Legislature(2011 - 2012)BELTZ 105 (TSBldg)

02/01/2012 01:30 PM JUDICIARY


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01:32:48 PM Start
01:33:39 PM SB173
01:36:18 PM SB165
02:44:54 PM Update on Case Dismissals
03:06:50 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 165 PRINCIP.& INC/PROBATE/UTMA/RETIREMT/ETC. TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
= SB 173 2012 REVISOR'S BILL
Moved SB 173 Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE JUDICIARY STANDING COMMITTEE                                                                             
                        February 1, 2012                                                                                        
                           1:32 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Hollis French, Chair                                                                                                    
Senator Bill Wielechowski, Vice Chair                                                                                           
Senator Joe Paskvan                                                                                                             
Senator Lesil McGuire                                                                                                           
Senator John Coghill                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                              
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 173                                                                                                             
"An Act  making corrective amendments  to the Alaska  Statutes as                                                               
recommended  by the  revisor of  statutes; and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     - MOVED SB 173 OUT OF COMMITTEE                                                                                            
                                                                                                                                
SENATE BILL NO. 165                                                                                                             
"An  Act relating  to property  exemptions for  retirement plans;                                                               
relating to  pleadings, orders, liability, and  notices under the                                                               
Uniform  Probate  Code;  relating  to the  Alaska  Principal  and                                                               
Income Act;  relating to the  Alaska Uniform Transfers  to Minors                                                               
Act; relating  to the disposition  of human remains;  relating to                                                               
insurable  interests for  life  insurance  policies; relating  to                                                               
transfers  of  individual  retirement   plans;  relating  to  the                                                               
community property of married persons;  and amending Rule 301(a),                                                               
Alaska Rules of Evidence."                                                                                                      
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
UPDATE ON CASE DISMISSALS                                                                                                       
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 173                                                                                                                  
SHORT TITLE: 2012 REVISOR'S BILL                                                                                                
SPONSOR(s): RULES BY REQUEST OF LEGISLATIVE COUNCIL                                                                             
                                                                                                                                
01/23/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/23/12       (S)       JUD                                                                                                    
01/30/12       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
01/30/12       (S)       Heard & Held                                                                                           
01/30/12       (S)       MINUTE(JUD)                                                                                            
                                                                                                                                
BILL: SB 165                                                                                                                  
SHORT TITLE: PRINCIP.& INC/PROBATE/UTMA/RETIREMT/ETC.                                                                           
SPONSOR(s): JUDICIARY                                                                                                           
                                                                                                                                
01/17/12       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/17/12       (S)       JUD, FIN                                                                                               
02/01/12       (S)       JUD AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
CINDY SMITH, Staff to Senator French, and                                                                                       
Aide to the Senate Judiciary Committee                                                                                          
Alaska State Legislature                                                                                                        
Juneau, AK                                                                                                                      
POSITION STATEMENT: Introduced SB 165.                                                                                        
                                                                                                                                
DAVID SHAFTEL, Attorney                                                                                                         
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Provided a sectional analysis for SB 165.                                                                 
                                                                                                                                
DOUGLAS BLATTMACHR, President and CEO                                                                                           
Alaska Trust Company                                                                                                            
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Stated support for SB 165.                                                                                
                                                                                                                                
NANCY MEADE, General Counsel                                                                                                    
Alaska Court System                                                                                                             
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Provided information on dismissal rates for                                                               
FY11 felony cases.                                                                                                              
                                                                                                                                
JOHN SKIDMORE, Director                                                                                                         
Criminal Division                                                                                                               
Department of Law                                                                                                               
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Discussed FY11 felony dispositions from the                                                               
DOL perspective.                                                                                                                
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:32:48 PM                                                                                                                    
CHAIR  HOLLIS   FRENCH  called  the  Senate   Judiciary  Standing                                                             
Committee meeting  to order at 1:32  p.m. Present at the  call to                                                               
order  were  Senators  Coghill,  Paskvan,  McGuire,  and  French.                                                               
Senator Wielechowski during the opening remarks.                                                                                
                                                                                                                                
                   SB 173-2012 REVISOR'S BILL                                                                               
                                                                                                                                
1:33:39 PM                                                                                                                    
CHAIR  FRENCH announced  the consideration  of SB  173. He  noted                                                               
that the bill was heard  previously and the assistant revisor was                                                               
available if  there were questions. Finding  no public testimony,                                                               
he closed  it. Finding  no committee  discussion, he  solicited a                                                               
motion.                                                                                                                         
                                                                                                                                
1:34:18 PM                                                                                                                    
SENATOR WIELECHOWSKI moved  to report SB 173  from committee with                                                               
individual recommendations and attached fiscal note.                                                                            
                                                                                                                                
CHAIR FRENCH announced that without  objection, SB 173 moved from                                                               
the Senate Judiciary Standing Committee.                                                                                        
                                                                                                                                
