907) 465-3875
POSITION STATEMENT: Sponsor of HB 199.
JOAN CLOVER, Attorney at Law
Gruenberg and Clover
880 H Street, Suite 201
Anchorage, Alaska 99501
Telephone: (907) 279-9940
POSITION STATEMENT: Testified on HB 199.
MARYANN FOLEY, Attorney at Law
750 West Second Avenue, Suite 203
Anchorage, Alaska 99501
Telephone: (907) 279-0783
POSITION STATEMENT: Testified on HB 199.
RICHARD THWAITES, Attorney at Law
500 L Street, Suite 301
Anchorage, Alaska 99501
Telephone: (907) 277-1595
POSITION STATEMENT: Testified on HB 199.
RICHARD HOMPESCH II, Attorney at Law
Hompesch and Associates, PC
Denali Financial Center
119 North Cushman Street, Suite 400
Fairbanks, Alaska 99508
Telephone: (907) 452-1700
POSITION STATEMENT: Testified on HB 199.
REPRESENTATIVE TERRY MARTIN
Alaska State Legislature
Capitol Building, Room 502
Juneau, Alaska 99801
Telephone: (907) 465-3783
POSITION STATEMENT: Sponsor of HB 234.
THEDA PITTMAN, Interim Executive Director
Alaska Civil Liberties Union
P.O. Box 201844
Anchorage, Alaska 99520-1844
Telephone: (907) 258-0044
POSITION STATEMENT: Testified in opposition to HB 234.
PAULINE UTTER
P.O. Box 240667
Anchorage, Alaska 99524
Telephone: (907) 345-3563
POSITION STATEMENT: Testified in opposition to HB 234.
ACTION NARRATIVE
TAPE 97-63, SIDE A
Number 0001
CHAIRMAN JOE GREEN called the House Judiciary Standing Committee
meeting to order at 8:30 a.m. Members present at the call to order
were Representatives Green, Bunde, Rokeberg and James.
Representative Berkowitz joined the meeting at 8:38 a.m.
Representatives Porter and Croft were absent. This meeting was
teleconferenced to Fairbanks and Anchorage.
HB 163 - GAMMA-HYDROXYBUTYRATE AS CONTROLLED SUBST
Number 0020
CHAIRMAN GREEN announced the first item on the agenda was HB 163,
"An Act relating to designating gamma-Hydroxybutyrate as a schedule
IVA controlled substance; and providing for an effective date."
Number 0072
REPRESENTATIVE AL VEZEY, sponsor of HB 163, recommended that the
state classify gamma-Hydroxybutyrate (GHB), also known as gamma-
Hydroxybutyric acid, as a schedule IVA controlled substance. He
offered to go into detail.
CHAIRMAN GREEN asked the common name of this substance and what it
does.
REPRESENTATIVE VEZEY answered that street names include GHB,
primarily, as well as Georgia Home Boy, Grievous Bodily Harm, Gamma
and Ecstasy. Until 1990, it was available over the counter at
health food stores across the country. Although selling it is
illegal in the United States, possession only violates the law in
Georgia and New Jersey, as well as possibly in California and
Florida; the latter two states have either made possession illegal
or are in the process of doing so.
Number 0207
REPRESENTATIVE NORMAN ROKEBERG asked whether placing it on the
controlled substance list adds possession as an additional element.
REPRESENTATIVE VEZEY explained that HB 163, by listing GHB as a
class IVA controlled substance, makes possession of it a serious
crime. Possession of three grams would be a Class C felony. A
typical dose for criminal assault purposes would be about four
grams, as compared to a typical drug abuse dose of one to two
grams.
Number 0263
REPRESENTATIVE ROKEBERG asked why there could not be a catch-all
prohibition on these types of substances, which continue to be
developed in laboratories across the United States.
REPRESENTATIVE VEZEY answered that there is a serious
constitutional question about denying someone's freedom and/or
property through the regulatory process. By enacting HB 163, the
legislature could control the legality of possessing this
substance; currently, no other law does so in Alaska.
Number 0325
REPRESENTATIVE CON BUNDE asked whether typical abuse of this
substance is administering it to others, creating a situation where
a "date rape" could occur.
REPRESENTATIVE VEZEY said GHB is considered by law enforcement
professionals to be the "date rape drug of choice" because of its
effectiveness. It induces a deep sleep with a dose of about four
grams. A heavy dosage will show up in a person's urine the first
time they void their bladder after the dosage, but only through
specialized testing. However, the second time they void their
bladder, there may or may not be elevated traces of GHB. The third
time, there will be no trace.
