Legislature(1995 - 1996)
03/27/1996 01:30 PM Senate JUD
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE JUDICIARY COMMITTEE
March 27, 1996
1:30 p.m.
MEMBERS PRESENT
Senator Robin Taylor, Chairman
Senator Lyda Green, Vice-Chairman
Senator Mike Miller
Senator Al Adams
Senator Johnny Ellis
MEMBERS ABSENT
None
COMMITTEE CALENDAR
SENATE BILL NO. 207
"An Act authorizing the issuance and sale of revenue bonds to fund
public wastewater systems, nonpoint source water pollution control
projects, including solid waste management systems, and estuary
conservation and management projects; authorizing the use of the
Alaska clean water fund to pay and secure the bonds and to pay
costs related to issuance and administration of the bonds;
authorizing certain measures to secure payment of the bonds; and
amending Alaska Rule of Civil Procedure 3."
SENATE BILL NO. 268
"An Act relating to release before trial in cases involving
controlled substances."
SENATE BILL NO. 277
"An Act relating to charitable gaming and gaming on state ferries;
and providing for an effective date."
SENATE BILL NO. 272
"An Act relating to small claims actions; relating to actions that
may be heard by a magistrate; relating to representation by an
attorney in civil actions in which a corporation is a party and to
representation by an attorney in certain civil claims asserted by
assignment; amending Rules 11(a)(4), 15(c), and 17(b), Alaska
District Court Rules of Civil Procedure; and providing for an
effective date."
HOUSE BILL NO. 446 am
"An Act allowing home rule municipalities to bring actions for
certain injunctive relief relating to nuisances."
SENATE CS FOR HOUSE BILL NO. 57(TRA)
"An Act relating to driver's licensing; and providing for an
effective date."
CS FOR HOUSE BILL NO. 459(JUD) am
"An Act relating to the jurisdiction governing a trust, to
challenges to trusts or property transfers in trust, to the
validity of trust interests, and to transfers of certain trust
interests."
PREVIOUS SENATE COMMITTEE ACTION
SB 207 - See Community & Regional Affairs minutes dated 2/5/96,
2/14/96, and 2/21/96, and State Affairs minutes dated
2/29/96.
See Judiciary minutes dated 3/20/96.
SB 268 - See Judiciary minutes dated 3/13/96, 3/22/96, 3/25/96.
SB 277 - See Judiciary minutes dated 3/20/96.
SB 272 - No previous Senate committee action.
HB 446 - No previous Senate committee action.
HB 57 - See Senate Transportation minutes dated 2/22/96 and
2/27/96.
HB 459 - No previous Senate committee action.
WITNESS REGISTER
Keith Kelton
Dept. of Environmental Conservation
410 Willoughby Ave. Ste. 105
Juneau, AK 99801-1795
POSITION STATEMENT: Supports CSSB 207(JUD)
Senator Loren Leman
Alaska State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Sponsor of SB 268
Senator John Torgerson
Alaska State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Sponsor of SB 272