1:34:34 PM                                                                                                                    
At ease from 1:34 p.m. to 1:36 p.m.                                                                                             
                                                                                                                                
        SB 165-PRINCIP.& INC/PROBATE/UTMA/RETIREMT/ETC.                                                                     
                                                                                                                                
1:36:18 PM                                                                                                                    
CHAIR FRENCH announced the consideration  of SB 165 and asked for                                                               
a  motion  to  adopt  the  proposed  committee  substitute  (CS),                                                               
version D.                                                                                                                      
                                                                                                                                
1:36:45 PM                                                                                                                    
SENATOR WIELECHOWSKI  moved [to  adopt the work  draft CS  for SB                                                               
165, labeled 27-LS0819\D, as the working document.]                                                                             
                                                                                                                                
CHAIR FRENCH found no objection  and announced that version D was                                                               
before the committee.                                                                                                           
                                                                                                                                
CINDY  SMITH, staff  to Senator  French  and aide  to the  Senate                                                               
Judiciary Committee, read  the sponsor statement for  SB 165 into                                                               
the record.                                                                                                                     
                                                                                                                                
     Alaska   first   modernized   its  trust   and   estate                                                                    
     legislation in  1997. Since then, the  trust and estate                                                                    
     planning  community continuously  makes recommendations                                                                    
     to  the legislature  for  updates  and improvements  to                                                                    
     Alaska's trust  and estate laws  to ensure  that Alaska                                                                    
     can  continue to  provide  the  best possible  planning                                                                    
     solutions.   Alaska's  trust   and  estate   laws  have                                                                    
     significant impact  on our economy,  bringing literally                                                                    
     millions  of dollars  to the  state  and creating  jobs                                                                    
     within the trust, banking, insurance and legal fields.                                                                     
                                                                                                                                
     Senate Bill  165 provides for amendments  to statute in                                                                    
     the following areas:                                                                                                       
                                                                                                                                
         · Extends protection for retirement plan  assets to                                                                    
           the beneficiaries of retirement plans (often the                                                                     
           surviving spouse).                                                                                                   
         · Provides means of  representation for  minors and                                                                    
           incapacitated    persons    in    dealing    with                                                                    
           settlements    of    accounts    or    settlement                                                                    
           agreements.                                                                                                          
         · Amends the 2003 Alaska  Principal and  Income Act                                                                    
           to conform with current IRS regulations.                                                                             
         · Provides rules  concerning  who may  control  the                                                                    
           disposition of decedents' remains.                                                                                   
         · Makes conforming  amendments   to  Alaska's  laws                                                                    
           regarding insurable interests to align with                                                                          
           changes to the Uniform Trust Code.                                                                                   
         · Provides that IRA  interests  can be  voluntarily                                                                    
           transferred to a family member or trust.                                                                             
         · Makes amendments to  Alaska's community  property                                                                    
           provisions to update and clarify the ownership                                                                       
           of community property.                                                                                               
         · Allows a  beneficiary  to extend  the  time  that                                                                    
           funds will be held in a Uniform Transfer to                                                                          
           Minors Account                                                                                                       
                                                                                                                                
Passage of SB 165 will ensure that Alaska remains the                                                                           
premier state in which to establish trusts and estates.                                                                         
                                                                                                                                
CHAIR FRENCH asked Mr. Shaftel to provide the sectional                                                                         
analysis.                                                                                                                       
                                                                                                                                
1:39:08 PM                                                                                                                    
DAVID SHAFTEL,  Attorney, said  he works in  the areas  of estate                                                               
planning and trust and estate  administration, and is a member of                                                               
an  informal  group of  attorneys,  trust  officer and  financial                                                               
planners who  have been working  with the Legislature  since 1997                                                               
to  suggest improvements  to  Alaska trust  and  estate laws.  He                                                               
described  SB  165  as  an   excellent  bill  with  a  number  of                                                               
substantial provisions  that will improve Alaska  estate planning                                                               
statutes.                                                                                                                       
                                                                                                                                
1:42:02 PM                                                                                                                    
MR.  SHAFTEL provided  the following  sectional  analysis for  SB                                                               
165.                                                                                                                            
                                                                                                                                
Section 1  deals with asset  protection for  inherited retirement                                                               
plans.  Current  statute  protects an  individual's  interest  in                                                               
their retirement plan, such as  an IRA, from creditor claims, and                                                               
this  extends  this  protection  to  claims  of  a  beneficiary's                                                               
creditors. This provision follows federal bankruptcy law.                                                                       
                                                                                                                                
SENATOR PASKVAN asked if the asset has to remain in the IRA.                                                                    
                                                                                                                                
