Legislature(1999 - 2000)

03/22/2000 01:44 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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              SENATE JUDICIARY COMMITTEE                                                                                        
                    March 22, 2000                                                                                              
                      1:44 p.m.                                                                                                 
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                                 
                                                                                                                                
Senator Robin Taylor, Chairman                                                                                                  
Senator Rick Halford, Vice-Chairman                                                                                             
Senator Dave Donley                                                                                                             
Senator Johnny Ellis                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                  
                                                                                                                                
Senator John Torgerson                                                                                                          
                                                                                                                                
COMMITTEE CALENDAR                                                                                                              
                                                                                                                                
SENATE BILL NO. 277                                                                                                             
"An Act relating to the elimination of the Alaska Administrative                                                                
Journal and the establishment of the Alaska Online Public Notice                                                                
System; amending public notice publication requirements for                                                                     
regulations; and providing for an effective date."                                                                              
     -MOVED CSSB 277(JUD)am OUT OF COMMITTEE                                                                                    
                                                                                                                                
SENATE BILL NO. 286                                                                                                             
"An Act relating to the duties and powers of the attorney general."                                                             
     -MOVED CSSB 286(JUD)am OUT OF COMMITTEE                                                                                    
                                                                                                                                
CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 275(JUD)                                                                           
"An Act relating to the Uniform Probate Code, including trusts and                                                              
governing instruments; relating to trustees; relating to under                                                                  
productive trust property; and relating to conveyances of real                                                                  
property and interests in real property by or to trusts."                                                                       
          -HEARD AND HELD                                                                                                       
                                                                                                                                
CS FOR SENATE JOINT RESOLUTION NO. 14(JUD)                                                                                      
Proposing amendments to the Constitution of the State of Alaska                                                                 
relating to the election and the duties of the attorney general.                                                                
     -MOVED CSSJR 14(JUD) OUT OF COMMITTEE                                                                                      
                                                                                                                                
PREVIOUS SENATE COMMITTEE ACTION                                                                                                
                                                                                                                                
SB 286  - See Judiciary Committee minutes dated 3/6/00.                                                                         
                                                                                                                                
SB 277  - See Judiciary Committee minutes dated 3/1/00.                                                                         
                                                                                                                                
HB 275  - No previous action to report.                                                                                         
                                                                                                                                
SJR 14 - See State Affairs minutes dated 3/18/99 and 4/7/99.                                                                    
           Judiciary minutes dated 4-12-99, 2-9-00 and 3-6-00.                                                                  
                                                                                                                                
WITNESS REGISTER                                                                                                                
                                                                                                                                
Ms. Deborah Behr                                                                                                                
Department of Law                                                                                                               
PO Box 110300                                                                                                                   
Juneau, Alaska 99811-0300                                                                                                       
POSITION STATEMENT:      Testified on SB 277                                                                                    
                                                                                                                                
Mr. John Lindback, Chief of Staff                                                                                               
Office of the Lieutenant Governor                                                                                               
PO Box 110015                                                                                                                   
Juneau, Alaska 99811-0015                                                                                                       
POSITION STATEMENT:      Testified on SB 277                                                                                    
                                                                                                                                
Ms. Annette Kreitzer                                                                                                            
Staff to Senator Leman                                                                                                          
State Capitol Building                                                                                                          
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:      Testified on SB 277                                                                                    
                                                                                                                                
Mr. Mark Johnson                                                                                                                
Subcommittee on Privatization for the                                                                                           
Department of Law                                                                                                               
13631 Windward Circle                                                                                                           
Anchorage, Alaska 99516                                                                                                         
POSITION STATEMENT:      Testified on SB 286                                                                                    
                                                                                                                                
Senator Jerry Ward                                                                                                              
State Capitol Building                                                                                                          
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:      Sponsor of SJR 14                                                                                      
                                                                                                                                
Ms. Wilda Rodman                                                                                                                
Staff to Representative Therriault                                                                                              
State Capitol Building                                                                                                          
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:      Testified on HB 275                                                                                    
                                                                                                                                