Mr. Al Tamagni
7001 Oakwood Dr.
Anchorage, AK 99507
POSITION STATEMENT: Commented on SB 272
Bob Manley
324 E. Cook
Anchorage, AK 99501
POSITION STATEMENT: Commented on SB 272 and HB 459
John George
NAII
3328 Fritz Cove Rd.
Juneau, AK 99801
POSITION STATEMENT: Supports HB 57
Mark Johnson
Dept. of Health and Social Services
P.O. Box 110616
Juneau, AK 99811-0616
POSITION STATEMENT: Supports HB 57
Juanita Hensley
Division of Motor Vehicles
Department of Public Safety
Box 20020
Juneau, AK 99802
POSITION STATEMENT: Supports HB 57
Chris Christensen
Alaska Court System
303 K St.
Anchorage, AK 99501-2084
POSITION STATEMENT: Commented on SB 272
Laurie Otto
Deputy Attorney General
Department of Law
P.O. Box 110300
Juneau, AK
POSITION STATEMENT: Supports SB 268
Dick Thwaites
500 L Street, Suite 301
Anchorage, AK 99501
POSITION STATEMENT: Supports HB 459
Joe Ryan
Legislative Aide to Rep. Vezey
Alaska State Capitol
Juneau, Alaska 99801-1182
POSITION STATEMENT: Testified for the sponsor of HB 459
ACTION NARRATIVE
TAPE 96-29, SIDE A
Number 001
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to
order at 1:36 p.m. A quorum was present with Senators Green,
Adams, Miller and Chair Taylor. The first order of business before
the committee was SB 207.
SB 207 REVENUE BONDS: WATER & WASTE PROJECTS
SENATOR ADAMS moved for the adoption of CSSB 207(JUD) (version F).
SENATOR TAYLOR objected for the purpose of discussion and explained
the requested amendments were incorporated into the committee
substitute.
KEITH KELTON, representing the Department of Environmental
Conservation, stated DEC is satisfied with this version.
SENATOR TAYLOR removed his objection to the motion to adopt the
committee substitute, therefore, so moved.
SENATOR ADAMS moved and asked unanimous consent that CSSB 207(JUD)
be moved from committee with individual recommendations. There
being no objection, the motion carried.
SB 268 PRETRIAL RELEASE FOR CERTAIN OFFENSES
SENATOR LEMAN stated version K accommodates the Chair's concerns
and is similar to the original version of the bill. Language was
included on page 2, lines 27 through 31, to address previously
discussed concerns about firearms and knives.
SENATOR TAYLOR added that references to AS 04 were omitted from
version K. SENATOR LEMAN agreed the bill title was changed and any
reference to alcohol was removed, making the bill more similar to
the original version of SB 268.
SENATOR TAYLOR felt lines 19 through 21 to be too restrictive as it
would prevent a person who might need to use a portable
communications device in the course of employment from doing so,
when that person has only been alleged to have committed a crime.
SENATOR LEMAN clarified the court would consider the list of
conditions, as well as the person's previous record. It has become
increasingly difficult to keep repeat drug offenders off the
streets in the Municipality of Anchorage: the offenders are dealing
drugs within hours of an arrest. In such a case, a judge would
have the ability to decide which conditions would be appropriate.
Police are finding that cellular phones are a tool of the drug
trade.
Number 099
SENATOR TAYLOR asked if version K includes conditions of release
under AS 12.30.020, the domestic violence statute. SENATOR LEMAN
replied AS 12.30.020 is the general authority for conditions.
Section 2 ensures that general bail conditions, plus the conditions
laid out in SB 268, are considered for domestic violence offenses.
SENATOR TAYLOR questioned whether the same restriction on portable
telephone use apply to domestic violence offenders. SENATOR LEMAN
indicated it could be, but the bill does not provide for that
explicit authority. This legislation provides that particular
condition only for release before trial involving controlled
substances.
SENATOR ADAMS asked if on page 2, line 27, the words "possession or
control" were supposed to replace the word "person." SENATOR
TAYLOR believed that language was only to apply to knives, and
subsection (4) pertains to controlled substances.
SENATOR ADAMS inquired whether Section 2 is in concert with the
Governor's domestic violence legislation. SENATOR TAYLOR replied
the Governor's legislation is quite comprehensive; Section 2 is one
small step.
SENATOR GREEN moved the adoption of CSSB 268(JUD) (version K).
There being no objection, the motion carried.
SENATOR GREEN moved CSSB 268(JUD) out of committee with individual
recommendations. There being no objection, the motion carried.
Number 187
SB 277 GAMING: FERRIES, VIDEO LOTTERY & MISC
SENATOR TAYLOR explained the proposed committee substitute: limits
those who may be able to utilize gaming permits and devices in the
state; prohibits funds from flowing to political entities, and
significantly narrows the definition of what constitutes a
charitable organization.