MR. SHAFTEL  replied it has to  remain in the IRA,  which is most                                                               
advantageous  to  the  beneficiary  such as  a  surviving  spouse                                                               
because it can be spread it  over his or her lifetime. Income tax                                                               
is only paid when the funds are distributed.                                                                                    
                                                                                                                                
SENATOR PASKVAN  asked if there is  a cap on the  amount that can                                                               
be withdrawn and still protected under federal bankruptcy law.                                                                  
                                                                                                                                
MR.  SHAFTEL  replied that  under  the  2005 bankruptcy  Act  the                                                               
maximum amount  that can be  protected is $1 million.  That's for                                                               
an IRA that an individual creates  and contributes to over his or                                                               
her lifetime and is rolled over.                                                                                                
                                                                                                                                
SENATOR  PASKVAN  said  he  was focusing  on  the  income  stream                                                               
flowing from the corpus. He asked  if an income stream of $20,000                                                               
per month, for example, would be protected.                                                                                     
                                                                                                                                
MR.   SHAFTEL  replied   the  funds   are   not  protected   once                                                               
distributed; this provision protects the funds while in the IRA.                                                                
                                                                                                                                
1:46:06 PM                                                                                                                    
SENATOR FRENCH  summarized that if he  were to pass away  and his                                                               
wife  was the  beneficiary of  his  $1 million  IRA, those  funds                                                               
would be protected  against federal bankruptcy claims  as well as                                                               
state  bankruptcy claims  under SB  165. He  asked if  a $100,000                                                               
withdrawal  would  be  subject  to  creditor  claims  under  both                                                               
federal and state law.                                                                                                          
                                                                                                                                
MR. SHAFTEL answered  yes. A creditor cannot reach any  of the $1                                                               
million while  it's in the fund,  but a creditor could  reach any                                                               
distribution  from   that  fund   made  over   the  beneficiary's                                                               
lifetime.                                                                                                                       
                                                                                                                                
CHAIR  FRENCH commented  that it's  an interesting  balancing act                                                               
between the creditor and the inheritor.                                                                                         
                                                                                                                                
1:47:59 PM                                                                                                                    
MR. SHAFTEL said the next  substantive provision is in Section 4,                                                               
representation   for  settlement   agreements.  Current   statute                                                               
provides   that  minors   and   incapacitated   persons  may   be                                                               
represented by another  person who has the same  interests in the                                                               
matter. This clarifies that it  applies to both judicial and non-                                                               
judicial settlements.                                                                                                           
                                                                                                                                
Sections  6-22 amend  the 2003  the Alaska  Principal and  Income                                                               
Act, which allows a person creating  a new trust, or a trustee of                                                               
an   existing  trust,   to  adopt   a  "unitrust"   approach  for                                                               
determining  the  income  of  the  trust  that  may  have  to  be                                                               
distributed annually.  This amendment allows a  trustee to select                                                               
a  unitrust  rate ranging  from  three  percent to  five  percent                                                               
averaged  over 5  years,  rather than  the  current four  percent                                                               
rate.  An  explicit  definition  of  income  is  provided  for  a                                                               
unitrust and  language was  added to provide  an ordering  of the                                                               
distributions  among  types  of  income and  principal.  The  new                                                               
provisions  also  clarify  how   unitrust  rules  will  apply  to                                                               
retirement benefits..                                                                                                           
                                                                                                                                
1:56:18 PM                                                                                                                    
SENATOR PASKVAN  asked, under the disqualified  trustee issue, if                                                               
there  were fiduciary  standards  in law  that  the trustee  must                                                               
abide by.                                                                                                                       
                                                                                                                                
MR. SHAFTEL  answered yes; the  fiduciary standard is  very high.                                                               
If  there is  an  abuse  of discretion  and  damages result,  the                                                               
injured parties  can go to court  and the trustee could  lose his                                                               
or her position and be held liable.                                                                                             
                                                                                                                                
SENATOR PASKVAN asked if there  are disclosure requirements as to                                                               
potential conflicts of interest.                                                                                                
                                                                                                                                
MR.  SHAFTEL  replied  there isn't  an  up-front  disclosure  for                                                               
trustees, but the practice in his  office, and others, is to give                                                               
newly appointed  trustees a pamphlet that  discusses their duties                                                               
and responsibility so  they're made aware up  front. The trustees                                                               
are  required to  sign that  they've read  the pamphlet  and that                                                               
becomes part of the trust packet.                                                                                               
                                                                                                                                
CHAIR FRENCH asked  what the difference is between a  trust and a                                                               
unitrust.                                                                                                                       
                                                                                                                                