REPRESENTATIVE VEZEY said GHB is a natural substance metabolized by
the body into carbon dioxide and water. A victim of a sexual
assault where GHB was used would need the presence of mind to go to
the police and report it prior to voiding their bladder.
Number 0458
REPRESENTATIVE VEZEY explained that this has been one of the most
complex subjects on which he has worked. This substance has
definite pharmaceutical uses and is currently under investigation
as possibly the sole promising drug to treat narcolepsy. If the
state made it a controlled substance prior to its approval by the
federal Food and Drug Administration (FDA), pharmacists would be
criminals for selling it. However, Representative Vezey had
checked with the Pharmacy Board and found they do not dispense GHB
as a pharmaceutical agent.
Number 0542
REPRESENTATIVE ETHAN BERKOWITZ asked whether HB 163 would preclude
pharmacists from prescribing GHB.
REPRESENTATIVE VEZEY answered that doctors, not pharmacists,
prescribe. Doctors cannot currently prescribe GHB, as it is not
approved by the FDA. It is under what they call "investigational
new drug status." A physician can get a license from the FDA to
test it on patients, and there are currently a couple of hundred
patients being treated for narcolepsy with this drug in the United
States.
Number 0587
REPRESENTATIVE BERKOWITZ mentioned that the committee recently
passed a resolution encouraging the FDA to accelerate its
processes. If the FDA determines that GHB has valid medical
purposes, it seemed to him that HB 163 would preclude use of GHB in
a medicinal fashion.
Number 0603
REPRESENTATIVE VEZEY said no; typically schedule IA drugs are
deemed to have no medical purpose, and doctors cannot prescribe
them. However, schedule IIA, IIIA, IVA and VA drugs are deemed to
have medical purposes, and it is not illegal to possess those drugs
with authorization; the state accepts the FDA's criteria for
dispensing those drugs.
CHAIRMAN GREEN asked whether GHB could be made in a person's
garage.
REPRESENTATIVE VEZEY answered yes, and he clarified that part of
the problem is that although it is not legally manufactured in the
United States, it is easy to manufacture in a garage. It is made
by combining butyryl lactone, a common industrial solvent, with a
caustic such as sodium hydroxide or household drain cleaner.
Number 0688
REPRESENTATIVE ROKEBERG made a motion to move HB 163 with
individual recommendations and the attached zero fiscal note.
There being no objection, HB 163 moved from the House Judiciary
Standing Committee.
HB 199 - COMMUNITY PROPERTY
Number 0767
CHAIRMAN GREEN announced the next item on the agenda was HB 199,
"An Act relating to the property, transactions, and obligations of
spouses; relating to the augmented estate; amending Rule 301,
Alaska Rules of Evidence; and providing for an effective date." At
the previous hearing, some testimony had been taken.
GEORGE GORRIG, Attorney at Law, testified via teleconference from
Anchorage. He favors HB 199 not only for the income tax advantage,
which would put Alaska on equal footing with community property
states, but also as an important vehicle to help plan Alaskans'
estates. Even though there are no more federal and state taxes
between husbands and wives, oftentimes the major wage earner is
listed and liquidation of the assets is necessary. A half-interest
in a piece of property cannot be sold. People incur an income tax
liability because of the death of a family member, which he
believes is patently unfair compared to the advantage enjoyed in
community property states.
MR. GORRIG explained that there are problems equalizing estates
when there is a joint death. The ability to enter into a community
property agreement precludes having to equalize estates on an
annual basis. A person could choose to have community property
status for certain property, which would continue to have that
status as an undivided interest, without having to worry about one
property having a much greater value than another.
MR. GORRIG said on the down-side are problems with potential
creditors. As it currently stands, the creditor of one spouse
cannot reach the assets of the other spouse unless a professional
is involved. This provision is to prevent doctors, dentists and
attorneys, for example, from transferring assets to their spouses
in case they are sued for malpractice. He believes this is a poor
offset against the advantages.
MR. GORRIG referred to AS 13.26.332, relating to statutory powers
of attorney. He said whoever receives the power of attorney has
tremendous powers. He stated, "And we know that this could be a
problem, but there are sufficient warnings in the statute which put
these people on alert that they could have problems with property
ownership and the ability to dispose or sell if you execute these
general powers of attorney." He said similar warnings could easily
be put into HB 199, saying, as a caveat, that this could affect the
creditors' rights to certain mineral property and that the person
should be advised to seek competent advice regarding liability.