SENATOR TAYLOR moved to adopt CSSB 277(JUD) (version K). SENATOR
ELLIS objected. SENATOR ADAMS asked for a review of the changes
made in the proposed committee substitute.
SENATOR TAYLOR stated the original bill would have eliminated
pulltabs and replaced them with video lottery machines. A previous
witness from the pulltab industry believed the introduction of
video lottery machines will eliminate the pulltab industry over
time, and because many charitable organizations did not want to
lose pulltab business, the section eliminating the use of pulltabs
was removed. Nothing else in the committee substitute is different
from the original bill.
SENATOR ADAMS if a permittee could contract out either the pulltab
or video lottery permit. SENATOR TAYLOR affirmed the permittee
could not.
Number 231
SENATOR ELLIS believed video lottery gaming will expand the
gambling industry in the state because video machines can be
programmed to provide an array of games. The California courts
have interpreted video lotteries as slot machines, and Native
organizations use that interpretation as their statutory basis for
major casinos and mini casinos that have proliferated throughout
that state. Regardless of the Native aspect, the escalation of the
kind of gambling represented by this bill is a significant
expansion of gambling. He questioned the move against such
activity by the majority last year. He asked Senator Taylor if he
agreed with the interpretation of the California court decision
regarding the operation of mini and maxi casinos. In addition, he
asked if video lottery machines must be programmed to keep an
electronic record of gaming activity, and whether the bill
explicitly requires such records to be kept.
SENATOR TAYLOR replied it is his understanding the Division would
have the authority to impose that type of regulation.
SENATOR ELLIS asked if the bill explicitly directs the Division to
do so. SENATOR TAYLOR responded the bill does not order the
Division to set up a recording device. Regarding Senator Ellis'
first question, he responded the U.S. Supreme Court just rendered
a decision which says the states have retained the authority to
regulate casino gaming. That decision is a direct reversal of the
lower court decision and will have significant ramifications on the
Native gaming casinos across the United States.
Number 285
SENATOR ELLIS questioned whether Senator Taylor intended to require
recordkeeping by statute as opposed to regulation. SENATOR TAYLOR
stated he would have no problem with that, and would take the
suggestion under consideration.
SB 272 SMALL CLAIMS CT JURISDICTION & PROCEDURE
SENATOR TORGERSON, sponsor of SB 272, explained the purpose of the
bill is fourfold: it allows creditors without legal representation
in relatively small claims cases; it increases the maximum amount
of a claim from $5,000 to $10,000; it allows a motion to practice
in small claims court; and allows service for small claim cases on
defendants outside Alaska. SB 272 amends existing statute so the
corporation can appear without an attorney in cases under $10,000,
and amends three court rules. The legislation was introduced on
behalf of an attorney in his district.
Number 320
CHRIS CHRISTENSEN, general counsel to the judicial branch,
discussed two primary components of SB 272. It raises the
jurisdictional limit of the small claims court from $5,000 to
$10,000. The Supreme Court opposes an increase of that magnitude
because although there has been no increase since 1986, the federal
CPI has only increased 32.8 percent since 1986. That would equate
to $6,650 in 1996 dollars. The Court System believes the change to
$10,000 will cause cases of much greater evidentiary complexity to
be placed before magistrates, and would prefer an incremental
change, raising the current amount to $7,500.
SENATOR TAYLOR asked about the second component regarding attorneys
having to appear on behalf of creditors.