Mr. Steve Greer                                                                                                                 
Attorney                                                                                                                        
PO Box 24-2903                                                                                                                  
Anchorage, Alaska 99524                                                                                                         
POSITION STATEMENT:      Supports HB 275                                                                                        
Ms. Tammy Troyer                                                                                                                
Staff to Representative Cissna                                                                                                  
State Capitol Building                                                                                                          
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT:      Testified on HB 275                                                                                    
                                                                                                                                
Mr. David Sheftel                                                                                                               
Estate Planning and Business Attorney                                                                                           
550 West 7th Avenue, #705                                                                                                       
Anchorage, Alaska 99501                                                                                                         
POSITION STATEMENT:      Testified on HB 275                                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                                
                                                                                                                                
TAPE 00-15, SIDE A                                                                                                              
Number 001                                                                                                                      
                                                                                                                                
CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to                                                                 
order at 1:44 p.m.  Present were Senator Halford, Senator Donley                                                                
and Chairman Taylor.  The first order of business to come before                                                                
the committee was SB 277.                                                                                                       
                                                                                                                                
                                                                                                                                
         SB 277-ONLINE SYSTEM REPLACES AK ADMIN JOURNAL                                                                         
                                                                                                                                
MS. DEBORAH BEHR, Assistant Attorney General for the Department of                                                              
Law (DOL), commented that during the March 3 Judiciary Committee                                                                
meeting a question was raised about  the definition of "newspaper                                                               
of general circulation."  This wording appears twice in SB 277.                                                                 
The first time is on page 3, line 26 and it sets out the current                                                                
statutory requirement that notice of an agency's intent to adopt a                                                              
regulation must be "published in the newspaper of general                                                                       
circulation..."  Then on page 5, line 7, the bill uses the same                                                                 
language in setting out the method for notifying the public of                                                                  
updated documents already incorporated by reference in a                                                                        
regulation.  Both references use the phrase in the context of                                                                   
regulation adoption.  The Administrative Procedures Act does not                                                                
have a definition of "newspaper of general circulation."  When Ms.                                                              
Behr reviews regulations, she looks to see that they are published                                                              
in a readily available newspaper of wide distribution throughout                                                                
the state.  Often times she will advise agencies to publish in more                                                             
than one newspaper to make sure that the distribution reaches the                                                               
area affected by the regulation.                                                                                                
                                                                                                                                
Number 297                                                                                                                      
                                                                                                                                
SENATOR HALFORD said he was asked by another member of the                                                                      
legislature about a possible amendment requiring an abbreviated                                                                 
form to be used in publications.                                                                                                
                                                                                                                                
MS. BEHR commented that she has seen the amendments, and it is her                                                              
understanding that the Lieutenant Governor's Office prefers to keep                                                             
the bill focused on the online public notice.  The language she has                                                             
seen is old language from a prior bill that does not reflect on the                                                             
online public notice.                                                                                                           
                                                                                                                                
Number 379                                                                                                                      
                                                                                                                                
MR. JOHN LINDBACK, Office of the Lieutenant Governor, noted that in                                                             
1997 the Governor proposed, as a bill, what is embodied in these                                                                
amendments.  Because the lieutenant governor's office is in charge                                                              
of filing regulations, it was designated as the lead agency. The                                                                
regulations were proposed because there were too many complaints                                                                
being received from the public about regulations being adopted                                                                  
without a public hearing.  Mr. Lindback said the newspaper industry                                                             
hated the Governor's bill, and since that time an effort has been                                                               
made trying to convince them that these amendments are not                                                                      
something they need to be afraid of, but they have not been                                                                     
convinced.  Because the amendments are controversial, it is                                                                     
requested they not be attached to this bill.                                                                                    
                                                                                                                                
MS. BEHR noted that there is a technical problem on page two, line                                                              
3 of the amendment.  This section requires the lieutenant governor                                                              
to provide additional public notice, which adds an unnecessary                                                                  
cost.  All of section 4 can be deleted with no effect on the bill.                                                              
                                                                                                                                
SENATOR HALFORD noted this will not remove the requirement to                                                                   
publish, it will only shorten the form.                                                                                         
                                                                                                                                
