02/19/2018 01:30 PM Senate JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| SB151 | |
| HB208 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 151 | TELECONFERENCED | |
| + | HB 208 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE JUDICIARY STANDING COMMITTEE
February 19, 2018
1:32 p.m.
MEMBERS PRESENT
Senator John Coghill, Chair
Senator Mia Costello
Senator Pete Kelly
Senator Bill Wielechowski
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 151
"An Act relating to the number of superior court judges in the
first judicial district; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 208
"An Act relating to trusts and powers of appointment; and
providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 151
SHORT TITLE: NUMBER OF SUPERIOR COURT JUDGES
SPONSOR(s): RULES BY REQUEST
01/22/18 (S) READ THE FIRST TIME - REFERRALS
01/22/18 (S) JUD
02/19/18 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg)
BILL: HB 208
SHORT TITLE: TRUSTS; COMM PROP TRUSTS; POWERS OF APPT
SPONSOR(s): JOHNSON
03/31/17 (H) READ THE FIRST TIME - REFERRALS
03/31/17 (H) JUD
04/10/17 (H) JUD AT 1:00 PM GRUENBERG 120
04/10/17 (H) Scheduled but Not Heard
04/12/17 (H) JUD AT 1:00 PM GRUENBERG 120
04/12/17 (H) Heard & Held
04/12/17 (H) MINUTE(JUD)
04/14/17 (H) JUD AT 1:00 PM GRUENBERG 120
04/14/17 (H) Moved HB 208 Out of Committee
04/14/17 (H) MINUTE(JUD)
04/15/17 (H) JUD RPT 2DP 5NR
04/15/17 (H) DP: KOPP, CLAMAN
04/15/17 (H) NR: EASTMAN, FANSLER, KREISS-TOMKINS,
LEDOUX, REINBOLD
05/10/17 (H) TRANSMITTED TO (S)
05/10/17 (H) VERSION: HB 208
05/11/17 (S) READ THE FIRST TIME - REFERRALS
05/11/17 (S) L&C, JUD
01/30/18 (S) L&C AT 1:00 PM BELTZ 105 (TSBldg)
01/30/18 (S) Moved HB 208 Out of Committee
01/30/18 (S) MINUTE(L&C)
01/31/18 (S) L&C RPT 2DP 2NR
01/31/18 (S) DP: COSTELLO, MEYER
01/31/18 (S) NR: MICCICHE, GARDNER
02/19/18 (S) JUD AT 1:30 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
NANCY MEADE, General Counsel
Administrative Staff
Alaska Court System
Anchorage, Alaska
POSITION STATEMENT: Introduced SB 151 on behalf of the Alaska
Court System.
REPRESENTATIVE DELENA JOHNSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 208.
ANDREW EVANS, Staff
Representative DeLena Johnson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 208 on behalf of the sponsor.
RICHARD HOMPESCH, Attorney
Hompesch Evans & Everett
Fairbanks, Alaska
POSITION STATEMENT: Provided supporting information for HB 208.
ABIGAIL O'CONNOR, Attorney
Holland & Knight
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 208.
MATTHEW BLATTMACHR, Vice President and Trust Officer
Peak Trust Company
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 208.
DOUGLAS BLATTMACHR, President and CEO
Peak Trust Company
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 208.
ACTION NARRATIVE
1:32:24 PM
CHAIR JOHN COGHILL called the Senate Judiciary Standing
Committee meeting to order at 1:32 p.m. Present at the call to
order were Senators Costello, Kelly, Wielechowski, and Chair
Coghill.
SB 151-NUMBER OF SUPERIOR COURT JUDGES
1:33:45 PM
CHAIR COGHILL announced the consideration of SB 151.
1:34:18 PM
NANCY MEADE, General Counsel, Administrative Staff, Alaska Court
System, Anchorage, Alaska, introduced SB 151, on behalf of the
Alaska Court System speaking to the following sponsor statement:
The Alaska Court System is requesting a change to AS
22.10.120 to increase the number of superior court
judges in the state from 42 to 43. Specifically, the
court is seeking authorization for the additional
superior court seat so that one of the two existing
district court slots in Juneau can be converted to a
superior court judgeship. Superior court judges have
broader jurisdiction than district court judges; the
change would allow the new judge to handle a greater
variety of cases, thus ensuring that the caseload in
Juneau is handled more efficiently and effectively.