MR. CHRISTENSEN stated the Supreme Court has not yet reviewed that
portion of the bill, therefore he cannot state a position. He
relayed comments from some district court judges who expressed
concern about how the proposed court rule changes will change the
nature of small claims court in ways that are detrimental to the
system as a whole. The primary effect of SB 272 is to make it
easier and cheaper for collection agencies to engage in commercial
litigation. Collection agencies attempt to collect money on behalf
of a third party. Section 4 provides that collection agencies will
no longer have to use an attorney when they go into small claims
court on behalf of another business or individual. The individual
judges who have commented worry that collection agencies are not
bound by the same set of ethical rules that licensed attorneys are
bound by. Collection agencies have no prohibitions on conflict of
interest, no rules on candor with the court, no rules regarding
fairness to the other parties, no rules regarding communication
with the other party, and no rules with regard to the degree of
truthfulness they have to maintain. The same judges are also
concerned that Section 5 will make it easier for agencies and
others who are familiar with the small claims process to take
advantage of the lack of familiarity the defendant has with the
small claims process. Section 5 allows the court to grant a
decision based on a summary judgment motion which would almost
invariably be filed by the plaintiff. Court rules require the
magistrate or clerks to assist the litigants in a small claims case
by providing legal advice to both sides. If a plaintiff filed a
summary judgment motion, the judge would not be able to offer
assistance to the defendant. A defendant in such a case would
eventually take far more clerical time keeping defendants informed
and prepare documents.
MR. CHRISTENSEN continued. Section 6 will allow out-of-state
service on defendants. Presently, court rules only allow a small
claims plaintiff to serve an out-of-state defendant in
landlord/tenant cases and in cases involving motor vehicles. This
particular issue was visited by the Supreme Court Small Claims
Committee the last time the limit was changed. The magistrates and
clerks in small rural courts are not trained and qualified in long
arm jurisdiction. Current law excepts landlord/tenant cases and
motor vehicle cases because the plaintiff can serve the
Commissioners of Commerce and Public Safety if the defendant is
out-of-state.
SENATOR ADAMS asked if the Court System used federal figures to
determine the CPI. MR. CHRISTENSEN replied it did.
SENATOR ADAMS asked if the figure would be higher than $6,650 if
the Alaska CPI was used. MR. CHRISTENSEN answered he was under the
impression the federal figure for Anchorage was used.
Number 400
SENATOR TAYLOR asked Senator Torgerson if he would object to a
limit of $7,500. SENATOR TORGERSON indicated he did not.
SENATOR ADAMS asked if the fiscal note would change if the limit
were placed at $7,500. MR. CHRISTENSEN believed the figure would
be lower because the number of new cases would decrease, and would
be less complex since they would be of lower value.
SENATOR TAYLOR felt the collection agencies should be held more
accountable and be required to hire a person with some legal talent
to represent them. Regarding Section 6, he shared Mr.
Christensen's concern that out-of-state cases are complex.
SENATOR TAYLOR moved to delete Sections 4 and 6, and to change
every place that the bill reflects $10,000 to $7,500. There being
no objection, the motion carried.
Number 445
AL TAMAGNI testified from Anchorage in support of SB 272. The
court takes a narrow approach as to what is good for the court
which is not always what is good for the public. People with small
automobile accident claims over $5,000 have no access to the court
system. He would prefer to see the limit raised to $15,000 because
if you adjust the $5,000 for cost-of-living increases since 1986,
the amount would be $3,200. SB 272 will open the doors of the
court to people who cannot get access now. He recommended keeping
the limit at $7,500 but indexing it annually.
SENATOR TAYLOR noted he thought an incremental approach to be most
practical, and agreed with Mr. Tamagni that people's courts should
be expanded.
SENATOR MILLER moved SB 272 as amended out of committee with
individual recommendations. There being no objection, the motion
carried.
HB 446 NUISANCE INJUNCTION BY HOME RULE MUNI
SHIRLEY ARMSTRONG, aide to Representative Rokeberg, sponsor of HB
446, gave the following summary of the bill. HB 446 was requested
by Mayor Mystrom as it will help municipalities suppress nuisances
and provide a mechanism for civil abatement of premises. It would
enjoin nuisances within the jurisdictions of municipalities when
real property is being used for illegal activity, such as drugs,
gambling or prostitution, and is an attempt to assist
municipalities to close down crack houses or similar enterprises
when the landlord ignores repeated notices or citations. Current
law mandates the Attorney General to enjoin the properties, but if
that office is not inclined to do so due to lack of funding or
unwillingness to enforce the statute, the public can enjoin a piece
of property, however most people do not have the financial
resources or legal talent to pursue such action.