MR. SHAFTEL explained that the unitrust  is a term for the annual                                                               
payment  that's  made  that  is  based on  a  percentage  of  the                                                               
principal.  The  trust  itself   is  a  broader  instrument.  For                                                               
example,  you put  $500,000  in a  trust for  your  wife and  the                                                               
remainder to  your kids.  The trust  concept is  that you  name a                                                               
trustee  for that  trust,  a  bank for  example.  That trust  has                                                               
certain assets and those are owned  by the trustee, the bank, and                                                               
the bank must  administer that trust according  to the directions                                                               
in the  trust instrument  for the  benefit of  the beneficiaries.                                                               
Your wife  and children  are the  beneficiaries in  this example.                                                               
The unitrust amount  refers to the fact that you  may have set up                                                               
the trust  and directed an  annual payout  to your wife  equal to                                                               
five percent of the assets in  that trust. That concept in itself                                                               
is called the unitrust.                                                                                                         
                                                                                                                                
CHAIR  FRENCH commented  that it's  simply a  designation of  the                                                               
payout mechanism and percentage.                                                                                                
                                                                                                                                
MR. SHAFTEL agreed.                                                                                                             
                                                                                                                                
2:00:55 PM                                                                                                                    
CHAIR FRENCH asked  if the percentages established  in Section 11                                                               
might have to be adjusted in  the future in order to maintain the                                                               
strength of a trust's buying power over time.                                                                                   
                                                                                                                                
MR. SHAFTEL  replied the Legislature  could do that,  and another                                                               
way would  be through the  Act itself, which  contains provisions                                                               
for going to court to get  a different percentage. If the trustee                                                               
decides to  go to court  to petition for a  different percentage,                                                               
everyone gets  noticed so that  they can exercise their  right to                                                               
participate. In  the above  example, both  the wife  and children                                                               
would have the right to participate.                                                                                            
                                                                                                                                
CHAIR  FRENCH  noted that  the  court  process was  addressed  in                                                               
Section 14.                                                                                                                     
                                                                                                                                
2:03:22 PM                                                                                                                    
SENATOR  COGHILL  asked if  the  three  percent to  five  percent                                                               
payout might become a major tax consideration.                                                                                  
                                                                                                                                
MR.  SHAFTEL   replied  the  trustee   has  to  take   that  into                                                               
consideration  as  well  because  the distribution  is  taxed  as                                                               
ordinary  income. If  a five  percent distribution  came out  and                                                               
that  trust made  more than  five  percent income  that year,  it                                                               
would all be taxable to the  spouse at that point. That isn't any                                                               
different than  in the prior  structure that says all  the income                                                               
gets  paid out  to the  spouse every  year. For  example, if  the                                                               
spouse  is getting  a  payout  of $20,000  and  the trust  earned                                                               
$20,000 of  income that  year, there is  taxability on  that full                                                               
$20,000.                                                                                                                        
                                                                                                                                
2:05:49 PM                                                                                                                    
MR.  SHAFTEL  said  Sections  23-25   amend  the  Alaska  Uniform                                                               
Transfers to  Minors Act. These  new provisions  address parental                                                               
concerns  about some  children's  ability  to responsibly  manage                                                               
funds.  Some  years ago  Alaska  adopted  a statute  for  Uniform                                                               
Transfer  to Minor  Accounts that  allow  parents to  gift up  to                                                               
$13,000  per  year  into  their child's  account  tax  free.  The                                                               
custodian of the  account, who may or may not  be the parent, can                                                               
use the  funds for the  benefit of the  minor and when  the minor                                                               
reaches age  18 or age 21  those funds become the  minor's funds.                                                               
An IRS provision says  the child can have the funds  at age 18 or                                                               
25  if he  or she  wants them.  Under current  state statute  the                                                               
child may agree not to take possession  of the funds at age 18 or                                                               
21, but  the outer  limit is  age 25.  This provision  allows the                                                               
money  to be  held in  that account  for much  longer periods  of                                                               
time,  if the  minor  consents.  It will  not  run  afoul of  the                                                               
Internal Revenue Code regarding these accounts.                                                                                 
                                                                                                                                
2:11:00 PM                                                                                                                    
SENATOR MCGUIRE asked if it  was necessary to delete the existing                                                               
statutory reference  to 25  years of  age. She  expressed concern                                                               
that removing the reference would eliminate that option.                                                                        
                                                                                                                                
MR. SHAFTEL  responded the intent  was to allow  full flexibility                                                               
to choice any age.                                                                                                              
                                                                                                                                
SENATOR MCGUIRE  said she wanted  to be sure that  this amendment                                                               
wouldn't eliminate the ability to  extend custodial control up to                                                               
age 25,  without having to sit  down and reason with  an 18-year-                                                               
old. She  worried that deleting  the reference in Section  23 and                                                               
Section 25 would eliminate that option.                                                                                         
                                                                                                                                
MR.   SHAFTEL   recalled   that    the   language   "in   certain                                                               
circumstances"  referred to  the  circumstances of  going to  the                                                               
child and asking for consent.                                                                                                   
                                                                                                                                