The two existing Juneau superior court judges handle
about 590 cases per judge per year, the second-highest
caseload per superior court judge of any court except
Anchorage (where other resources are available to
assist with cases). The high caseload has resulted in
a reduced capacity to schedule and decide matters as
expeditiously as the court system would like. Further,
one of long-serving district court judges in Juneau
has announced his plan to retire effective June 30,
2018. This bill is therefore timely; if passed, the
solicitation for applicants to that soon-to-be-vacant
position will be for a superior court rather than a
district court judge.
The new superior court judge will share a judicial
assistant and law clerk with the existing Juneau
judges, and would have the already-existing courtroom
and materials from the district court position, so
that no additional resources are necessary. The court
system will absorb the additional salary and benefits
for the superior court judge with savings it has
achieved elsewhere through attrition. Therefore,
Senate Bill 151 has a zero fiscal note.
MS. MEADE explained that Juneau also has a magistrate judge that
has been doing master work the last few years to help the
superior court with preliminary hearings, not final decisions.
With this change, that magistrate judge would transition to more
typical duties, leaving the remaining district court judge with
about the same number of filings as the Kenai district court
judge.
She said the court system hasn't asked for a judge the past few
years because it typically costs about $500 thousand. Taking
advantage of the long-serving district court judge's retirement
and combining resources makes this request timely.
1:45:52 PM
SENATOR WIELECHOWSKI referred to table 6.05 of the Court System
FY17 annual report and asked if the number of filings was per
judicial position or the total amount.
CHAIR COGHILL deferred the question until the members and Ms.
Meade had a copy of the report.
1:47:11 PM
SENATOR COSTELLO asked if she had information on the wait times
for cases to be resolved, and if that had changed.
MS. MEADE said she didn't have data on the time to dispositions
but it's always more complicated than it appears. She advised
that there has not been a problem where criminal cases had to be
dismissed because Rule 45 deadlines were not met, but it is
increasingly difficult for parties to get scheduled if their
case doesn't have an absolute deadline to be heard. This has
caused general dissatisfaction with the process.
SENATOR COSTELLO asked what timelines are in statute.
MS. MEADE explained that child in need of aid (CINA) cases have
federally imposed guidelines for bringing a case to permanency.
Those guidelines are tied to federal funding for the Office of
Children's Services and are written in the court's child in need
of aid rules, although parties can agree to extensions under
certain circumstances. This is not uncommon. The court follows
criminal Rule 45 in felony cases, which has a 120-day timeline.
Felony cases often are not resolved in that timeline because the
case is not ready for trial. However, the parties talk about
where they are relative to Rule 45 at every felony hearing.
Everyone is aware of and works towards that timeline, but
logistics sometimes stand in the way of accomplishing it.
SENATOR COSTELLO asked if there were consequences for not
meeting the timeline and if passing SB 151 would help the
situation at the superior court level.
MS. MEADE said the court hopes it will help move cases along
faster. She explained that the court generally grants a Rule 45
waiver if the parties agree that a continuance is needed for due
process. In the rare circumstance that there is a Rule 45
failure the case is dismissed.
SENATOR COSTELLO asked if the court tracks the types of cases it
hears to see trends that might be occurring.
MS. MEADE replied trends might be evident if one were to look at
the statutorily required administrative reports on the Court
System website, but the court never addresses the question of
why cases go up and down. She offered to provide follow up
information on the website and a copy of a pie chart she
prepared on the types of cases and the percentage that is
handled in the different courts.
SENATOR COSTELLO asked what the landscape of cases looks like.
MS. MEADE reported that in Juneau from 2013 to 2017, the number
of probate cases increased 70 percent and the number of child in
need of aid cases increased 60 percent. Statewide the child in
need of aid cases have increased about 50 percent the last four
years and felonies and misdemeanors ebb and flow. Last year the
number of misdemeanors decreased and now there is an increase in
the number of felonies and felony trials.