MR. GORRIG concluded that overall, HB 199 is invaluable. He said
instead of Alaska being one of the last states to enact what he
believes is a "very advanced law," it should be one of the first.
Number 1022
CHAIRMAN GREEN said a concern is whether HB 199 would pass muster
with the Internal Revenue Service (IRS).
MR. GORRIG responded, "No question." He said when he worked for
the IRS, community property estates had a much greater advantage
than separate property estates in regards to federal taxes.
Enactment of the unlimited marital deduction in 1982 took away the
fear of being forced to sell property. When a tax between a
husband and a wife is generated due to a death where the property
is being sold, a double taxation occurs in separate property
estates; the living spouse is forced, by a tax consequence, to
incur a capital gains tax.
MR. GORRIG said he believes in 50 percent of the cases that he is
handling on probate, some liquidation is necessary because of other
issues such as loss of the major wage earner. He commented that
when persons are forced to sell something, they never get the full
market value and are forced to incur a tax.
MR. GORRIG said the IRS looks to state law to determine who gets
what. It is not the states but the federal government that gives
the community property status or "step-up in basis" for both
halves. This bill says that this tax advantage, available by the
federal government, should be made available to Alaskans. If the
state allows a community property status when a person dies, the
entire community is going to be stepped up.
REPRESENTATIVE ROKEBERG asked what Mr. Gorrig's background is.
MR. GORRIG said he was a federal/state gift tax attorney for three
years beginning in 1971 for the Seattle district and moved to
Alaska to perform the same job for two years. His background is
both in community property estates and separate property estates.
He has been doing estate planning throughout Alaska since 1977.
Number 1180
SHARON GLEASON, Attorney at Law, testified next via teleconference
from Anchorage, saying she is a domestic relations and family
lawyer. She has practiced in Alaska for 14 years. She is not an
estate planning lawyer but has done several wills. Her practice is
primarily divorce law, with increasing focus in recent years on
large-asset property division cases rather than custody work.
MS. GLEASON expressed concern about HB 199 from her perspective as
a divorce lawyer. This bill, as presently drafted, would be a
departure from many of the protections afforded by Alaska to
spouses when they go through a divorce.
MS. GLEASON said from a general standpoint, divorce in Alaska is an
expensive process. Many dissolutions require more than 20 pages of
paperwork; that would magnify to include these community property
issues. She recalled seeing a chart where estate lawyers show a
tax savings of $14,000 in a hypothetical situation of a spouse
deciding to sell property upon the death of the other spouse. In
her view, 50 percent of couples in Alaska are going to divorce.
For those couples, this community property law would greatly
increase the costs associated with getting that divorce.
MS. GLEASON referred to a discussion with a lawyer who is head of
the family law section in Wisconsin, which adopted a similar bill
about ten years ago; they call their bill "the divorce lawyers' and
tax accountants' relief and pension fund act" because the law is so
complex that it has mushroomed into making divorces far more
difficult for the parties involved. Ms. Gleason offered to discuss
additional concerns.
Number 1438
CHAIRMAN GREEN asked for examples of problems that HB 199 might
create.
MS. GLEASON referred to page 11, lines 1 through 26; this specifies
when a community property agreement can be set aside. Under
current Alaska law, if the parties venture into a premarital
agreement and then later divorce, a spouse can argue that the
agreement should not be enforced because it is unconscionable at
the time of the divorce. And she reads it, HB 199 would eliminate
that argument.
MS. GLEASON said HB 199 basically allows an agreement to be set
aside if there was no disclosure at the time it was made or if it
was not voluntarily executed. Under present Alaska law, an
agreement, whether premarital or following marriage, can be set
aside at the time of the divorce if enforcing it would be grossly
unfair to one spouse. As reflected in the court system, a husband
and wife entering into an agreement should be accorded a different
level of review than two people entering into a business
transaction.
Number 1598
CHAIRMAN GREEN asked: If property or something of value was
voluntarily put into this kind of a trust, how would that be held
unconscionable at a later date?
MS. GLEASON explained that the problem is that a party can take
action after entering into the agreement. She cited an example
where a woman has premarital stock in her family business. When
they marry, she and her husband decide that the husband will run
the business. They put the stock into a community property
agreement, as well as including a no-alimony provision. Unknown to
her, the husband transfers the entire community property interest
to a third party, which under a different provision of this bill is
allowable. At the time of the divorce, the woman cannot set that
transaction aside. The result would be that the husband had,
during the marriage, defrauded the wife of this property, and the
wife could not argue that it was unfair in light of the husband's
actions after the date of the agreement.