SENATOR MCGUIRE  asked Mr. Shaftel  to follow up  with additional                                                               
information  about: 1)  what the  certain circumstances  were, 2)                                                               
why 21 years  of age was referenced  - on page 2  of the summary,                                                               
and 3) why  age 25 was referenced. She  reiterated her reluctance                                                               
to give  up an opportunity  for more discretion  in distribution.                                                               
She said she  would understand if this was  necessary to maintain                                                               
the tax  free status of the  account, but she wanted  to have the                                                               
discussion.  She also  asked  how long  the  distribution can  be                                                               
delayed and  what recourse the  child has if  he or she  wants to                                                               
withdraw  consent  for  delayed  distribution.  She  provided  an                                                               
example.                                                                                                                        
                                                                                                                                
MR.  SHAFTEL responded  that this  account  is very  much like  a                                                               
trust; a custodian  is named but the money belongs  to the child.                                                               
The  custodian  is  like  a  trustee  and  is  supposed  to  make                                                               
decisions to use  the money for the child's benefit  and would be                                                               
held accountable for an abuse of discretion.                                                                                    
                                                                                                                                
SENATOR  MCGUIRE  said  it's  a   good  reminder  that  the  same                                                               
protections apply with  respect to abuse of  discretion, and that                                                               
the  custodian is  managing the  account for  the benefit  of the                                                               
trustee.                                                                                                                        
                                                                                                                                
MR. SHAFTEL said that's correct  and confirmed he would follow up                                                               
with the information she requested.                                                                                             
                                                                                                                                
2:18:49 PM                                                                                                                    
SENATOR  PASKVAN questioned  whether  extending the  distribution                                                               
farther into  the future might  increase the likelihood  that the                                                               
beneficiary  would not  consent to  the extension.  He posed  the                                                               
hypothetical of  a minor  who at  age 21 consented  to a  20 year                                                               
extension, and  asked if in  five or so  years there would  be an                                                               
opportunity for a secondary option.                                                                                             
                                                                                                                                
MR.  SHAFTEL  responded that  while  it's  not always  the  case,                                                               
Alaska law presumes that  a person is an adult at  age 18 and can                                                               
make  decisions, enter  into  contracts and  be  bound; they  are                                                               
responsible for  their actions. He  opined that a person  who has                                                               
reached age  18 and lacks  maturity would likely be  resistant to                                                               
an  extension and  very resistant  to a  long-term extension.  He                                                               
suggested  that a  practical  approach would  be  to revisit  the                                                               
decision to extend at the end  of that timeframe. If at that time                                                               
there still were  reasons for an extension, it  could be extended                                                               
again.                                                                                                                          
                                                                                                                                
The language  does not speak to  the situation of someone  who at                                                               
age 21 agreed  to a 20-year extension and then  at age 30 decided                                                               
the  reason for  the extension  no longer  existed. However,  the                                                               
matter could be taken to  probate court. The custodian would have                                                               
to  justify   any  objection  they  might   have,  otherwise  the                                                               
extension would likely be terminated.                                                                                           
                                                                                                                                
2:22:44 PM                                                                                                                    
CHAIR  FRENCH   directed  attention  to  page   15,  Section  15,                                                               
subsection  (i)(1), regarding  the  power of  a  minor to  compel                                                               
distribution, and asked for the range of ages that could apply.                                                                 
                                                                                                                                
MR.  SHAFTEL  replied depending  on  the  type of  transfer,  the                                                               
distribution can  be tied up  initially until  age 18 or  age 21.                                                               
But the statute  provides that if at  age 18 or age  21 the minor                                                               
agrees, it can be extended to age 25.                                                                                           
                                                                                                                                
CHAIR FRENCH asked  if he was saying that the  upper limit for an                                                               
extension for  a minor who does  not consent is age  21 and maybe                                                               
age 25.                                                                                                                         
                                                                                                                                
MR.  SHAFTEL  replied it's  age  21  unless the  minor  consented                                                               
previously.                                                                                                                     
                                                                                                                                
CHAIR  FRENCH asked  Mr. Shaftel  to double  check and  follow up                                                               
with an email,  and he would distribute it among  the members. He                                                               
commented that it's a nice circuit breaker for the minor.                                                                       
                                                                                                                                
MR.  SHAFTEL  said  that  Section 26  relating  to  a  decedent's                                                               
remains was  a suggestion by  directors of funeral homes  to give                                                               
guidance as to who to take  directions from in the disposition of                                                               
human  remains. This  provision provides  a disposition  document                                                               
that  prioritizes the  people who  will have  this authority  and                                                               
estate planning attorneys will have  their clients sign the form.                                                               
The  provision includes  some technical  areas.  For example,  if                                                               
people put directions regarding  disposition of their remains the                                                               
will does  not have  to be  probated. There  is also  a liability                                                               
provision  that   says  that  funeral  homes   that  follow  this                                                               
direction will not be held liable.                                                                                              
                                                                                                                                