Number 816                                                                                                                      
                                                                                                                                
MR. LINDBACK commented there is a long list of requirements in the                                                              
statute of what is required for an ad.  The amendments being                                                                    
discussed remove some of these requirements, opening the door for                                                               
some agencies to take the notices out of the back of the newspaper                                                              
and put them into display ad space.  There is also a provision                                                                  
allowing a coordinated advertising approach allowing municipal                                                                  
advertising pages.  The newspaper industry has been dead set                                                                    
against these provisions.                                                                                                       
                                                                                                                                
SENATOR HALFORD moved to adopt amendment 1-LS1407\A.1, as modified.                                                             
                                                                                                                                
SENATOR ELLIS objected.                                                                                                         
                                                                                                                                
The roll was taken on the motion.  Voting yea:  SENATOR DONLEY,                                                                 
SENATOR HALFORD and CHAIRMAN TAYLOR.  Voting nay:  SENATOR ELLIS,                                                               
and so the amendment was adopted.                                                                                               
                                                                                                                                
SENATOR HALFORD noted the bill now has a positive fiscal note                                                                   
because it saves the state money.                                                                                               
                                                                                                                                
MS. BEHR commented that the last time DOL asked for a fiscal note,                                                              
they were told it would be awash because display ads are a little                                                               
more expensive.                                                                                                                 
                                                                                                                                
MR. LINDBACK said the idea behind the amendment is to get a more                                                                
prominent ad for the money, not that it will cost any less.                                                                     
                                                                                                                                
MS. ANNETTE KREITZER, staff to Senator Leman, thanked the committee                                                             
for entertaining the amendment.  The amendment does give the                                                                    
lieutenant governor some discretion in terms of what state agencies                                                             
are required to do with legal notices.  The Department of                                                                       
Transportation (DOT) has found a way to save money--about $100,000,                                                             
by using the smaller and shorter format, while still informing the                                                              
public.                                                                                                                         
                                                                                                                                
Number 1068                                                                                                                     
                                                                                                                                
MR. LINDBACK stated that DOT has in deed saved money, but it is not                                                             
because of these provisions.  The provisions being discussed were                                                               
not required at the time--DOT just wrote better ads.  Display ad                                                                
space is more expensive and that is why the fiscal note was                                                                     
considered to be awash.  There is a possibility that advertising                                                                
money can be saved by using the coordinated approach that is                                                                    
contemplated in one section of the amendments.                                                                                  
                                                                                                                                
Number 1130                                                                                                                     
                                                                                                                                
SENATOR DONLEY moved SB 277am from committee with individual                                                                    
recommendations.  There being no objection, the motion carried.                                                                 
                                                                                                                                
          SB 286-DUTIES AND POWERS OF ATTORNEY GENERAL                                                                          
                                                                                                                                
CHAIRMAN TAYLOR moved to delete on page 1, line 5 the words "state,                                                             
including the," because an inherent conflict is generated.  This                                                                
restores the original language of the bill requiring the attorney                                                               
general  to be subject to the power of the legislature in making                                                                
appropriations and settling civil action cases.  There being no                                                                 
objection, amendment 1 carried.                                                                                                 
                                                                                                                                
Number 1305                                                                                                                     
                                                                                                                                
SENATOR DONLEY recommended a new provision saying the attorney                                                                  
general shall defend the constitution of Alaska.                                                                                
                                                                                                                                
SENATOR DONLEY moved to insert in Section 1(b), (1) defend the                                                                  
constitution of the state of Alaska, and to renumber the rest of                                                                
the section accordingly.  There being no objection, amendment 2                                                                 
carried.                                                                                                                        
                                                                                                                                
MR. MARK JOHNSON, Subcommittee on Privatization for the Department                                                              
of Law (DOL), noted the legislature has the ability to define the                                                               
scope and nature of the responsibilities of the AG.                                                                             
                                                                                                                                
CHAIRMAN TAYLOR asked Mr. Johnson to further discuss the remaining                                                              
provisions on page 2 of SB 286--both the new language and the                                                                   
deleted language.                                                                                                               
                                                                                                                                