MS. GLEASON said another example might be when one spouse develops
a serious illness or problems that would warrant something other
than an equal division of assets, given the disparity of the
parties' circumstances. Those types of "after arising"
circumstances are what the court deems appropriate considerations
when determining whether an agreement between the parties should be
enforced at the time of divorce.
Number 1706
CHAIRMAN GREEN referred to prior testimony and said they had heard
this sort of thing could be "opted out." He asked, in the
situation where a husband is seriously ill, whether opting out
would be possible. He also asked whether Ms. Gleason sees other
sections of Alaska law allowing something entrusted voluntarily by
both parties as being subject to withdrawal by one party.
MS. GLEASON replied that as she reads HB 199, no provision allows
one spouse to opt out. Once property is put into the community
property characterization, it would require both parties' consent
to opt out. This is in contrast to the provision that would allow
one party, on his or her own, to sell, transfer or encumber the
community property without the consent or knowledge of the other
spouse. One spouse cannot opt out of the agreement unless they
both agree.
CHAIRMAN GREEN said, "It could be encumbered by one by not opted
out by one."
MS. GLEASON concurred. She said a form of opting out would be to
transfer the asset, unbeknownst to the other spouse. Typically,
the desire to opt out would arise in the spouse who had not managed
the assets at the time of divorce.
Number 1787
REPRESENTATIVE BUNDE proposed a situation where the community
property is a building. He asked whether it is possible to
encumber one-half of the interest in that building, unbeknownst to
other spouse. He doubted that he could get a second mortgage on
his home without his wife's consent and involvement, as they had
both signed the mortgage. He asked whether one could get a second
mortgage on a building without the spouse's knowledge.
MS. GLEASON responded, "The issue would be if the building was only
titled in the name of one spouse, so that on the deed it indicated
`husband is the owner,' but separate and apart from the deed, there
was a community property agreement, which would not be recorded,
that ... identified that asset as community property, that what
this bill does, as I understand it, is say that husband can go out
and he can get a loan, without the consent or knowledge of the
other spouse, regarding that property."
MS. GLEASON continued, "Now, as a practical matter, the banks
typically require the other spouse to sign a waiver of a homestead
exemption if it's residential property. But with regard to
commercial property, there would be nothing to preclude one spouse
from getting loans or transferring the property, provided that on
the deed, he was - or she was - the sole owner of the property.
You'd have a separate agreement that would not be recorded."
Number 1875
REPRESENTATIVE BUNDE observed that if there is an encumbrance on a
piece of property, and if the attorney involved in creating the
loan, for example, does not discover it, that is a whole other
story. He referred to the "unconscionable portion," page 11, lines
25 and 26, and asked whether that addresses Ms. Gleason's concern.
MS. GLEASON said she wondered about that herself. To her, that
section could be interpreted two ways. She stated, "When you
determine what's unconscionable, as that term is used above in
sections (f) and (g), then this section (h) is saying that's up for
the courts to decide. The other way would be the interpretation
that I understand you would be proposing, which is to say that this
is, in essence, a catch-all that would allow the court to determine
that the agreement is unconscionable at the time enforcement is
sought. To me, at least, it's unclear, and in the context of the
bill, it would be likely that a court might well conclude that the
term there is intended to define its use above and not to accord
additional rights to a party seeking to set aside the agreement."
REPRESENTATIVE BUNDE said his interpretation is that this
subsection affords additional rights, which is the second
interpretation presented by Ms. Gleason. He suggested
strengthening this language.
Number 1960
REPRESENTATIVE BERKOWITZ asked, "The question of unconscionability
is a question of law for the courts to determine regardless, isn't
it?"
MS. GLEASON said yes.
REPRESENTATIVE BERKOWITZ asked whether her concern with the bill
was from the divorce aspect, not relating to estate planning.
MS. GLEASON replied that she had no concern, nor ability to
testify, regarding estate planning.
Number 1983
REPRESENTATIVE JEANNETTE JAMES presented a situation where a party
has property in their own name and then enters into a community
property agreement in Alaska, providing this became law. The
scenario presented by Ms. Gleason was that the person who had the
property in their name could dispose of it. Representative James
said she would be surprised if people did not understand that if
there is a community property agreement, it must be recorded.
Number 2033
MS. GLEASON responded that in her practice, she would disagree.
The vast majority of business interests she sees are held in the
name of one spouse. Although there might be a premarital agreement
addressing the rights of parties in respect to business interests,
she does not recall ever seeing a premarital agreement recorded.