SENATOR TAYLOR commented injunctive relief is available in Title 9.
SENATOR ELLIS expressed strong support of HB 446 but questioned
where in the process the word "shall" was changed to "may." MS.
ARMSTRONG answered that change was made on the House floor in
response to concerns made by small municipalities who rely on the
state to enjoin the nuisance. Currently a municipality that wants
to pursue such a situation independently must get power of attorney
from the state. The process is complicated and cumbersome.
SENATOR ELLIS stated he understood that language was changed
because one complaint was received from the City of Ketchikan. He
objected to the House accommodating that request. He moved to
return the word "may" to "shall" because otherwise the aggressive
action necessary to rid neighborhoods of crackhouses will not take
place.
Number 554
MS. ARMSTRONG pointed out the Municipality of Anchorage is awaiting
passage of this legislation to pursue 22 nuisances. She referred
to an article in the Alaska Star about the Polar Bear Bar in the
Spenard area.
SENATOR ELLIS agreed that situation will get immediate attention.
He repeated his motion to change the bill back to its original
language. SENATOR TAYLOR objected because the word "shall" will
require two entities to take action, both the state and
municipality, and no entity will have priority.
SENATOR ELLIS reminded Senator Taylor of other situations in which
the state was given the power to act but could not do so due to
limited resources. He repeated that the legislation needs to have
more teeth.
MS. ARMSTRONG noted the Municipality of Anchorage agreed to the
language change because some areas of the state prosecute these
types of problems under state statute. SENATOR TAYLOR stated if
the word "shall" was used, the state would be shifting the burden
to the municipalities without providing the resources to do so.
The motion to change the word "may" to "shall" on line 8 failed
with Senators Ellis and Adams voting "yea" and Senators Taylor,
Green and Miller voting "nay."
SENATOR ADAMS felt the committee made a mistake by not passing the
amendment, as it would give local control back to municipalities.
SENATOR TAYLOR pointed out the subjects covered within the bill are
prostitution, illegal activity involving a place of prostitution,
and illegal activity involving alcoholic beverages, a controlled
substance, an imitation controlled substance, or gambling or
promoting gambling.
SENATOR GREEN moved HB 446am out of committee with individual
recommendations. There being no objection, the motion carried.
TAPE 96-29, SIDE B
HB 57 LICENSING REQUIREMENTS FOR DRIVERS
MELINDA GRUENING, legislative assistant to Representative Joe
Green, explained the intent of the measure is to establish a
graduated drivers license system. Currently 16 to 21 year old
drivers comprise 6.2 percent of Alaskan drivers but account for
13.9 percent of all accidents and 28 percent of all fatal crashes.
A large majority of those accidents happen in the early hours of
the morning. HB 57 will ease the novice driver, under controlled
conditions, into the driving environment by creating a provisional
license. Nighttime driving hours will be restricted between the
hours of 1:00 a.m. and 5:00 a.m. with the exception of travelling
the most direct route to and from work. A licensee with a
provisional license could only accumulate 8 points during a 12
month period. After a one-year period, if the provisional licensee
has demonstrated a safe driving record, an unrestricted driver's
license would be issued. HB 57 is designed to allow the Department
of Public Safety (DPS) to take advantage of new federal funding to
implement such legislation.
SENATOR GREEN moved to adopt the committee substitute. SENATOR
ELLIS objected to the motion and asked Representative Green to
speak for the bill.
REPRESENTATIVE JOE GREEN offered to answer questions. SENATOR
ELLIS asked about the fiscal impact of the legislation.