MR. JOHNSON commented that on page 2, lines 8 and 9 there is a                                                                  
significant deletion relating to common law powers.  This language                                                              
was deleted because, if a limited constitutional government is                                                                  
desired, the powers granted should not reflect a blank check, which                                                             
is what the present language reflected.  The addition of subsection                                                             
(c) will set into statutory law that which was believed to be the                                                               
case all along.                                                                                                                 
                                                                                                                                
Number 1426                                                                                                                     
                                                                                                                                
CHAIRMAN TAYLOR moved to amend line 15 by adding the words "enact                                                               
laws."  The following is how Section 1(c) will read:  (c) The                                                                   
attorney general may, subject to the power of the legislature to                                                                
enact laws, make appropriations,....  There being no objection,                                                                 
amendment 3 carried.                                                                                                            
                                                                                                                                
Number 1597                                                                                                                     
                                                                                                                                
SENATOR ELLIS commented he thinks it is a mistake to eliminate the                                                              
common law powers of the AG.  He wonders what specific abuse of                                                                 
power has cause the Chairman to want to limit the office like this                                                              
in the future.  There are areas of the law that change rapidly, and                                                             
he does not understand why the committee should want to  minimize                                                               
the powers of the office rather than leave them as they are--being                                                              
fairly expansive in terms of purview and power.  Legislatures are                                                               
slow to keep up with changing areas of the law and it is good to                                                                
know there is a chief legal officer who will keep up with these                                                                 
things and exercise power in the public interest.                                                                               
                                                                                                                                
Number 1658                                                                                                                     
                                                                                                                                
CHAIRMAN TAYLOR commented that he and Senator Ellis would like an                                                               
analogy of specific abuses that went beyond the AG's power, and                                                                 
where that abuse limited the private sector or stifled business in                                                              
some way.                                                                                                                       
                                                                                                                                
MR. JOHNSON noted the Exxon Valdez settlement is an example of                                                                  
where things were stretched about as far as they could go.                                                                      
                                                                                                                                
SENATOR DONLEY said Cleary and Molly Hootch are also examples of                                                                
the AG's abuse of power.                                                                                                        
                                                                                                                                
CHAIRMAN TAYLOR asked Mr. Johnson to get back to the committee with                                                             
a further analysis on this subject.                                                                                             
                                                                                                                                
SENATOR DONLEY moved SB 286 as amended from committee with                                                                      
individual recommendations.                                                                                                     
                                                                                                                                
SENATOR ELLIS objected.                                                                                                         
                                                                                                                                
The roll was taken on the motion.  Voting yea:  SENATOR HALFORD,                                                                
SENATOR DONLEY and CHAIRMAN TAYLOR.  Voting nay:  SENATOR ELLIS,                                                                
and so the motion carried.                                                                                                      
                                                                                                                                
              SJR 14-ELECTION OF ATTORNEY GENERAL                                                                               
                                                                                                                                
SENATOR WARD, sponsor of SJR 14, commented he likes the 1-LS0588\H,                                                             
(Kurtz) draft of SJR 14 more than any version being offered.                                                                    
                                                                                                                                
SENATOR HALFORD moved CSSJR 14(JUD) from committee with individual                                                              
recommendations.                                                                                                                
                                                                                                                                
SENATOR ELLIS objected.                                                                                                         
                                                                                                                                
The roll was taken on the motion.  Voting yea:  SENATOR DONLEY,                                                                 
SENATOR HALFORD and CHAIRMAN TAYLOR.  Voting nay:  SENATOR ELLIS,                                                               
and so the motion carried.                                                                                                      
Number 1877                                                                                                                     
                                                                                                                                
          HB 275-UNIFORM PROBATE CODE/TRUSTS/PROPERTY                                                                           
                                                                                                                                
MS. WILDA RODMAN, staff to Representative Therriault, stated that                                                               
HB 275 is intended to enhance the estate planning climate in the                                                                
state of Alaska.  The bill augments and clarifies the Uniform                                                                   
Probate Code that was adopted in 1996.  The changes in HB 275 were                                                              
drafted by estate planning attorneys and have been through                                                                      
extensive review on a state and national level.  The changes are,                                                               
for the most part, based on other state statutes and allow Alaska                                                               
residents to take advantage of federal tax provisions that have                                                                 
been passed since the enactment of the uniform probate law.                                                                     
                                                                                                                                