It is quite common for a court to divide property in a divorce that
is titled in only one spouse's name. To her, it is a cause for
concern. She said she had several other concerns as well.
Number 2078
REPRESENTATIVE JAMES asked whether it would be wise to include
something in this legislation that indicates that these need to be
recorded.
MS. GLEASON answered that her sense is that most parties would
prefer to keep these agreements between themselves. As with a
will, this is a private document regarding assets, debts and
agreements with each other. Although recording does have a benefit
in giving protections, she believes most Alaskans would prefer
privacy.
Number 2132
CHAIRMAN GREEN asked where the recording for more liquid properties
such as stocks or a business would take place.
MS. GLEASON answered that interest in real property is recorded at
the Recorder's Office, which is the only place where a third party
is expected to know of transactions between spouses regarding real
property. For security interests in stock, theoretically, one
could do a Uniform Commercial Code (UCC) filing, but the process
does not achieve any purpose because it is accounted in so many
different ways. For example, if a building is owned by a
corporation, the title at the Recorder's Office will show that `ABC
Corporation' owns it. However, the corporation might be owned 100
percent by one of the spouses. That will not be at all apparent
when one goes to the Recorder's Office.
Number 2203
MR. GORRIG suggested this problem occurs when one person has their
name on the property and then enters into a community property
agreement. Because it is not recorded, the person whose name is on
the property could dispose of it or do anything with it. He asked,
"Well, why can't they do that anyway? I mean, it seems to me that
the community property agreement at least would give the other
spouse some claim against that property." He asked what the damage
would be if there was no community property agreement.
MS. GLEASON responded that it ties in with another provision of HB
199. Referring to the top of page 10, she said under AS
34.75.090(e), there is a provision that says a community property
agreement may not adversely affect the right of a child to support.
By implication, to her that would mean a community property
agreement could adversely affect the right of a spouse to support.
A situation could occur where someone sells an asset with a
community property agreement in place. If the community property
agreement says that neither spouse is entitled to spousal support,
someone could walk away with virtually nothing out of a divorce
under this language.
MS. GLEASON said if the same scenario happened under existing
Alaskan law, at the very least, the court would have the ability to
order spousal support in an effort to address the needs of both
parties. The community property agreement, in addition to giving
one spouse complete control over assets, could eliminate the right
of a spouse to support. She said this is also a way to address
equities when a property is encumbered or difficult to access, such
as in a professional practice.
Number 2326
CHAIRMAN GREEN asked whether there is some way, not already
afforded, that a community property agreement would preclude court
intervention or invasion. He referred to a building being deeded
to one spouses and asked, under a divorce proceeding, whether the
court could invade that or whether it was precluded under community
property.
MS. GLEASON said that was an interesting question and stated,
"You're correct that you can invade under existing law quite
readily. As I read the intent of this bill, the intent would be to
preclude invasion because there is a provision of the bill that
would require a 50-50 split of community property, unless at the
outset - at the time of entry into the agreement - the parties had
agreed on a different split between them."
REPRESENTATIVE BERKOWITZ asked whether Ms. Gleason had a copy of
her comments or a sectional analysis.
MS. GLEASON offered to prepare comments and forward them to the
committee.
CHAIRMAN GREEN asked about Ms. Gleason's concerns.
MS. GLEASON said there are two other concerns. She referred to
page 7, line 4, relating to gifts of community property to third
persons. This is substantially a variance with existing Alaskan
law as it would apply in equitable distribution. Currently, if one
spouse makes a gift of marital property, the other spouse has two
years after learning of the gift to have it set aside. Referring
to subsection (d), beginning on line 18, she said under HB 199, the
spouse that learns of the gift has a much more limited time period,
the earlier of one year after notice of the gift or three years
after the gift. Three years could pass without the spouse learning
of the gift, precluding them from setting it aside.
TAPE 97-63, SIDE B
Number 0001
MS. GLEASON continued, saying this could harm the spouse that has
less knowledge or involvement in an asset put into a community
property agreement.
CHAIRMAN GREEN referred to line 7 and said there is a limit of
$1,000 in a calendar year. He asked if this is under existing law.
MS. GLEASON said no. There are no current limits on "gifting."
REPRESENTATIVE BUNDE said he understands the problem of having an
open-ended window; a person could give a gift and then 20 years
later, the recipient might receive notice that they must give it
back. He asked: If three years is not an adequate amount of time,
and since it is not acceptable to him to have no time limit, what
would be an acceptable time limit?