REPRESENTATIVE GREEN replied that a majority of the costs would be
reimbursed by a federal grant. HB 57 will help protect teenagers
against themselves, and while their reflexes and ability to drive
may be better than an older person, their concentration may be less
than someone more mature. This bill will get teenagers through the
most critical period and is designed to be a protective measure,
not an intrusive one.
Number 500
SENATOR ADAMS expressed concern about the point system on page 3
because it decreases the amount of accumulated points from 12 to 8.
This topic was debated in the Transportation Committee, and a
compromise amount of 10 points was discussed.
REPRESENTATIVE GREEN observed the original amount of points in the
bill was was raised from 6 to 8 points. He emphasized that a
driver's license is a privelege.
SENATOR GREEN felt to accumulate 8 to 12 points in one year to
require a good deal of irresponsible behavior.
JOHN GEORGE, representing the National Association of Independent
Insurers (NAII), testified in support of the bill. On a personal
note, he stated as Assistant Fire Chief of the Auke Bay Fire
District, he has responded to many late night automobile accidents.
He believes this bill will ensure the safety of teenagers by
creating a curfew.
Number 458
MARK JOHNSON, Chief of the Emergency Medical Services Section of
the Department of Health and Social Services, testified in support
of HB 57 as data from hospitals show that teenagers treated for
motor vehicle accidents are double the rate of other drivers. The
cost for hospitalization of that group averages over $20,000.
SENATOR TAYLOR asked if Mr. Johnson had reviewed statistical
information from other states that have implemented a similar
program. MR. JOHNSON replied he had reviewed information provided
by DPS and from the Insurance Institute for Highway Safety's
newsletter.
JUANITA HENSLEY, Director of the Division of Motor Vehicles, DPS,
testified in support of HB 57 and noted widespread support for the
legislation by other national and international groups. The
National Highway Traffic Safety Administration (NHTSA) made
available incentive grants to Alaska and North Carolina several
years ago to help implement and study a graduated license system to
see if it does save lives. HB 57 is a step forward in that
process. Alaska has already implemented a "use it, lose it"
sanction system for driver's licenses. Because driver education is
not provided to students, they learn by trial and error.
SENATOR ADAMS asked how many points a teen driver would get for two
curfew violations. MS. HENSLEY answered each violation receives
two points. After accumulating four points, DMV would send a
letter to the licensee providing him/her the option of eliminating
two points by taking a defensive driving class.
SENATOR TAYLOR asked Ms. Hensley to explain the changes made in the
proposed committee substitute.
MS. HENSLEY stated the original bill disallowed a licensee between
the ages of 16 and 17 to get a provisional license until he/she had
held an instructional permit for a period of six months. At the
age of 18 through 20, a licensee would have to have a provisional
license for one year before being granted full driving priveleges.
The proposed committee substitute removes the provision for 18 to
20 year olds, and would allow a 15 year old who obtained an
instructional permit for six months prior to obtain a provisional
driver's license at age 16 after passing a test.
SENATOR ELLIS asked if exceptions to driving during the curfew
hours were discussed when the bill was heard in the House and who
decides what the most direct route to and from work would be.
REPRESENTATIVE GREEN answered the House did consider longer curfew
hours from 11:00 p.m. to 6:00 a.m. Most of the discussion centered
around the fact that teenagers do not need to be out between the
hours of 1:00 and 5:00 unless it is for working purposes because
there is a rapid escalation of accidents during those hours.
Regarding the second question, the police officer would determine
the most direct route, and could call the place of employment to
verify where the driver was enroute to and from.
SENATOR ELLIS asked if an officer would also determine whether the
driver was driving from a legitimate activity during curfew hours,
such as a school function. REPRESENTATIVE GREEN replied the
officer would make that determination, but it could be appealed by
the driver.
SENATOR ELLIS stated he was trying to clarify whether driving to
and from work would be the only legitimate reason to drive during
curfew hours. REPRESENTATIVE GREEN stated if this bill becomes
law, the teenager would need to be driven by someone else during
curfew hours for any activity other than work.