MS. RODMAN gave the following sectional analysis of HB 275.                                                                     
                                                                                                                                
Section 1 pertains to "nonademption of specific devises."  This                                                                 
section deals with the specific instance of nonademption when the                                                               
person creating the will (decedent) has sold the gift (specific                                                                 
devise) prior to the decedent's death and is still owed money for                                                               
the property.  The question of who ultimately receives the proceeds                                                             
should not depend on whether the decedent received full or partial                                                              
payment before death. Presently if the property were sold and the                                                               
decedent did not receive full payment before death, the payment                                                                 
received after death and any promissory note will go to the                                                                     
specific devisee--this will not happen under HB 275.  Instead, the                                                              
payment and any promissory note will be treated in the same manner                                                              
as all other property that the decedent owned, and will be                                                                      
distributed equally among the beneficiaries.                                                                                    
                                                                                                                                
Section 2 makes the rules of construction under 13.12.606                                                                       
applicable to trusts as well as wills.  The second part of section                                                              
2, section 13.12.720, allows Alaska residents eligibility for a new                                                             
IRS deduction for a family-owned business.  In addition to the                                                                  
present $600,000 tax shelter, people will be eligible for an                                                                    
additional $675,000 tax shelter for their new family-owned                                                                      
business.  This is to prevent people from having to sell their                                                                  
business in order to pay the taxes on their inheritance.  This                                                                  
lowers and raises the ceiling between the tax shelter and family                                                                
owned business deduction.                                                                                                       
                                                                                                                                
Section 3 will change the amount of interest that is paid on a                                                                  
pecuniary devise.  By state law if a person wills money, that                                                                   
pecuniary bequest has to accrue interest, which comes from the                                                                  
residuary estate.  Presently, the money accrues interest at the                                                                 
legal rate of 10.5%.  HB 275 changes the interest rate from 10.5%                                                               
to a discount borrowing rate (variable rate) taken from AS                                                                      
45.45.010(b).                                                                                                                   
                                                                                                                                
The provisions in section 4 do not apply to a marital pecuniary                                                                 
devise, this section enables people to qualify for an IRS                                                                       
deduction.                                                                                                                      
                                                                                                                                
Section 5 gives the personal representative more discretion over                                                                
how to distribute the residuary estate assets to devisees, as long                                                              
as it is in the best interests of the distributees.  HB 275 has                                                                 
added AS 13.16.560(a)4 which says a person can make non pro-rata                                                                
distributions of assets.  This means if there are two devisees, and                                                             
a decedent has a life insurance policy and an IRA account both                                                                  
policies can be split down the middle and half of each account can                                                              
be given to each devisee, this is so neither devisee will have to                                                               
bear the full tax consequence.                                                                                                  
                                                                                                                                
Section 6 relates to restrictions on exercising certain trustee                                                                 
powers.  This section says that for tax purposes a person who is                                                                
both the trustee and beneficiary can only distribute those assets                                                               
to himself for his reasonable comfort.  There is a difference                                                                   
between "reasonable comfort" and "comfort and happiness."  Support                                                              
in "reasonable comfort" is not taxable but support for "comfort,                                                                
welfare or happiness" is taxable.  The bill says that unless                                                                    
specifically stated in the trust document, the spouse will only                                                                 
have the right to distribute principal in a manner limited to an                                                                
ascertainable standard.                                                                                                         
                                                                                                                                
Tape 00-16, Side B                                                                                                              
                                                                                                                                
Section 7 relates to new IRS allowances that allow a person to                                                                  
divide a single trust into two or more separate trusts as long as                                                               
each trust remain substantially identical in terms of the existing                                                              
trust, the only difference is that they be administered separately.                                                             
Trusts written before this new IRS ruling may not have this                                                                     
provision, and section 7 allows for the division of a trust without                                                             
having to go to court for approval.                                                                                             
                                                                                                                                