Number 0043
MS. GLEASON replied that she does not have an idea on the time
limit as much as on the appropriate remedy. She agreed one could
not go back and recover the gift necessarily, but the open-ended
time limit, if it allowed a remedy between the spouses, is a
workable solution; that is what exists in current law. Rather than
setting aside a gift learned about 20 years later, the other spouse
can be held accountable for the gift transaction in the divorce.
She said she had not thought about it but would consider the idea
of a time limit that would apply irrespective of notice to the
spouse.
MS. GLEASON referred to page 5, lines 2 through 5, which says in
part, "income earned or accrued by a spouse or attributable to
property of a spouse during marriage and after the determination
date is community property." She said this is problematic in two
respects. First, it sets up the problem of tracing, which is
already an expensive process in divorce litigation on occasion;
this would double the cost. She presented a situation where people
put apartment buildings into community property, leaving everything
else as noncommunity property, with the intent of lumping the rents
into a joint account used for their various needs. Money also
accumulates in this account. She questioned what should be done
with the income attributable to the building, which is supposedly
community property, while other income going into that same account
would be marital property subject to equitable distribution. This
is an accounting problem.
MS. GLEASON said the other problem with this provision is that
existing Alaskan law clearly establishes that the date when parties
physically separate from one another is a cut-off date for
allocation of marital and nonmarital property. For example, when
the husband leaves the home, his post-separation earnings are his
own and not part of the marital property, even if it takes a year
for the divorce. That year's earnings are his, subject to child
and spousal support obligations that might be imposed. To Ms.
Gleason, this would run counter to that provision because it would
make all of the income during that post-separation process
community property. It would complicate an already-complex
accounting problem that arises in divorce cases.
CHAIRMAN GREEN noted that there was a response and asked that Ms.
Gleason send further testimony to the committee.
Number 0201
REPRESENTATIVE JOE RYAN, sponsor of HB 199, read the first portion
of subsection (d), which says, "If the community property agreement
provides that all property acquired ...." He emphasized that this
is an agreement; he assumed people planning to do this would hire
someone like Ms. Gleason or an estate planning attorney, who would
inform them that if they sign this agreement and put these
provisions in, there are consequences if they separate. It is a
voluntary agreement, and people must hire someone to inform them of
the consequences.
REPRESENTATIVE RYAN read from page 8, subsection (b), beginning at
line 5: "After the determination date, a spouse's obligation to
satisfy a duty of support owed to the other spouse or a child of
the marriage may be satisfied only from community property and
other property of the obligated spouse that is not community
property." He said you take the portion that is designated as
community property; the other assets are individual property and
apply under the laws applicable to that. He questioned how all the
"what-if scenarios" could be addressed in legislation. "This is
why we have courts to make these decisions," he added.
Number 0282
MS. GLEASON responded that this is why the Wisconsin lawyer called
this type of legislation "the divorce lawyers' and tax accountants'
relief and pension fund act," because of the complexities
associated with it. She hopes most Alaskans who choose to enter
into these agreements would obtain legal advice. She cautioned
that there are people who will write their own community property
agreements after reading what a wonderful tax savings they could
obtain. Some people do not like to seek legal advice; she believes
it is those people who may be severely impacted by this type of
legislation.
Number 0321
REPRESENTATIVE ROKEBERG said he did not expect an answer; however,
at the previous hearing, he had posited a scenario where the
prenuptial agreement has a provision that the parties would elect
to have a community property agreement. He asked: Under Alaska
law and case law, could a prenuptial agreement stipulate that if
there was a divorce, the parties would automatically opt out of the
community property agreement and settle into existing state law?
He further asked: In the alternative, could the legislature, in
this bill, allow for that instance if it would not be allowable
under existing case law?
MS. GLEASON answered that there is a provision that allows parties
to set a termination date for their community property agreement.
She advised that she would give thought to that in her written
comments.
Number 0377
JOAN CLOVER, Attorney at Law, Gruenberg and Clover, testified next
via teleconference from Anchorage. She has practiced domestic
relations law for 15 years. Like Ms. Gleason, she is currently a
member of the executive committee of the state family law section
of the Alaska bar; she and Ms. Gleason had been co-chairs of that
section a few years ago.
MS. CLOVER specified she was speaking with a "voice of caution."
She said the family law section had received a mailing from, she
believes, the probate section; she received it March 1. That was
the first they knew of HB 199. She has received several phone
calls regarding the bill. She believes it is important enough to
Alaskans that it should be held over the interim so that family law
attorneys can study it and provide input.