2:28:09 PM                                                                                                                    
CHAIR FRENCH said  he's pleased this is  being addressed, because                                                               
it can be very traumatic to try to get a body released.                                                                         
                                                                                                                                
SENATOR PASKVAN  asked if funeral  home operators had  raised the                                                               
issue of same sex domestic partners.                                                                                            
                                                                                                                                
MR. SHAFTEL replied that wasn't  mentioned directly, but a person                                                               
could  designate  a   domestic  partner  as  the   agent  on  the                                                               
prioritized list.                                                                                                               
                                                                                                                                
SENATOR PASKVAN asked if that was on page 16, lines 13-14.                                                                      
                                                                                                                                
MR. SHAFTEL answered yes.                                                                                                       
                                                                                                                                
CHAIR FRENCH added that it would need to be done in advance.                                                                    
                                                                                                                                
MR. SHAFTEL said one of the  benefits of this approach is that it                                                               
allows a person to decide who will have that authority.                                                                         
                                                                                                                                
Section 27  deals with  insurable interests.  The concept  in the                                                               
law generally is  that for one person to buy  an insurance policy                                                               
and benefit from  the death of another person there  must be some                                                               
sort of  close connection  between the  people. Most  states have                                                               
statutes  regarding insurable  interests, but  many are  unclear.                                                               
This  provision   generally  follows   the  Uniform   Trust  Code                                                               
provisions to cure this problem.                                                                                                
                                                                                                                                
Section 28 deals with transfers  of IRA interests. This provision                                                               
clarifies that an  individual may transfer his or her  IRA into a                                                               
grantor  trust.  The transferred  assets  must  be accounted  for                                                               
under the gift  tax but those assets and the  growth would not be                                                               
included in the gross estate and taxed at death.                                                                                
                                                                                                                                
CHAIR FRENCH asked how many jurisdictions had adopted this rule.                                                                
                                                                                                                                
MR. SHAFTEL replied this wasn't  found in other jurisdictions, it                                                               
was  suggested   as  something  that   would  be   beneficial  in                                                               
minimizing estate taxes at death.                                                                                               
                                                                                                                                
Sections 29-33  add clarification to Alaska's  optional community                                                               
property system  that was enacted  in 1998. It clarifies  that if                                                               
the spouses  determine that an  asset is community  property, the                                                               
form of title is not determinative.  If the title of the property                                                               
is  in  the  form  of   survivorship  between  the  spouses,  the                                                               
presumption is  that the survivorship provision  does not change.                                                               
If a spouse  designates a beneficiary for an interest  in what is                                                               
community property, it  is only effective for  that spouse's half                                                               
interest, unless the other spouse  consents in writing. There are                                                               
also  provisions   about  remedies  for  improper   transfers  of                                                               
community  property and  limitation  periods  during which  those                                                               
remedies can be pursued.                                                                                                        
                                                                                                                                
2:42:17 PM                                                                                                                    
SENATOR  PASKVAN  asked if  the  surviving  spouse's claim  would                                                               
apply  only  to  property  that's  designated  with  a  right  of                                                               
survivorship  or any  property acquired  during the  term of  the                                                               
marriage.                                                                                                                       
                                                                                                                                
MR.  SHAFTEL replied  it  would not  be  limited to  survivorship                                                               
property. That was  just one area of concern. It  could be that a                                                               
$500,000  account was  just in  the  husband's name  but the  two                                                               
spouses  together entered  into  a  community property  agreement                                                               
regarding  that  account.  If  the  husband  decides  during  his                                                               
lifetime  to make  gifts  of it  to his  children  from a  former                                                               
marriage, the wife can still claim half the money.                                                                              
                                                                                                                                
CHAIR FRENCH  asked Mr.  Blattmachr to provide  his views  on the                                                               
bill.                                                                                                                           
                                                                                                                                
2:43:57 PM                                                                                                                    
DOUGLAS BLATTMACHR,  Alaska Trust Company, stated  support for SB                                                               
165  and  urged  the  committee  to  pass  the  bill.  It  brings                                                               
clarification and good provisions that Alaskans can use.                                                                        
                                                                                                                                
CHAIR FRENCH  stated that  Mr. Shaftel would  be invited  back to                                                               
finish explaining  the repealers and  the last few  indirect rule                                                               
changes. He announced he would hold SB 165 in committee.                                                                        
                                                                                                                                
                   ^UPDATE on CASE DISMISSALS                                                                               
                                                                                                                                
2:44:54 PM                                                                                                                    
CHAIR FRENCH  announced the  final order of  business would  be a                                                               
follow through on  an issue that came up during  the recent Crime                                                               
Summit regarding case dismissals.  He recognized Nancy Meade with                                                               
the Court System and John Skidmore with Department of Law.                                                                      
                                                                                                                                