Section 8 is the application of special distribution provisions.                                                                
This section takes the tried and true provisions that apply to the                                                              
distribution of wills and applies them to the administration of a                                                               
trust.                                                                                                                          
                                                                                                                                
Section 9 relates back to Sections 6 and 7, Title 13, Chapter 36.                                                               
The only other place that "party in interest" appears in Chapter 36                                                             
is in sections 7 and 9.  These sections are the restrictions on the                                                             
trustees power to distribute assets (ascertainable standards), and                                                              
the division of trust.  This section says if a person knows of the                                                              
tax benefits and they still want to give Uncle Sam more money, they                                                             
can opt out.  Section 9 defines who has to sign off on the trust in                                                             
order to opt out of these two provisions.                                                                                       
                                                                                                                                
Number 2310                                                                                                                     
                                                                                                                                
SENATOR ELLIS asked about mandatory distribution in section 9.                                                                  
                                                                                                                                
MS. RODMAN answered that this language causes there to be an                                                                    
increase in the number of people who have to sign.  This provision                                                              
is only to opt out--not who can go to court or who is a party of                                                                
interest.                                                                                                                       
                                                                                                                                
MS. RODMAN explained that section 10 is for tax purposes.  The                                                                  
beneficiary of the trust can require the trust to produce income,                                                               
this relates to the qualification for the marital deduction.                                                                    
                                                                                                                                
     This section provides that in those trusts where the spouse is                                                             
     entitled to all the income earned by a trust paid no less                                                                  
     frequently than annually, and a marital deduction is claimed                                                               
     for the trust, the spouse has the power to require the trustee                                                             
     to make the trust assets produce income.  This simple                                                                      
     provision is a required statement in all trusts intending to                                                               
     qualify for the marital deduction.  This section provides the                                                              
     required language for those trusts lacking this provision.                                                                 
                                                                                                                                
MS. RODMAN noted that section 11 ends the confusion over the                                                                    
ability to transfer real property to or from a trust in the name of                                                             
the trust.  This section also helps title companies prevent future                                                              
legal problems.                                                                                                                 
                                                                                                                                
MS. RODMAN indicated the amendment she distributed to the committee                                                             
has been reviewed by the Department of Law, resulting in one change                                                             
being made to the conveyance section.                                                                                           
                                                                                                                                
Number 2081                                                                                                                     
                                                                                                                                
CHAIRMAN TAYLOR moved to amend page 8, line 24, deleting the word                                                               
"mandatory," and on page 8, line 26, also deleting the word                                                                     
"mandatory."  The new language will read:                                                                                       
                                                                                                                                
     (ii) each beneficiary entitled to receive a distribution of                                                                
     income or principal from a trust or, if a beneficiary entitled                                                             
     to receive a distribution of income or principal from a trust                                                              
     is not 19 years of age or is incapacitated, the beneficiary's                                                              
     legal representative under applicable law or the beneficiary's                                                             
     agent under a durable power of attorney; and                                                                               
                                                                                                                                
MR. STEVE GREER commented there is no problem in going along with                                                               
the amendment because Section 9 is a provision that no one will                                                                 
ever use.  The entire bill is a safety net to protect against                                                                   
sloppy drafting, preventing a bad tax result.  Section 9 is in the                                                              
bill because Alaska has taken its laws from other states that have                                                              
such a provision.                                                                                                               
                                                                                                                                
CHAIRMAN TAYLOR said as long as the wording is "mandatory" there is                                                             
a limited number of people involved, but once that wording is                                                                   
removed it will never be known who the signatures have to be                                                                    
collected from.                                                                                                                 
                                                                                                                                
MR. GREER noted the intent of the amendment was to protect people,                                                              
but people are not protected because it is impossible to elect out                                                              
of the provisions.  He does not think that the people who drafted                                                               
the amendment really understood what it was about.                                                                              
                                                                                                                                
MS. TAMMY TROYER, staff to Representative Cissna, stated that                                                                   
Representative Cissna's concern is that beneficiaries who are not                                                               
"mandatory distribution" and are at the discretion of the trustee,                                                              
should not be allowed to be present when electing to agree to the                                                               
provision to opt out.                                                                                                           
                                                                                                                                