MS. CLOVER said she is personally a proponent of individuals'
ability to contract and believes people can be held responsible for
their own voluntary actions. However, the purpose of our laws, to
a certain degree, is to protect citizens. The legislature should
proceed with great care when embarking on something that puts
Alaska at the forefront of the nation. She said Alaskans will be
the guinea pigs. She noted that only eight states have community
property; she said one must wonder why. In addition, only
Wisconsin has adopted the uniform marital property act. Alaska has
a well-established body of case law dealing with equitable
divisions and the way that we hold property in a separate property
estate.
MS. CLOVER advised that she went to law school in California. She
recalled discussions of community property and said it is
substantially different from equitable division. The rights of the
parties during an intact marriage, where each owns a separate half
of property, are significantly different. Similarly, the rights in
divorce are different. She believes HB 199 can be improved and
that it deserves the study that can be given to it by allowing
domestic relations attorneys an opportunity for greater input and
time to study this over the interim.
Number 0538
CHAIRMAN GREEN noted that there has been an expressed desire to
move this rapidly because of "a competitive edge that the state of
Alaska may have." He said holding it over the interim may impact
that significantly. He asked Ms. Clover to comment.
MS. CLOVER answered that this advantage involves attracting money
from outside of the state for the benefit of the lawyers who will
draft these agreements and some trust officers who want to
administer. She believes that legislators' obligations are to
their constituents, to Alaskans, most of whom are married and many
of whom will find themselves embroiled in a divorce. Along with
Ms. Gleason, she fears that not only people who have carefully
considered the consequences and have obtained competent advice will
enter into these agreements. Unlike many estate planning attorneys
who write prenuptial agreements, she said she tears them apart.
She is involved in litigation either attempting to sustain them,
under attack, or attacking them.
Number 0602
MARYANN FOLEY, Attorney at Law, testified next via teleconference
from an offnet site. She has been a practicing divorce attorney
for more than 16 years. She agreed with many of the comments made
by Ms. Gleason and Ms. Clover. She believes the bill is not in the
best interests of most Alaskans, mainly because of the
discrimination that occurs within the bill to Alaskans themselves.
MS. FOLEY cited an example. One couple decides not to go with a
community property agreement; they will divorce under the "fair and
equitable" division of property, with the court looking at all the
factors contained within AS 25.24.160(a) in making a fair
allocation of their property.
MS. FOLEY said under HB 199, however, if a second couple has
entered into a community property agreement, the court cannot vary
from that agreement. Therefore, it cannot consider factors such as
the income-earning capacity or health of both parties, the length
of marriage or the fact that the marital home should probably go to
the spouse who may be getting primary custody of the children. The
court is not allowed to balance the equities under HB 199.
MS. FOLEY referred to a section where parties who chose a community
property agreement may opt for a dissolution instead of divorce in
Alaska. Under this proposal, the court could still check into
those factors to ensure that the dissolution is fair and equitable.
Therefore, there are three different possibilities of treatment
from the courts for three different couples. She believes this is
discriminatory and may not stand up to muster with the Alaska
Supreme Court should someone challenge it.
CHAIRMAN GREEN asked whether Ms. Foley had prepared comments.
MS. FOLEY replied that she could send them by Monday.
CHAIRMAN GREEN commented that the last three testifiers had brought
concerns that the committee had not yet heard. He asked Mr.
Thwaites whether he could offer a summation to help them through
this dilemma.
Number 0730
RICHARD THWAITES, Attorney at Law, testified via teleconference
from Anchorage. He said it is true that HB 199 adds complexity to
the law of the state of Alaska. It provides an optional provision
regarding treatment of marital property, which will help spouses in
the area of income taxes related to their estate planning.
However, it complicates some of the marital issues.
MR. THWAITES said he had talked with Representative Ryan and
Representative Croft about the possibility of placing a fairly
strong warning in the bill. He advised that he had just been
handed a proposed amendment that contains some of that language,
saying it is essentially the same type of caveat that is placed on
the durable power of attorney section.
Number 0817
REPRESENTATIVE BERKOWITZ said it seems that HB 199 creates a
collision between estate planning and family law. He said as it
was explained to him, the focus of the bill was on the estate
planning end of it. He expressed support for that. However, he
suggested finding a way to work out the family law concerns
expeditiously so that no harm is visited on those who must use
family lawyers.
CHAIRMAN GREEN asked Mr. Hompesch to address the concerns expressed
or send comments to the committee.