SENATOR WIELECHOWSKI asked if the number of filings in table
6.05 [on page 157] of the Court System FY17 annual report
represents raw filings.
MS. MEADE replied the table reflects the number of files that
come in the door per superior court judge.
SENATOR WIELECHOWSKI asked if the totals in the last column
titled "Filings per judicial position" represent the combined
filings for superior court judges, district court judges, and
magistrate judges.
MS. MEADE replied it may also include magistrate judges.
SENATOR WIELECHOWSKI noted that there are 19 filings per
judicial position in Angoon. He asked if there is either a
district court judge or magistrate judge in that jurisdiction.
MS. MEADE answered no; the judicial positions in Southeast have
a traveling calendar and Judge George who is based in Sitka
covers both district court and superior court in that location.
1:56:39 PM
SENATOR WIELECHOWSKI asked if the 987 filings in Sitka includes
the filings in Angoon.
MS. MEADE said no; to get a better, but still incomplete,
picture of the actual caseload you would need to add all the
areas the judge is covering. For example, adding the numbers for
Sitka, Angoon, and Prince of Wales gives a better idea of Judge
George's workload. She cautioned that it's difficult to compare
workloads because travel takes time out of a judge's schedule.
SENATOR WIELECHOWSKI asked if the Juneau judge travels.
MS. MEADE said on paper the Juneau judges do travel. One judge
covers Juneau, Yakutat, and Haines and the other covers Juneau,
Hoonah, and Skagway. The last couple of years the presiding
judge has tried to minimize travel for those judges either by
taking it himself or offering it to the Sitka judge.
SENATOR WIELECHOWSKI asked if superior court judges typically
get a law clerk and district court judges typically do not get a
law clerk.
MS. MEADE said that's correct.
SENATOR WIELECHOWSKI asked if the cost of a law clerk for the
proposed additional superior court judge will be absorbed in the
court's budget.
MS. MEADE clarified that the Court System is not seeking a law
clerk for the proposed position, so no additional money is
needed. Everyone thinks having two law clerks for the three
judges will work because the caseload for the sitting superior
court judges will drop. If things change in a few years and the
model is unsustainable, the Court System could hire a law clerk
without coming to the legislature using a PCN (position control
number) from another vacated position. She noted that law clerks
are considered temporary employees and don't get any benefits or
payments into PERS. Their salaries are in the high $60 thousand
range.
SENATOR WIELECHOWSKI asked if that would be the only superior
court judge in the state that doesn't have a law clerk.
MS. MEADE said no; the two Ketchikan superior court judges share
a law clerk, the presiding judge in Anchorage does not have a
law clerk, and judges often share resources when a law clerk
leaves before the end of his or her one-year term.
SENATOR WIELECHOWSKI asked if there is a national standard for
filings per judicial positions.
MS. MEADE said not that she was aware of.
2:01:02 PM
CHAIR COGHILL asked if this could potentially cause downward
pressure and the need for more judge magistrates.
MS. MEADE said the hope and expectation is that this will
alleviate the problem; this change is not expected to create a
ripple effect to other courts in Southeast.
CHAIR COGHILL said he wanted assurance that this wouldn't create
a bubble that appears somewhere else.
MS. MEADE said she appreciates that, but the Court System
expects this change will contain the pressure and resources
where they're needed without hurting other case handling.
2:04:23 PM
CHAIR COGHILL stated that he would hold SB 151 in committee with
public testimony open.
HB 208-TRUSTS; COMM PROP TRUSTS; POWERS OF APPT
2:05:06 PM
CHAIR COGHILL announced the consideration of HB 208.
REPRESENTATIVE DELENA JOHNSON, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 208, stated that this legislation
increases the flexibility of existing trust law. It will restore
Alaska to its place as an attractive trust environment. She
relinquished further introduction to Mr. Evans.
2:06:23 PM
At ease
2:11:02 PM
CHAIR COGHILL reconvened the meeting and invited Mr. Evans to
proceed.