2:45:38 PM                                                                                                                    
NANCY  MEADE,  General Counsel,  Alaska  Court  System, said  she                                                               
would address  two separate issues. The  first is a follow  up to                                                               
the Crime Summit where she brought  up the statistic that in FY11                                                               
23.5 percent of felony cases  were dismissed. Some members of the                                                               
committee  were surprised  about that.  The second,  separate but                                                               
not unrelated, issue is the time  it is taking for felonies to be                                                               
disposed.                                                                                                                       
                                                                                                                                
She  directed attention  to six  one-page reports  showing felony                                                               
case  dispositions for  FY09, FY10  and FY11  and calendar  years                                                               
2009, 2010 and 2011. The  FY11 report directly addresses the 23.5                                                               
percent  felony  dismissal  rate.   [In  FY11  there  were  6,218                                                               
dispositions; .5  percent of cases were  acquittals, 75.6 percent                                                               
were  convictions, 23.4  percent were  dismissals and  .5 percent                                                               
were categorized  as other.] The  1,452 (23.5  percent) dismissed                                                               
cases were  categorized by the CourtView  case management system.                                                               
The report shows  that 1,065 or 73.3 percent of  those cases were                                                               
dismissed  by  the prosecution  under  Criminal  Rule 43(a).  She                                                               
noted that Mr. Skidmore could address the reasons.                                                                              
                                                                                                                                
2:48:23 PM                                                                                                                    
SENATOR PASKVAN asked if the  [4,703] convictions were all felony                                                               
convictions.                                                                                                                    
                                                                                                                                
MS. MEADE answered yes and added  that in cases where a person is                                                               
charged  with  more  than  one crime,  the  case  is  categorized                                                               
according  to  the  most  serious   charge  within  the  charging                                                               
document.                                                                                                                       
                                                                                                                                
CHAIR FRENCH  posed the hypothetical  of a person who  is charged                                                               
with  vehicle theft,  possession of  marijuana and  possession of                                                               
cocaine. He asked if the case  would count as a conviction, not a                                                               
dismissal,  if the  person pleads  to the  vehicle theft  and the                                                               
drug charges "go away," so to speak.                                                                                            
                                                                                                                                
MS. MEADE answered yes.                                                                                                         
                                                                                                                                
CHAIR FRENCH  summarized that  all the  offenses that  come under                                                               
one charging document will be resolved as one case.                                                                             
                                                                                                                                
MS. MEADE agreed.                                                                                                               
                                                                                                                                
2:50:26 PM                                                                                                                    
JOHN  SKIDMORE, Director,  Criminal Division,  Department of  Law                                                               
(DOL) offered to proceed as directed.                                                                                           
                                                                                                                                
CHAIR FRENCH referred  to the Alaska Court System  FY11 report of                                                               
criminal case time to disposition  and observed that 28.3 percent                                                               
of superior court felonies were  dismissed between six months and                                                               
a year after they  were filed. He asked why it  takes so long for                                                               
the prosecution to say it couldn't go forward with a case.                                                                      
                                                                                                                                
MR.  SKIDMORE responded  that the  reason  is plea  negotiations.                                                               
Using Senator  French's hypothetical, the prosecution  might make                                                               
an offer of one year in jail on  that case, but while out on bail                                                               
the person commits  another similar crime. To  resolve both cases                                                               
the prosecution  might increase the jail  time to 2 years  on the                                                               
first case and agree to dismiss  the second case. He opined that,                                                               
that accounts for a large percentage of those dismissals.                                                                       
                                                                                                                                
In other situations the prosecution  may learn more details about                                                               
a case as the investigation  progresses. The report reflects that                                                               
some cases remain  open and active for 1-2 years  and some remain                                                               
open for longer  than 2 years. It's important  to understand that                                                               
the  investigation continues  throughout  that  entire time,  and                                                               
that the  case sometimes  gets better  and sometimes  weaker. The                                                               
prosecution  may try  to resolve  a  weaker case  through a  plea                                                               
negotiation, or they may decide to dismiss the case.                                                                            
                                                                                                                                
MR.  SKIDMORE apologized  that he  could not  provide percentages                                                               
for those  cases but could say  that 70,000 counts were  filed in                                                               
2011  and  14,000  were  dismissed.   Over  half  of  those  were                                                               
dismissed because the person pled to something else.                                                                            
                                                                                                                                