Number 0900
RICHARD HOMPESCH II, Attorney at Law, Hompesch and Associates, PC,
testified via teleconference from Fairbanks, agreeing to send
comments. He cited a personal example, then stated that very few
people do estate planning and few will enter into these community
property agreements. He said he finds that most people who do
estate planning do not divorce. He does not believe Alaskans will
be guinea pigs because he believes more people from outside of
Alaska will do this than from inside the state.
MR. HOMPESCH referred to Mr. Thwaites' testimony and said he
believes this is a freedom of contract issue. Yes, there are many
risks and complexities in the case of divorce, and those will need
to be considered. He asked, "But can't we rely on the judgment of
Alaskans who have acquired one or two or three or four or five
million dollars to plan their affairs in the best way they think
they should do so?" He said these are sophisticated agreements,
with sophisticated planning. He believes his clients can make
these choices.
Number 0991
REPRESENTATIVE BERKOWITZ commented that this legislature has
determined that it wants predictability to be one of the focuses in
the courts, with more predictable outcomes. In that respect, the
concerns of the family lawyers are of some interest to him; he
would like to address them before proceeding; however, he would
like to get this bill through as soon as possible.
REPRESENTATIVE BUNDE requested testimony from a tax attorney and
someone from the IRS the next time the bill is heard. Regarding
the last point, he said he had seen a lot of very wealthy people
make fools of themselves in public.
CHAIRMAN GREEN commented that in effect, they had heard some
testimony regarding taxes, as George Gorrig had worked for the IRS.
He announced HB 199 would be held over for further discussion.
REPRESENTATIVE RYAN said he did not mind addressing these concerns.
However, he hoped to see positive ways to improve the bill, not
"what-if scenarios."
(HB 199 was held over.)
HB 234 - ABORTIONS UNDER GENERAL RELIEF PROGRAM
Number 1064
CHAIRMAN GREEN announced the next item on the agenda was HB 234,
"An Act relating to assistance for abortions under the general
relief program; and relating to financial responsibility for the
costs of abortions."
REPRESENTATIVE TERRY MARTIN, sponsor of HB 234, asked for another
opportunity when there was more time to hear the bill.
CHAIRMAN GREEN noted that a couple of people needed to testify. He
asked whether Representative Martin wished to make a statement
prior to that.
REPRESENTATIVE MARTIN said this is a new approach concerning state
funding for an abortion. Federal and state laws have been
formulated to make the male responsible for the child that is born;
earnings can be attached, for example. In the same way, this
legislation would make the male responsible for the abortion. He
referred to two proposed amendments and said he believes those
would add to the bill, if the committee wished to prepare a
committee substitute.
CHAIRMAN GREEN advised that the committee would meet again later
that day.
Number 1172
THEDA PITTMAN, Interim Executive Director, Alaska Civil Liberties
Union (ACLU), testified via teleconference from Anchorage. She
said she had submitted a letter on behalf of the ACLU in opposition
to the bill; she would make a couple of additional comments.
MS. PITTMAN noted that the sponsor statement pools abortions and
elective procedures. She pointed out that the medical community
uses the word "elective" for procedures that can be scheduled, as
opposed to emergency procedures. While an abortion may be
considered elective as far as the doctor is concerned because it
can be scheduled, it is not elective for the woman in many
instances. She commented that discussions about the difference
between preserving one's health and one's life were rather
disappointing.
MS. PITTMAN reported that in 1994, the ACLU successfully brought
suit against the Hickel Administration for a regulation that would
have prevented general relief medical funding for abortions; the
state is currently operating under a settlement agreement reached
as a result of that suit. She expressed disappointment in an
amendment before the committee, which only mentions rape and
incest, not taking into account the many other reasons why women
seek abortions, such as the woman's health, failed birth control or
other reasons.
MS. PITTMAN stated that some feel that promoting childbirth while
denying abortions is pro-family. But frankly, it is not their
families who will be affected, and it should not be their decision.
It is a disservice to Alaskan women who are poor to tell them the
state will not allow them to decide what kind of medical procedures
they need.
Number 1301
PAULINE UTTER, Chair, Abortion Rights Project, testified next via
teleconference from Anchorage. She said all women should have the
right to choose. However, HB 234 will place an undue burden on
poor women. Abortion has always been available to the rich, even
when it was illegal. One of the functions of government should be
to keep abortion safe and legal for all women. A yes vote on HB
234 will be considered an anti-choice vote. She encouraged the
committee to help keep abortion safe and legal by voting no.
CHAIRMAN GREEN announced that HB 234 would be heard again that
afternoon.
ADJOURNMENT
Number 1383
CHAIRMAN GREEN adjourned the meeting of the House Judiciary
Standing Committee at 9:55 a.m.
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