2:11:48 PM
ANDREW EVANS, Staff, Representative DeLena Johnson, Alaska State
Legislature, Juneau, Alaska, introduced HB 208 on behalf of the
sponsor. He explained that Alaska transitioned to a top choice
for the placement of trusts with the passage of the Alaska Trust
Act in 1997. This law effectively eliminated the rule against
perpetuities and allowed the protection of trust assets against
creditors of the beneficiary. The fact that Alaska has no income
tax was another benefit.
The trust market has evolved since then and states like New York
and Nevada have passed legislation that expand the flexibilities
available to trusts. Alaska's ranking of being in the top three
for housing trusts has fallen to number eight. HB 208 will
update, clarify, and increase flexibility in trust regulations,
while maintaining existing protections.
MR. EVANS stated that HB 208 will promote investment in Alaska's
economy and opportunities for growth in the financial services
sector. It will expand a non-natural resource extraction
industry by attracting nonresident trusts and create high-paying
jobs. It will also provide revenue to the state through
registration fees and life insurance premium taxes. These are
expected to bring in between $7 million and $12 million
annually.
2:14:11 PM
MR. EVANS advised that HB 208 expands the flexibility of trust
law in four areas. These are 1) decanting of trusts; 2) powers
of appointment; 3) traceability of assets; and 4) clarification
of trustees' specific powers.
He deferred to Mr. Hompesch to discuss the four areas in detail.
2:15:02 PM
RICHARD HOMPESCH, Attorney, Hompesch Evans & Averett, Fairbanks,
Alaska, explained that trusts are decanted by taking the assets
from one trust and placing them in a second trust that is more
appropriate for the current circumstance. Because Alaska law
allows a trust to continue for one thousand years, what may be
appropriate now may not be appropriate in future years. If a
trustee can distribute the assets from one trust to another,
that provides a lot of options to satisfy the beneficiaries
going forward.
The changes to the decanting statutes proposed in HB 208 make
the system more efficient and clarify points that raised
questions under old law. HB 208 clarifies that the beneficiaries
may waive the 30-day notice requirement, that at least one
beneficiary must be notified, and that the trustee may be
authorized to exercise a power without noticing beneficiaries.
He said this is important for settlors who may want to set up a
silent trust.
2:19:32 PM
MR. HOMPESCH explained that the power of appointment relates to
a person who has the power to distribute or give assets to
another person. HB 208 provides that a non-fiduciary who has the
power of appointment, that is someone that is not a trustee,
cannot be compelled to exercise that power in favor of a
creditor of the person holding the power.
2:20:52 PM
At ease for technical difficulties.
2:23:10 PM
CHAIR COGHILL reconvened the meeting and asked Mr. Hompesch to
continue.
MR. HOMPESCH advised that Section 2 allows the trustee to insure
property of the trust against damage or loss and themselves
against liability from third persons or beneficiaries of the
trust.
MR. HOMPESCH discussed the following points regarding
traceability of assets under HB 208.
· Assets entering the trust may be documented as to their
origin, pre-trust ownership or percentage of ownership
prior to being placed into the trust.
· In the event of divorce, beneficiary conflicts, or other
such events, the assets of the trust are traceable back to
the point they entered the trust.
· Tracing of origin will allow retention of certain tax
benefits even after one of the settlors expires.
2:25:07 PM
SENATOR COSTELLO asked what Alaskans are involved with trusts
and who in Alaska will benefit when the bill passes.
MR. HOMPESCH said many Alaskans want their assets held in trusts
for the benefit of their children and other descendants. This is
helpful in the circumstance of divorce because the assets in a
trust are not subject to division upon divorce. He said he's
surprised at the number of working Alaskans who are interested
in trusts and a lot of wealthy families from elsewhere in the
U.S. have decided to form their trusts under Alaska law because
the law is more flexible. "As Delaware is to corporations, we
wanted Alaska to be as trusts and I think we've succeeded in
large part."
SENATOR COSTELLO asked if Alaskans who have children with
special needs access trusts to ensure their children are taken
care of once they're gone.