He  explained  that  dismissals   are  broken  into  three  large                                                               
categories: evidentiary reasons,  discretionary reasons and other                                                               
legal issues.  Evidentiary reasons  include things like  the mens                                                               
rea, an issue  with a witness and litigation later  in that case,                                                               
all of  which cause  the prosecution to  reevaluate the  case. In                                                               
discretionary dismissals  the prosecutor decided to  do something                                                               
other than move forward. That can  be because it is essentially a                                                               
civil matter  or the defendant  has pled  to another case  or the                                                               
counts  are  consolidated.  Other  legal  issues  can  include  a                                                               
problem  with Rule  45, a  deceased or  incompetent defendant  or                                                               
that the case was transferred to another agency.                                                                                
                                                                                                                                
2:56:39 PM                                                                                                                    
MR.  SKIDMORE noted  that  the report  that  Ms. Meade  discussed                                                               
categorized as  dismissals 224  cases that  were not  filed. From                                                               
DOL's perspective those cases are not counted as dismissals.                                                                    
                                                                                                                                
CHAIR FRENCH  highlighted that those  cases are disposed  of very                                                               
quickly and have  little impact on a defendant.  It's an instance                                                               
of the police  arresting somebody and the DA's  office not filing                                                               
a charge.                                                                                                                       
                                                                                                                                
MR.  SKIDMORE  agreed and  pointed  out  that  the FY11  time  to                                                               
disposition report incorporates those  224 cases as dismissals in                                                               
the first 120 days. He said  another number that jumps out on the                                                               
disposition  report  is the  96  cases  that are  categorized  as                                                               
dismissed due  to delay  in superior  court transfer  or Criminal                                                               
Rule  5(e). That  says when  somebody  is charged  with a  felony                                                               
offense the state  has 10 days if  in custody and 20  days if out                                                               
of  custody to  take  the case  to grand  jury.  If that  doesn't                                                               
happen  in those  timeframes, the  case will  not be  transferred                                                               
from district  court into superior  court and therefore  can't go                                                               
forward.  He  said the  grand  jury  is essentially  a  screening                                                               
process to  decide whether  or not  there is  sufficient evidence                                                               
for the case to move forward as a felony.                                                                                       
                                                                                                                                
CHAIR  FRENCH  asked  if  it's  a  dismissal  with  prejudice  or                                                               
without.                                                                                                                        
                                                                                                                                
MR.  SKIDMORE replied  it's a  dismissal without  prejudice. That                                                               
means  the DA  can indict  later on  and that's  what happens  in                                                               
approximately  half of  those  cases. To  the  court system  that                                                               
number suggests  that 96 cases  were dismissed due to  Court Rule                                                               
5, but it doesn't show up that way in DOL's numbers.                                                                            
                                                                                                                                
He  referenced Mr.  Svobodny's comments  during the  Crime Summit                                                               
about the  appropriateness of having  one case  management system                                                               
and highlighted that  DOL's numbers for FY11 show  a 14.5 percent                                                               
dismissal  rate for  felonies,  including  the plea  negotiations                                                               
mentioned previously.                                                                                                           
                                                                                                                                
3:02:17 PM                                                                                                                    
CHAIR FRENCH asked Ms. Meade  to address the second question, the                                                               
time to get a case to disposition in felony court.                                                                              
                                                                                                                                
MS. MEADE  referred to  a report  showing the  number of  days to                                                               
disposition for  each type of  felony at filing.  She highlighted                                                               
that for all felonies the mean  from filing to disposition is 216                                                               
days,  whether  it's a  sentence,  dismissal  or acquittal.  Also                                                               
important  is that  89.4  percent of  all  felonies are  disposed                                                               
within 181  to 365  days. She further  highlighted that  the more                                                               
serious  offenses take  longer to  dispose. They  take longer  to                                                               
prepare for both the prosecution  and defense. She noted that the                                                               
mean to dispose unclassified felony  murder cases is 550 days, or                                                               
18 months as opposed to a class C felony at 165 days.                                                                           
                                                                                                                                
CHAIR FRENCH asked what "felony conversion" refers to.                                                                          
                                                                                                                                
MS. MEADE  explained that  the column shows  the cases  that were                                                               
disposed before the conversion to CourtView.                                                                                    
                                                                                                                                
CHAIR FRENCH  thanked Ms. Meade  and Mr. Skidmore for  the charts                                                               
and discussion.                                                                                                                 
                                                                                                                                
3:06:50 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair French adjourned the meeting at 3:06 p.m.                                                                                 

Document Name Date/Time Subjects
SB 165 Sponsor Statement.doc SJUD 2/1/2012 1:30:00 PM
SB 165
SB 165 Sectional Analysis.doc SJUD 2/1/2012 1:30:00 PM
SB 165
CS for SB 165 version D.pdf SJUD 2/1/2012 1:30:00 PM
SB 165
SB 165 Explanation of Changes Version D.doc SJUD 2/1/2012 1:30:00 PM
SB 165
SB 165 Letter of Support.pdf SJUD 2/1/2012 1:30:00 PM
SB 165