MS. HENSLEY clarified if a teenage driver has a driver over the age
of 25 in the car, then the provisional license driver would be able
to drive during curfew hours.
SENATOR ELLIS questioned why the age of 25 was used. MS. HENSLEY
commented the insurance industry uses the age of 25 to determine
that a driver is no longer a higher risk. Current law allows a
person with an instructional permit to drive in a car with a 19
year old; that would be changed because it is believed a 25 year
old is more mature. She noted that age was chosen arbitrarily.
SENATOR ELLIS believed young people feel contempt for the laws when
they differentiate by age for various activities, and felt that
provision in the bill needs more thought.
MS. HENLSEY remarked New Zealand and the province of Ontario have
successful graduated license programs based on novice driving,
rather than age.
SENATOR ELLIS removed his objection to the adoption of SCSHB
57(JUD) therefore the motion carried.
SENATOR MILLER moved SCSHB 57(JUD) out of committee with individual
recommendations. There being no objection, the motion carried.
HB 459 TRUSTS & PROPERTY TRANSFERS IN TRUST
JOE RYAN, legislative aide to Representative Al Vezey, sponsor of
HB 459, asked Dick Thwaites to provide the committee with an
overview of the legislation.
SENATOR ELLIS asked why the sponsor was not available to testify on
HB 459. MR. RYAN replied Representative Vezey was attending a
House Judiciary committee hearing at this time.
DICK THWAITES, an estate planning attorney, gave the following
summary of HB 459. The measure addresses Alaska statutes in the
area of trust and probate law (Title 13) and other related
statutes, including the statute of frauds, the rule against
perpetuities, and other sections of the code. The Alaska statutes
are not comprehensive in the area of trust law; they are general
and generic. HB 459 will create several types of trusts defined as
irrevocable family trusts. They are asset protection trusts which
essentially give the same protections to a family that a
corporation gives to a business. Assets unencumbered by spousal or
child support rights, creditor's claims, collateral interests of
banks, could be transferred into a trust which would allow the
grantor of the trust to be among the class of beneficiaries. Under
present law, if a grantor is a beneficiary of an irrevocable trust,
the grantor is deemed to have the power to control the trust,
therefore it is accessible by the grantor's creditors. HB 459 will
change the statute to allow the trust to be irrevocable and for the
grantor to be among the class of beneficiaries. It would allow for
a family nest egg, and provides an exception to the rule of
perpetuities. Alaska is in a beneficial position in that it does
not have a lot of trust law and case law to encumber the
establishment of such trusts, as Missouri did. This type of trust
will provide an alternative for individuals who might want to pass
property to offshore trusts; Alaska would be the unique
jurisdiction within the United States to accomplish that. This
type of trust provides certain estate tax advantages yet does not
avoid income, estate, or gift taxes. The fact that Alaska has no
state income tax adds to its appeal as a situs jurisdiction. The
trustee of the estate would have to be an Alaska resident
(according to the Permanent Fund dividend definition), an Alaska
Trust Company, an Alaska State bank with trust powers, or a
national banking association with trust powers having its principle
place of business in the State of Alaska. If large sums of money
are transferred to Alaska, it is likely large banks will establish
Alaska trust companies as wholy owned subsidiaries.
BOB MANLEY testified on his own behalf in support of HB 459. He
suggested the language "some or all" on page 2, line 11, and on
page 3, line 1, be changed to approximately 10 percent of the trust
assets to enhance the benefits to Alaska and its financial
institutions.
MR. THWAITES agreed with Mr. Manley's philosophy, but believed
imposing such a limit would discourage clients. He suggested that
change be considered in the future.
SENATOR GREEN moved CSHB 459(JUD)am out of committee with
individual recommendations. There being no objection, the motion
carried.
SENATOR TAYLOR adjourned the meeting at 3:10 p.m.
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