MR. HOMPESCH confirmed that a special needs trust can be
created, or a trust can be decanted to a special needs trust if
the need arises.
SENATOR COSTELLO asked if the trust must have some nexus to
Alaska.
MR. HOMPESCH said yes; at least one of the trustees must be a
state resident and some of the administration must occur here.
However, neither the beneficiaries nor the settlor is required
to be a resident of Alaska.
CHAIR COGHILL asked the typical circumstances under which a
trust is decanted.
MR. HOMPESCH said a trust formed under the laws of another state
may be imported and registered under Alaska law and an Alaska
trustee is appointed. The trustees then have the power to decant
under Alaska statutes. Any forum shopping that occurs takes
place before decanting.
CHAIR COGHILL asked if HB 208 will attract new trust business or
make it easier for Alaska trusts to move to another
jurisdiction.
MR. HOMPESCH said his experience is that trusts that are moved
to Alaska and decanted under Alaska law remain in Alaska and HB
208 furthers that goal.
CHAIR COGHILL asked how HB 208 changes the insurance provisions
under Alaska trust law.
MR. HOMPESCH explained that AS 13.36.109 expands the powers of
the trustee to include insuring the trustee against liability
with respect to beneficiaries of the trust.
CHAIR COGHILL asked for an explanation of traceability of assets
as it relates to division of ownership.
MR. HOMPESCH explained that Section 23 of HB 208 adds a new
provision that allows a trustee to divide a trust for income tax
purposes. Unless specifically prohibited, a trustee who has kept
records tracing contributions to the trust by different settlors
may divide the trust such that the specific settlor is treated
as the sole settlor of those contributions.
2:36:56 PM
CHAIR COGHILL opened public testimony on HB 208.
2:37:36 PM
ABIGAIL O'CONNOR, Attorney, Holland & Knight LLP, Anchorage,
Alaska, stated that she is also licensed and practices law in
Florida. She agreed with Mr. Hompesch that HB 208 creates more
flexibility and opportunities, particularly for decanting a
trust. She provided an example to illustrate that changing the
situs of a trust to Alaska makes planning easier for the settlor
and is beneficial to Alaska. She also agreed with Mr. Hompesch
that the goal of the legislation is to enhance Alaska's
desirability as a place to create or move and maintain a trust.
2:40:22 PM
MATTHEW BLATTMACHR, Vice President and Trust Officer, Peak Trust
Company, Anchorage, Alaska, stated that many in the trust
community believe HB 208 will further Alaska's position as a
premier jurisdiction for both Alaskans and non-Alaskans to do
their planning. It's good Alaska.
2:41:21 PM
DOUGLAS BLATTMACHR, President and CEO, Peak Trust Company,
Anchorage, Alaska, referenced an earlier comment about location
of assets and explained that one of the requirements is that
some of the assets must be in Alaska. He shared that Peak Trust
has about $80 million in trust assets on deposit with local
banks which provides more money for the banks to lend and
circulate in the economy. This legislation will be very
beneficial to Alaskans and Alaska.
MR. HOMPESCH listed additional financial benefits to Alaska
including premium taxes on life insurance and fees associated
with forming LLCs related to trusts.
2:45:50 PM
CHAIR COGHILL held HB 208 in committee.
2:46:37 PM
There being no further business to come before the committee,
CHAIR COGHILL adjourned the meeting Senate Judiciary Standing
Committee at 2:46 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 151 - Sponsor Statement.pdf |
SJUD 2/19/2018 1:30:00 PM |
SB 151 |
| SB 151 - Supporting Case Filing Data.pdf |
SJUD 2/19/2018 1:30:00 PM |
SB 151 |
| HB 208 - Sectional Summary.pdf |
SJUD 2/19/2018 1:30:00 PM |
HB 208 |
| HB 208 - Sponsor Statement.pdf |
SJUD 2/19/2018 1:30:00 PM |
HB 208 |
| HB 208 - Supporting Document.pdf |
SJUD 2/19/2018 1:30:00 PM |
HB 208 |
| HB 208 - Presentation.pdf |
SJUD 2/19/2018 1:30:00 PM |
HB 208 |