CHAIRMAN TAYLOR asked how people can be hurt by not being present                                                               
when a group of people opt out of the trust enabling them to                                                                    
receive their distribution--this would be the only reason to opt                                                                
out of the trust.                                                                                                               
                                                                                                                                
MS. TROYER responded it is to opt out of the provisions outlined in                                                             
sections 6 and 7 and not to opt out of the trust.                                                                               
                                                                                                                                
MR. GREER responded that Representative Cissna did not know what                                                                
she was proposing with the amendment.  There is pending federal                                                                 
legislation, the Uniform Trust Act, which will help fill the void                                                               
in states that do not already have detailed laws indicating how                                                                 
trusts should operate--section 9 goes beyond the Uniform Trust Act.                                                             
This section was included only because it was felt that the other                                                               
states Alaska looked at for direction included it for                                                                           
constitutional reasons.  But if the category of people who have to                                                              
opt out is opened up, it will be impossible for the trust to elect                                                              
out of this provision.                                                                                                          
                                                                                                                                
MS. TROYER interjected that Representative Cissna is aware of this,                                                             
and the intent is not to include a distant relative who could                                                                   
potentially be a beneficiary.  What Representative Cissna is trying                                                             
to do is open the door for beneficiaries who are now at the                                                                     
discretion of the trustee.  The statute, on line 24, says a person                                                              
has to be entitled to a mandatory distribution, and often times                                                                 
there are no mandatory distributions--distributions are at the                                                                  
discretion of the trustee.  Representative Cissna would like to                                                                 
make sure these beneficiaries are included.                                                                                     
                                                                                                                                
Number 1705                                                                                                                     
                                                                                                                                
SENATOR DONLEY asked if notification is the intent of "party of                                                                 
interest."                                                                                                                      
                                                                                                                                
MS. TROYER answered to "elect to agree" to the provisions outlined                                                              
in sections 6 and 7.                                                                                                            
                                                                                                                                
MR. GREER responded that is not correct.  It is to define those                                                                 
people who can elect to not be subject to provisions in sections 6                                                              
and 7.                                                                                                                          
                                                                                                                                
MS. TROYER agreed, and said it allows the beneficiaries to be part                                                              
of the discussion of whether or not to opt out of the provisions.                                                               
                                                                                                                                
SENATOR DONLEY clarified it has nothing to do with notice.                                                                      
                                                                                                                                
MS. TROYER agreed.                                                                                                              
                                                                                                                                
MR. GREER explained that the whole bill, including sections 6 and                                                               
7, is safety net legislation that other states already provide.  It                                                             
is meant to protect people who have their trusts drawn by lawyers                                                               
who do not keep current with state law and for people who have had                                                              
their trust prepared by competent estate planning attorneys but who                                                             
have not keep the trust updated.  This bill is meant to take care                                                               
of commonly occurring traps that allow the federal government to                                                                
get more money than was originally intended.  There is nothing                                                                  
controversial about this bill.  The importance of section 9 is very                                                             
low in comparison to the rest of the bill and it should have                                                                    
nothing to do with the bill passing or not. Section 9 is just about                                                             
who can elect out of the safety net provisions.                                                                                 
                                                                                                                                
Number 1537                                                                                                                     
                                                                                                                                
SENATOR HALFORD commented that he is not comfortable with moving                                                                
the bill out of committee until he has more time to look at it.                                                                 
                                                                                                                                
MR. SHEFTEL commented that HB 275 is a safety net piece of                                                                      
legislation that is designed to remedy obsolete trusts and poor tax                                                             
planning.   Most of the provisions in the bill have been taken from                                                             
legislation that has been recommended by national experts.  HB 275                                                              
is designed to bring Alaska law relating to estate planning up to                                                               
contemporary standards with that of other states.                                                                               
                                                                                                                                
SENATOR ELLIS asked to hold the amendment and the bill for further                                                              
thought.                                                                                                                        
                                                                                                                                
There being no further business to come before the committee,                                                                   
CHAIRMAN TAYLOR adjourned the meeting at 2:56 p.m.                                                                              
                                                                                                                                
                                                                                                                                

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